ARSS Infrastructure IPO
The initial public offering (IPO) of Orissa based infrastructure company, ARSS Infrastructure Projects has opened for subscription.
The company plans to raise Rs 103 crore via this issue with a price band of Rs 410-450 per share. The issue will close for subscription on February 11, 2010.
While talking to Moneycontrol.com, experts as well as brokerage houses recommended investors to subscribe to the issue. Investment Advisor, SP Tulsian said issue seemed to be having scope of appreciation on listing and going ahead. Manish Bhatt of Prabhudas Lilladher said one should subscribe to ARSS Infra IPO.
Tulsian said, “ARSS should be able to post a topline of close to Rs 860 crore and PAT of Rs 70 crore which should result in an EPS of close to Rs 48 for FY10 on the expected expanded equity base of close to Rs 15 crore.”
“The issue at the upper price band of Rs 450 is discounting FY10 earnings of the company by less than 10 times while at the lower band of Rs 410 it will be less than 9 times. Similar companies in the secondary market are ruling at a PE of over 12 times. So issue seems to be having scope of appreciation on listing and going ahead. It would be prudent and extra sweeter if book is discovered at lower end, giving better margin of safety to the prospective investors.”
Bhatt said, “After looking at company’s track recored, one should subscribe to this IPO. The company has reported CAGR of 120% in its PAT and 117% in revenues between FY07-09. It has posted topline of Rs 624 crore and EBITDA margin of 16% for FY09. For the period of nine-month of FY10, the earning per share came in at Rs 40 and book value of Rs 158; ROE stood at 29%, ROCE of 24.3% and EBITDA at 18.8%. Its order book is at Rs 2,877 crore, as of January 10, 2010, which is 4.61 times of FY09 revenues.”
Hem Securities
With the robust order book and strong growth plans, company seems to be reasonably priced at present level. Hence we recommend investor to subscribe the issue.
Swastika Investmart
ARSS Infrastructure’s IPO is aimed at funding its capital requirements for various Joint ventures and also its future working capital requirements. The company has developed expertise in railway construction projects, which includes earthwork, major and minor bridges, supply of ballast, sleepers, laying of sleepers and rails, linking of tracks etc. It has successfully completed over 200 kms of rail line and over 300 kms of roads and highways.
Considering the long-term infrastructure story in the country to continue and ARSS’s significant experience in this field, company is expected to have its own share of projects procuring in future. Hence, we recommend applying for the issue with price target of Rs 525-575 in medium term. Listing gains on stock can also be seen.
About the issue
The company is engaged in the business of construction activities in India. It undertakes construction of railway infrastructure, roads, highways, bridges and irrigation projects.
The proceeds of the issue are intended to be deployed for investment in joint ventures (at a cost of Rs 5 crore) and funding long-term working capital requirement (cost of Rs 86 crore). The rest of amount will be used for issue expenses and general corporate purpose.
Its clients’ list includes Ministry of Railways, State Government of Orissa, Rail Vikas Nigam Limited, RITES Limited, IRCON International Limited, National Thermal Power Corporation, Hindustan Steel Corporation Limited, PWD – Orissa, IOCL and the National Highway Authority of India. The company has presence in Eastern India, particularly in the state of Orissa.
The book running lead managers to the issue are IDBI Capital Market Services Ltd and SBI Capital Markets Ltd. Bigshare Services Private Ltd is the registrar.
Swastika IPO Analysis report on ARSS Infrastructure
HEM Securities IPO Analysis report on ARSS Infrastructure
An Interview of CEO of ARSS Infrastructure
