Vishnu Prakash R Punglia (VPRPL)
is an integrated engineering, procurement and construction (EPC) company with
experience in design and construction of various infrastructure projects for
the Central and state government, autonomous bodies, and private bodies across ninestates
and one Union territory in India.
Its principal business operations
are broadly divided into four categories: (i) Water Supply Projects (WSP); (ii)
Railway Projects; (iii) Road Projects and (iv) Irrigation Network Projects.
The company has over 36 years of
experience in executing WSPs comprising of construction and development of
pipelines, water tanks, reservoirs, tunnels, overhead tanks, water treatment
plants and irrigation projects. It has executed more than 75 WSPs so far. It is
one of the prominent players in the state of Rajasthan in water supply
projects.
VPRPL have been accredited with
various registrations as a contractor with various departments and agencies,
viz. Jodhpur Development Authority, Jodhpur (Class AA), Rajasthan, Public
Health Engineering Department, Rajasthan (Class AA) , Water Resources Department,
Rajasthan (Class AA), Roads and Building Department, Gujarat (Class AA), South
Western Command, Military Engineering Services (MES), Jaipur, Rajasthan (Class
S), Public Works Department, Chhattisgarh (Class A), Public Works Department,
Rajasthan, Public Works Department, Madhya Pradesh (Class AA), Bhopal (civil
works), pursuant to which it is also eligible to participate and undertake
projects awarded by various other departments and agencies.
The company has design and
engineering, procurement, project management and quality management teams
alongwith a fleet of 499 construction equipment and vehicles. The company hasin-house
teams todeliver projects from design to completion. This reduces its dependency
on third parties for key materials such as ready-mix concrete, stone
aggregates, bitumen and services such as design and engineering, transportation
and logistics required in the development and construction of projects.
The company continues to focus
on development and construction of WSPs as part of its growth strategy. It
intend to expand into and will continue to bid for projects related to the
railways sector including earthwork, construction of bridges and supply of
materials and track linking, railway station platforms, administrative
buildings, rail over-bridges and station quarters; projects related to road
sector like construction of highways, bridges, culverts, flyovers, subways;
projects related to irrigation like dams, canals, tunnels, pressured pipe
system, etc.; and other sectors like sewerage, industrial effluent treatment
plants on an EPC basis.
The company executes projects
either independently or through project specific joint ventures.
The Issue, Object of the Issue
The Initial Public Offer comprisesan
issue of fresh equity shares of up to 31200,000 of Rs 10 face value each. Of the net proceeds from the issue, about Rs
62.177 crore will be used to fund capex requirements for the purchase of
equipments/machineries, Rs 150 crore for funding the working capital
requirements and balance was general corporate purposes.
Strength
Track record of successful
completion of more than 85 projects till date and have 51 ongoing projects as
on July 15, 2023.
The order backlog of the company
as of July 15, 2023, stood strong at Rs 3799.528 crore, which is 3.25 times of
its FY23 revenue.
Undertakes construction and EPC
projects in an integrated manner as it have the key competencies and in-house
resources (engineers, equipments, ready-mix concrete, stone aggregates, and
processed bitumen, in a cost effective manner) to deliver a project from
conceptualization till completion. As on
March 31, 2023, its equipment fleet comprised about 499 construction equipment
and vehicles.
Effectively leveraging its
experience in executing EPC projects, it is increasing focus or expanding into
new functional areas such as Railways, Irrigation, and Industrial Effluent
Treatment Plantsthat will allow it to consolidate its position in the infrastructure
space.
Only about 55% of the households
of the country as on December 31, 2022, have tap water supply in their homes. Under
AMRUT scheme, about 6527 water projects costing Rs 129636 crore (including
O&M cost) have been approved by MoHUA so far. Of these 6527 projects, so
far DPR have been approved for 2058 projects (worth Rs 36481.47 crore), notice
inviting tenders (NIT) issued for 1025 projects (worth Rs 19157.55 crore); 608
projects (worth Rs 5422.82 crore) were awarded and about 29 projects (worth Rs
102.99 crore) have been completed.Currently, there is a 79%
(22,939 MLD) capacity gap between sewage generation and existing sewage
treatment capacity in tier I/II cities/towns in the country. Even if include
1742.6 MLD of ongoing/planned capacity, there is still a sewage treatment
capacity shortfall of 21,196 MLD. So GOI initiatives such as JJM Phase II and
urban waste generation and treatment there are enough growth opportunities for
the company in water/waste-water verticals. Similarly, the other major
verticals the company focuses, such as railways, also have strong investment
lined up.
Weakness
Business growth relies on
contracts awarded through tenders under competitive bidding process and ability
of the company to qualify independently and jointly with other partners,
availability of enough projects in the tender pipeline, timely award of the
contract as well as ability of the company to win it at competitive bids. The
bid success ratio of the company was in the range of 16-17% in the last three
fiscals.
Typically, EPC projects are
exposed to various implementation and other risks, including risks of time and
cost overruns, and uncertainties, which may adversely affect business,
financial condition, results of operations, and prospects.
