Bharat Road Network Limited (BRNL): IPO Review

Bharat Road Network IPO
Bharat Road Network Limited IPO (BRNL IPO), in which SREI Infrastructure Finance Ltd is a corporate promoter, is seeking a valuation of over 1,721 crore  through the IPO issue that begins on September 6, 2017. The Kolkata based, Road developer, Bharat Road Network Limited IPO comprises a fresh issue of 29.3 million shares which will result in a 34.9% stake dilution on a post-issue basis.At the upper end of the price band, the IPO size works out to Rs 600.65 crore  

Related Post : Bharat Road Network Limited IPO: Peer Analysis
IPO Issue Details:
Issue Opens On:  Wednesday, September 6, 2017
Issue Closes On:  Friday, September 8, 2017
Price Band Rs.195 – 205
Bid Lot 73 Equity Shares 
Issue Fresh Issue of 29,300,000 Equity shares
Issue Size ( Rs.) Rs. 601 Crore (at upper end)
Issue Structure :  
QIB 75% of the offer -21,975,000 Shares – Rs.451 Cr
NIB 15% of the offer 4,395,000 Shares  – Rs.90 Cr)
Retail 10% of the offer –  2,930,000 Shares – Rs.60  Cr
Lead Managers Inga Capital, Investec Capital, Srei Capital
Registrar Karvy  Computershare Pvt. Ltd.
About Bharat Road Network Ltd.

Incorporated in 2006, Bharat Road Network is a road and highways BOT company in India, focused on development, operation and maintenance of roads & highways projects. At present, all of its projects are implemented through special purpose vehicles, either through subsidiary or in partnership with other infrastructure players. BRNL has six road assets which as per the company are valued at around Rs 6,700 crore

Its main business operations can be divided into three categories, i.e. (i) project development and implementation; (ii) operation and maintenance of tolling operations and (iii) providing advisory and project management services to its projects.
All of its projects are implemented and held through its subsidiaries and associates. The company generates revenue from toll operations & maintenance and project management consultancy fees including from its project SPVs.

Roads Portfolio

 BRNL project portfolio consisting of six (6) BOT Projects, of which two (2) are Projects operational under Final COD (Commercial Operation date), three (3) are Projects operational under Provisional COD and one (1) is a Project under Construction.

Bharat Road Network Ltd. Holding in various Project SPVs: (Rs. Crores)
 SPV % Share BRNL Total Revenue   PBDITA   Remarks
    2017 2016 2017 2016  
Guruvayoor Infrastructure Pvt Ltd  49% 119.32 117.29 62.96 62.47 COD
Mahakaleshwar Tollways Pvt Ltd  48% 18.61 22.51 12.94 18.09 COD
Kurukshetra Expressway Pvt Ltd  49%^ 77.08 73.18 38.93 31.41 Provisional COD
Ghaziabad Aligarh Expressway Pvt Ltd  39% 148.05 101.01 134.96 90.89 Provisional COD
Shree Jagannath Expressways Pvt Ltd  40% 14.37 12.34 Provisional COD
Solapur Tollways Pvt Ltd  99.02%         Construction

( Rs.  In Crores)
2017 2016 2015 2014 2013
Revenue  10.25 0.75 8.43 9.62 0.68
Profit Before Tax -36.73 -49.84 -8.38 -51.39 -16.63
Net Profit  -73.89 0 0 0 0
Face Value 10        
Share Capital 54.65 10 10 10 10
Long Term Borrowings 514.97 872.72 280.43 461 298.12
NAV  78.64 -66.9 5.95 10.48 -1.13
EPS (Rs.)  -26.51 -92.54 -26.42 -60.76
IPO Price 205
PE ratio -7.73
P/BV ratio 2.61
CAGR Revenue  3 yrs 2.15%
Market Cap in Rs. Crore 1120.33
Market Cap/Sales 109.29

Objects  of the Issue
  • Invest in STPL Sponsor Investment(Rs.51.47Cr)
  • Acquisition of subordinated debt held by SREI in the SPVs – Rs.372Cr
  • General corporate purposes


  • BRNL has a presence in the infrastructure sector for over two decades
  • Bharat Road Network Ltd. has SREI Infrastructure Finance Ltd. (SREI) as its its corporate
    promoter. SREI is an established player in Indian Infrastructure space. and is registered with the RBI as an Infrastructure Finance Company and is also a notified Public Financial Institution.
  • The Road  portfolio of BRNL comprises of six BOT Projects, out which two are projects operational under final COD (~1622.44 lane kms), three are projects operational under provisional COD (72.72 lane Kms), and one is a project under construction for development of 400.24 lane kms

  • Bharat Road Network Ltd. had negative net cash flows from operating activities, investing activities, financing activities and restated losses in the past and may continue to have negative net cash flows and losses in the future.
  • Any reduction or suspension of toll collection in relation to company’s BOT Projects may adversely affect its profitability, cash flows and operations.
  • One of Bharat Road Network Ltd.  projects which was under construction has been foreclosed by NHAI, and company may get full/part/nil amount of compensation through settlement-
  • The nature of its Concession Agreements, is not guarded against claim and counter-claims to and
    from the Concessioning Authorities which may give rise to litigations
  • Bharat Road Network Ltd. has the backing of Strong and experienced Corporate Promoter SREI.
  • Company has diverse portfolio of projects in several states in India and long residual concession period of the projects
  • BRNL has been making losses in the past and may continue to have negative net cash flows and these are likely to act as a drag on its overall profitability going forward.
  • Company has in the past experienced Delays in the achieving financial closure of its projects and has experienced cost over runs
  •  Bharat Road Network Ltd. is present only in the BOT project segment and has no presence in EPC segment. Thus its profits are entirely dependent to increase in traffic growth & price increase.
  • Existing Players like IRB infra appear to be better placed. I donot intend to subscribe to this issue.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.

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