IRCON International IPO: Brokerage Views & Run Up to IPO

IRCON International
This post on IRCON International IPO  tries to bring out consolidated brokerage views , Grey Market Premium, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to IRCON International IPO or not.

Related Posts: IRCON International IPO Review
Subscription: IRCON International IPO   ( x times)
  QIB NII Retail Emp Total
Day 3  12.29   4.92 10.07 0.36 9.9
Day 2   0.01   0.1100 2.9600 0.1100 1.02
Day 1   0.0   0.04   0.8600  0.02 ).29
IRCON International IPO : Grey Market Premium etc.

17/09/18   Mostly deals on subject to allotment basis at Rs. 700/-
15/09/18 Grey Market Premium Rs.  40-45 ( was earlier upto Rs. 70-80)

Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on IRCON International IPO IPO.

Capital Market: ” Score 53/100, The company earned high profit margins during FY 2013-FY 2015, due to execution of export orders. Since FY 2016, the company is dominantly dependent on execution of domestic railway orders and revenue from foreign projects has fallen significantly. This has led to fall in profit margins and fluctuations in revenue and profit over the last five years.At higher price band of Rs 475, the P/E on FY 2018 EPS (on current diluted equity of Rs 94.05 crore) of Rs 43.8 works out to 10.9. “

Choice Broking: On valuation front, at higher price band, the company is demanding a P/E valuation of 10.9x (to its restated FY18 EPS of Rs. 43.8). Moreover, based on FY19 and FY20 earnings, the forward P/E comes out to 9.9x and 8.4x, respectively. Thus issue seems to be attractively priced considering its strategic importance in the Indian Railway, future growth outlook, limited competition, virtually debt free operations and healthy financial performance. Thus considering the above observation we assign a “SUBSCRIBE” rating to the issue.”

ICICIDirect:rcon’s revenues grew at 29.4% CAGR to | 4001.2 crore in FY16-18. The order book was at a robust | 22407 crore, which implies an order book to bill ratio of 5.6x on FY18 numbers, indicating revenue growth getting better ahead. At the IPO price band of | 470-475, the stock is available at 10.7-10.9x FY18 EPS. Adjusting for subsidiary investments worth ~| 700 crore, the issue is available at 9.2x FY18 EPS on higher band, which is attractive valuation vis-à-vis its peer companies. Hence, we have a SUBSCRIBE recommendation on the issue at the offer price only for listing gains.” 

Mehta Equities: “We believe company being majorly under railways IRCON has managed to perform well over the years with good economies of scale, healthy order book position which implies an order book to bill ratio of 5x on FY18 numbers. On valuation parse post-IPO IRCON is expecting a market cap Rs 4467 Cr at higher price band, valued at 1.24x the book value and the stock is available at PE 11.28x FY18 EPS, which appears to be low on valuations, but with no direct peer comparison and being Government entity with stable business outlook, valuations doesn’t stand attractive. Hence “SUBSCRIBE” for long term considering risk appetite of the investor.”

Nirmal Bang: “IRCON is being offered at a valuation of 10.9x FY18 (vs. Pvt road EPC companies’ average of 19.3x). Thus based on the business capabilities, industry growth prospects and valuations, we believe IRCON is attractively priced and recommend subscribing to the issue.

SMC: ” Score 3/5 , With excellent execution track record through strong operating systems and controls and strong financial performance and credit profile, the company is expected to see good growth record going forward. Also the company enjoys the strong order book. However, 86.70% of its Order Book is from the Railway sector projects. Any change in the sector causing decline in the number of project
available may adversely affect its revenues and profitability.”

SP Tulsiyan website:
“Given reasonable pricing, one can apply in the IPO, from a listing gains perspective. Over the long term, one needs to evaluate quarterly financial performance once the stock gets listed. 

SPA Securities: “With the strong order book, highly experienced management team, proven track record of various domestic and foreign project executions, project bidding criteria, own cash investment in core business, will help IRCON to grow at a robust pace. At present, IRCON  as enough cash to meet working capital needs and a passes-through amount reflects a healthy balance sheet. At the upper price band level at INR475, IRCON is available at 10.9x FY18 P/E. We recommend SUBSCRIBE to the issue with a long-term perspective.”

Ventura Securities: “The valuation on a trailing basis works out to 11.2x and 11.3x FY18 P/E on the lower and upper band of Rs 470 and Rs 475, respectively. We recommend a SUBSCRIBE.”

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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