About Rs 359.536 crore of the
order backlog or 9.46% of the order backlog as end of July 15, 2023, is from
the state of Manipur, which is currently facing ethnic clashes/unrest that might
delay project execution and bill collections impacting the operations of the
company. Entire Manipur order backlog is WSPs.
High geographical/client
concentration: About 61.54% of the order
backlog is from Rajasthan, 16.18% from UP, 9.46% from Manipur, 5.59% from
Uttarakhand, 5.54% from Assam and balance from other states. Similarly, about 80.92% of the revenue comes
from the top 5 clients. Of the order backlog about 77.89% is WSPs,
10.05% is railways, 7.93% is roadways, and 4.13% is sewerage and others. The WSP order backlog is spread across the
states of Rajasthan, Uttar Pradesh, Manipur, Uttarakhand, Gujarat, Assam, and
Haryana.
Undertakes projects in JV or
executes projects with sub-contractors and thus any execution delays,by JV
partner/ client/sub-contracts, will materially impact the fortune of the
company.
There are certain outstanding
litigations involving the company, which, if determined adversely, may affect
the business operations and reputation.
Military Engineering Services
(MES) debarred the company from participating in future tenders on March 30,
2021. The company filed a CWP in Rajasthan High Court at Jodhpur to
quash the order. Though the RHC by its interim order allowed it to participate
in future tenders, a final order not in favour of the company would lead the
company to be debarred from participating in any future tenders floated by MES.
Similarly, the company has challenged the illegal termination notice of Indore
Smart City Development (ISCDL) in the MP High Court and got an interim order
restraining ISCDL from encashing the performance BG and from blacklisting the
company until the order passed by the competent authority. Any judgment against
the company may lead to debarring of the company for five years from
participating in tenders floated by ISCDL and the local municipal corporation.
The company has reported
negative cash flow from operation in FY22 and FY23.
Valuation
Consolidated re-stated revenue
for the fiscal ended Marche 2023 stood higher by 49% to Rs 1168.40 crore. With
OPM expanding by 230 bps to 13.4%, the operating profit jumped up 80% to Rs
156.58 crore. Gained further by lower interest and depreciation as % of sales,
the PBT more than doubled (up 103%) to Rs 122.44 crore. Eventually, the net
profit was up by 102% to Rs 90.64 crore.
The EPS for FY2023 on expanded
equity (on the upper price band) was Rs 7.3. The PE on the upper price band
works out to 13.6 times. WPIL, which is a pump manufacturer as well as
undertakes JJM projects, quotes at a PE of 16.3 times of its consolidated FY2023
EPS. And some of other EPC companies in
the space of roads and railways such as
PNC Infratech, HG Infra, GPT Infra, RPP Infra, RVNL, IRCON, and ITD Cementation
are quoting at a PE of 15.2 times, 25.8 times, 14.9 times, 8.3 times, 18.3
times, 17.5 times and 28.9 times. Indian Hume Pipes which is into manufacturing
and marketing of concrete pipes as well as pipeline projects quotes at a PE of
34 times of its standalone FY23 EPS.
Vishnu Prakash R Punglia: Issue Highlights
|
|
Fresh Issue
(in equity share nos.)
|
31200000
|
Price band (Rs.)
|
|
Upper
|
99
|
Lower
|
94
|
Post-issue equity (Rs crore)
|
124.64
|
Post-issue promoter (including promoter group)
stake (%)
|
67.81
|
Minimum Bid (in nos.)
|
150
|
Issue Open Date
|
24-08-2023
|
Issue Close Date
|
28-08-2023
|
Listing
|
BSE, NSE
|
Rating
|
46 /100
|
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Vishnu Prakash R Punglia: Re-stated Consolidated Financials
|
|
|
|
|
|
2103 (12)
|
2203 (12)
|
2303 (12)
|
|
Sales
|
485.73
|
785.61
|
1168.40
|
|
OPM (%)
|
9.3
|
11.1
|
13.4
|
|
OP
|
45.38
|
86.87
|
156.58
|
|
Other income
|
1.94
|
1.77
|
3.06
|
|
PBIDT
|
47.32
|
88.64
|
159.64
|
|
Interest
|
17.54
|
24.07
|
30.23
|
|
PBDT
|
29.78
|
64.57
|
129.42
|
|
Depreciation
|
4.10
|
4.19
|
6.98
|
|
PBT
|
25.68
|
60.38
|
122.44
|
|
EO Exp
|
0.00
|
0.00
|
0.00
|
|
PBT after EO
|
25.68
|
60.38
|
122.44
|
|
Tax
|
6.70
|
15.53
|
31.80
|
|
PAT
|
18.98
|
44.85
|
90.64
|
|
EPS (Rs)*
|
1.5
|
3.6
|
7.3
|
|
* on post IPO fully dilluted equity (on upper
price band) of Rs 124.64 crore. Face Value: Rs 10
|
EPS is calculated after excluding EO and
relevant tax
|
|
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Figures in Rs crore
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Source: Capitaline Corporate database
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