Rail Vikas Nigam Ltd. IPO
Author: Pooja Jain Posted on 02 Apr 2019 14:58:59
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Offer Details
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Price band
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Rs 17-19 Per Equity Share
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Offer Open Date
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Mar 29, 2019
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Offer Close Date
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Apr 03, 2019
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Lot Size
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780 shares
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Shares on Offer
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20,85,02,010 shares
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Face value
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Rs 10 Per Equity Share
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Issue Size
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Rs 481.57 Cr
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Issue Type
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Book Built Issue IPO
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Book Building
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QIBs
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10,42,51,004
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Non-Institutional
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3,12,75,302
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Retail
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7,29,75,704
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Lead Managers
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Yes Securities (India) Limited, Elara Capital (India)
Private Limited and IDBI Capital Markets & Securities Limited
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Exchange
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BSE, NSE
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Capital Structure
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Pre Issue Equity
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208,50,20,100 shares
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Post issue Equity
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208,50,20,100 shares
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Rail Vikas Nigam Limited (RVNL), is a wholly owned government company, a Miniratna (Category – I) CPSE, incorporated by the Ministry of Railways on January 24, 2003, as a project executing agency working for and on behalf of MoR. It was incorporated with the objective to undertake rail project development, mobilization of financial resources and implementation of rail projects pertaining to strengthening of golden quadrilateral and port connectivity and raising of extra- budgetary resources for project execution.
Since its inception in 2003, MoR has transferred 179 projects to the company of which 174 projects are sanctioned for execution. Out of these, 72 projects have been fully completed totalling to Rs. 205,672.80 million and the balance are ongoing. It has an order book of Rs. 775,042.80 million as on December 31, 2018 which includes 102 ongoing projects.
During the financial year ending March 31, 2018, company completed a total of 885.50 rkm of project length which included 315.20 rkm of doubling and 425 rkm of railway electrification.
The objects of the Offer are:
- To carry out the disinvestment of 252,800,000 Equity Shares held by the Selling Shareholder i.e. government in the Company, equivalent to 10% of our company’s pre-Offer paid up Equity Share capital of the Company as part of the Net Offer and 657,280 Equity Shares that may be reserved for Employee Reservation Portion, if any, subject to necessary approval from GoI;
- To achieve the benefits of listing the Equity Shares on the Stock Exchanges. Company will not receive any proceeds from the Offer and all such proceeds will go to the Selling Shareholder.
Segment wise Revenue distribution
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(₹ in million)
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2018
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% of Total
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2017
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% of Total
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New Line
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19,844.48
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26%
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10,389.92
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18%
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Doubling
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33,919.19
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45%
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27,517.38
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47%
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Gauge Conversion
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4,883.36
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6%
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5,847.12
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10%
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Railway Electrification
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7,475.48
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10%
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3,845.97
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7%
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Metropolitan Transport Projects (including metros)
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6,386.66
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8%
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7,055.46
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12%
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Workshops
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1,720.05
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2%
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3,411.18
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6%
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Others (bridge construction etc.) (in numbers)
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1,336.37
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2%
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1,084.03
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2%
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TOTAL
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75,565.59
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100%
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59,151.06
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100%
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Things to note:
- The company has a total debt of Rs 2,843 crore, mostly from Indian Railway Finance Corporation — the financing arm of Indian Railways. However, the risk related to this loan is nil as the Railway Ministry takes full responsibility for debt servicing, which only passes through Rail Vikas Nigam’s books.
- It follows an asset light model to run various types of projects.
- It has a qualified and experienced workforce and management team.
Updates on IPO:
The initial public offer of RVNL was subscribed 0.18 times as of second day on monday, with the company receiving bids for 44.87 mln shares against 253.46 mln shares on offer, exchange data showed.
The company did not receive a single bid for the 126.40 mln shares reserved for qualified institutional buyers. Non-institutional investor portion was subscribed 0.03 times while retail investor portion was subscribed 0.49 times.
Conclusion:
We feel the current valuations are relatively attractive when compared to its closest proxy peer, IRCON. RVNL has a better growth profile with a strong balance sheet when compared to IRCON and we expect this gap to bridge between the two. RVNL has strong financial growth and a resilient order book but it derives a significant chunk of its revenue from the Ministry of Railways. Any slowdown in awarding of projects could adversely affect the growth prospects of the company. There can be no assurance that in future adequate financing will be granted which may result in an adverse effect on execution. Any delay in the company’s ability to complete the projects on time, could lead to termination of contracts which would affect their operations significantly. Hence, we subscribe NEUTRAL rating to the stock. Minor listing gains possible on listing but from a long term investors can avoid.
Source: DRHP filings of RVNL
Disclaimer