Capacit’e Infraprojects IPO Review

Capacit’e Infraprojects IPO issueCapacit’e Infraprojects Limited is a Mumbai based construction company which Company operates in the Mumbai metropolitan region (MMR), the National Capital Region (NCR) and Bengaluru. Capacit’e Infraprojects IPO consists of fresh issue of equity shares worth Rs 400 crore with face value of Rs 10 per share. Capacit’e Infra Projects  Limited is raising this amount to fund operations and acquire assets. The company which was promoted  by professionals in year 2012 has grown rapidly and has secured backing of PE funds. 

Capacit’e Infraprojects IPO Details:
Issue Opens  Wednesday, September 13, 2017
Issue Closes Friday, September 15, 2017
Price Band Rs.245 – 250
Bid Lot 60 Equity Shares and multiple thereof
Issue Size  Fresh Issue of Equity shares of Rs.400 Cr (6,326,531~Shares)
  Offer for sale of 1,450,000 Equity Shares.
Issue Size ( Rs.)  Rs. 400 Cr 
Issue Structure :  
QIB 50% of the Net Offer – 8,163,265~ Shares, Rs.200 Cr
NIB 15% of the Net Offer -2,448,980~ Shares-Rs. 60 Cr
Retail 35% of the Net Offer-5,714,286~ Shares -Rs. 140 Cr
Lead  Managers Axis Capital, IIFL Holdings, Vivro Financial
Registrar Karvy  Computershare Pvt. Ltd
About Capacit’e Infraprojects
  • Capacit’e was set up in 2012 by progfessionals from engineering and construction field  Shri Rahul Katyal, Rohit Katyal and Subir Malhotra, who earlier held senior positions in Pratibha Group.
  • Capacit’e Infraprojects undertakes construction of residential, commercial and institutional buildings, primarily in the Mumbai metropolitan region, the National Capital Region and Bengaluru.
  • The company had an order book of over Rs 4600 crore as of 30th June,2017 comprising more than 50 ongoing projects.
  • In recent past, the company received orders to the tune of  Rs1,500 crore from leading real estate developers such as the Oberoi, Wadhwa, Rustomjee and Kalpataru groups in Mumbai, Emaar in Gurgaon and Ozone in Bengaluru.
  • Capacit’e has one subsidiary CIPL-PPSL-Yongnam Joint Venture Constructions Private Ltd (CPYJVC) which acts as a special purpose project specific company to carry on the business of design, construction and development of housing projects.
  • Capacite Infraprojects is backed by private equity firms New Quest Asia and Paragon Partners as well as investment firm Infina Finance Pvt. Ltd. 
Capacit’e Infraprojects Limited IPO: Financials:
Rs. In crore
2017 2016 2015 2014
Revenue  1,157.00 853.30 555.70 214.30
Revenue Growth (%) 35.59% 53.55% 159.31%
EBIDTA  166.9 121.6 70 16.9
EBIDTA  Margin(%) 14.43% 14.25% 12.60% 7.89%
Profit Before Tax 106.6 74.3 46.1 10.9
Net Profit  69.7 48.8 32 4.1
Net Profit  Margin 6.02% 5.72% 5.76% 1.91%
Face Value 10 10 10 10
Share Capital 43.61      
Reserves 256 163.3 51.5 13.2
Net worth 299.6 171 56.4 21.8
RoNW (%) 23.26% 28.54% 56.74% 18.81%
NAV  74.4 297.1 114.1 54.1
EPS (Rs.)  17.20 12.30 10.90 1.60
IPO Price 250
PE ratio 14.53
P/BV ratio 3.36
Post Issue Equity 67.89  
Earning – Diluted equity 10.27
PE ratio (Post Issue) 24.35
CAGR Sales 3 yrs 75.43%  
CAGR NP  3 Yrs 157.13%
Market Cap  1697.25
Market Cap/Sales  1.47
Debt/Equity 0.23
Last Dividend 20%  
Objects of the Issue
  • Funding working capital requirements;
  • Funding purchase of capital assets (system formwork); and
  • General corporate purposes
Rationale for Investment
  • The company uses specialised formwork technologies, including Vertical Composite Panel system for columns; Horizontal Composite Panel system for slabs, Crane enabled Composite table formwork, Aluminium Panel Formwork and Automatic Climbing System Formwork. This modern technologies help reduce the construction cycle time of replicating floors in a highrise construction. 
  • The company has robust order book of  ~ Rs. 4,600 crore as on 31st May 2017. This amounts to nearly 4x its last year turnover.
  • The company aims to grow its market share through expansion in major cities with high growth potential and undertake projects on a design-build and lock-and-key basis providing higher revenue potential and increasing scope of services
  • Company has Ownership of modern system form works and other core assets which has stood it in good stead in bagging repeat orders from marque clients.
  • As of May 31, 2017, the company had 1,711 employees and 10,035 contract labourers across all their projects.

  • The company has exhibited very strong Revenue growth,order booking matched by a Strong financial performance. Its compound annual growth of revenues over last three years is ~75% and the figure for Net Profit is whooping ~175%.
  • There may be subdued demand for housing
  • Delay in the execution of the ongoing projects could lead to higher costs or cancellation of orders
  • Change in Govt Policies with regads to real estate & housing could throw untended challenges. The industry saw certain amount of turmoil after demonetization.
  • Capacit’e Infraprojects Limited gets some part of the orders executed through another group company
Capacit’e Infraprojects Limited: Overall Assessment
  • India’s construction industry is expected to log  faster growth
  • The company’s order book as on May 31, 2017 stands at Rs 4,600 crore with projects across metros like the Mumbai Metropolitan Region, the NCR, Patna, Bengaluru, Chennai, Hyderabad, Kochi and Vijaywada. This is 4 times its present turnover
  • Revenue of the company has grown at a CAGR of 75.4% over FY14-17. EBITDA has grown at a CAGR of 114.31% and PAT at a CAGR of 156.85% for FY14-17. As of May 31, 2017, the aggregate indebtedness (fund based and non-fund based) outstanding was Rs 477.47 crore, on a consolidated basis.
  • The company is a niche player with established credentials in  construction of High Rise and Super High Rise buildings and has developed technical prowess & technological competence for the same
  • God performance of the company is reflected in its marquee clientele which includes The Wadhwa Group, Godrej Properties Ltd, Oberoi Constructions Limited, Brigade Enterprises Ltd, Rustomjee, Saifee Burhani Upliftment Trust, The Lodha Group etc. 
  • The company is fully  focused on  its core competency of construction of buildings
  • Capacit’e Infraprojects Limited has grown at a much faster rate than its peers. While the peer  group has shown little or negligible growth Capacit’e Infraprojects Limited has shown stupendous Compounded Annualized Growth rate of 75% over the last three years and this has been matched by equally firm trend in profitability which stands at whooping CAGR of 177%.
  • Capacit’e Infraprojects Limited has comfortable Debt / equity ratio and scores over the peer group. Further after the IPO, the debt equity shall come down even further. Thus the Capacit’e Infraprojects Limited has managed very high growth and has still been able to maintain a strong Balance sheet. 
  • The Capacit’e Infraprojects IPO Valulations seems quite attractive based on financials, growth rate and PE  multiple.  Its peers are trading  trading at PE multiples of 21.6-28.6, whereas PE multiple for Capacit’e Infraprojects Limited stands at 15.6(Pre IPO equity at end of 31/03/37). Thus the company has not priced its offer stiffly and has left ample margin for the investors which are all hallmarks of a good and progressive management.
  • Capacite Infraprojects is backed by private equity firms New Quest Asia and Paragon Partners(floated by Siddharth Parekh, the younger son of HDFC chairman Deepak Parekh) & Infia finance(Investment company jointly owned by Kotak Mahindra Bank and the Kotak family). None of these investors is making an exit.
  • TheCapacit’e Infraprojects IPO  issue is not to be missed opportunity and Iam subscribing to it. My only worry is high over subscription due to anticipation of fantastic response to the 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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