Ramky Infrastructure Ltd IPO Message Board (Page 37)

VALUATION:

The company has limited experience in BOT,BOOT, PPP and Infra business segments. Faces stiff competition from established players like HCC, NCC, L&T, Madhucon and others. Although the company has decent execution record, the premium sought is on the high side. At Rs 405 - 468 price band, the company is demanding a valuation around 20 PE, of its FY 10 earnings, on the post issue expanded capital of 58cr.


THE ISSUE IS OPTIMALLY PRICED, NOT MUCH LEFT FOR INVESTORS, LISTING GAINS. AVOID.

REMEMBER IT'S PE IS EXPENSIVE AMONGS PEERS ALSO COMPANY IS RAISING 350 CR, IT'S LAST PAT WAS 128! THIS IS SO ABSURD. IF I WAS HAVING SUCH GOOD PROFIT I WONT GO FOR SHARING MY CAPITAL. GO FOR VA TECH AND ASHOKA INSTEAD BOTH PRICED NICELY.

Gem
It can easily fetch minimum 5k against one lac application provided the market remain stable.
In the event of a correction the loss is much more than 5k.

I AM YOUR CHELA GEM IPO FINDER. CAN YOU PLEASE TELL ME HOW MUCH TIME RAMKAY WILL OVERS SUBSCRIBE IN THE RETAIL PORTION?

no application in first day. i am appling in this IPO. i think that i am first and the last for appling in Ramky infrastructure and get whole profit. HA Ha Ha HA

ramky's nos post ipo:-

1) fy'10 sales 2251 cr, pat 129 cr, eps 23, bv 159.
2) asking pe @ 468 = 20, peers trades @ 18-25 times.
3) order book consist of 30% roads , 39% water waste managemnt.

conclusion : 25 pe can be given as the co is mostly engaged in roads ( thoug new entrant in bot ) and water waste management. so my target price is 575, or 550 - 600, gmp is low because of heavy allotment expected not because of co's valn.

It seems Ramkay will allot at Rs425/share, the price at which anchor investors are allotted. At this price how you feel Mr Gem IPO finder

Gem,

I think no infra IPO failed upto now, recent IPO's like ARSS, MAN has given good gains for investors, what do you say?. What is your view on this, can we go for 4-5 lots on this?

since hem securities has advised this ipo i doubt on the intregity of the broker
he has not recomded good ipo like vat tech catbil , and ashoka seems he has vested interest inthe ipo after having invested money in last 3 ipo like EROS micro and career in ASBA it is time to invest at least in two vatech and catibil
apply through cheque payment in ashoka and try luck for refund through ASBA ON 30 SEPT

1)Ramky Infrastructure has serviced a diverse range of construction and infrastructure projects in
sectors as varied as water and waste water, transportation, irrigation, industrial parks , power transmission and distribution, residential, commercial and retail property.

2)The Company principally operates in two business segments:
• A construction business which is operated by it, and
• A developer business which is operated through 10 Subsidiaries and four Associates.

3)No. of Completed Projects Value of Completed Projects (` in Millions)
Water and Waste Water 104 4157.51
Building Construction 84 6560.09
Irrigation 15 631.71
Transportation 29 4583.49
Industrial 34 1028.41
Total 266 16961.22

4)Company’s Order Book as at March 31, 2010 was Rs. 74,317.09 million, of which Rs. 49,709.08 million related to ongoing projects and Rs. 24,608.00 million related to projects for which it is yet
to begin construction. It has added additional contracts worth Rs. 31,473.11 million to the Order Book during the period from April 1, 2010 through June 30 2010

THIS IPO IS ALSO A DARK HORSE, HERE ARE FACTS:-

1) ORDER BOOK AS ON APRIL 2010 IS RS.10000 CR OR MORE.

2) OF TOTAL ORDER BOOK NEARLY 30% CONSIST OF "ROAD" AND 30% CONSIST OF WATER "WASTE MANAGEMENT"

3) SO THIS CO HAS MIX OF BOTH ASHOKA AND VATECH.

4) IT WILL GIVE HIGHEST GAIN ON PER LAC INVESTMENT AS RETAIL MAY NOT CROSS 2 TIMES IN THIS 450+ CR IPO, GMP IS 10%, SO MIN 5000/LAC.

MORE RESEARCH FOLLOWS.......

Friends,
I had mentioned we have come out of city traffic congestion to Highway .Career has eaten 1100 Cr of public money.Now chance to get good allotment.As mentioned earlier I am going for Ramky & that too in good quantity.

SJ, Shreedhar & Gem,

What is your opinion about Ramky? Are you guys going for this?

I thought of applying 1-2 lots only and exit on the listing day.

Thanks,
Gane.

This sees to be good IPO

Ramky Infrastructure, promoted by first generation promoter Alla Ayodya Rami Reddy and Y R Nagaraja, provides construction services in verticals such as water and waste water, irrigation, transportation, power, and building & industrial construction. The company started off as a construction service provider and in 2003 it has turned a developer of infrastructure projects.



The construction business is the domain of Ramky Infrastructure and the development business is carried out through various subsidiaries or special purpose vehicles. Ramky Engineering and Consulting Services FZC, a wholly owned subsidiary in the UAE, operates a small consultancy business in areas such as infrastructure development, waste management, environment and property development.

Currently, the company has 14 development projects including five industrial parks, five road projects, one transport terminal project and three integrated township projects. Barring the Hyderabad Ring Road project, all other projects are under various stages of implementation/development. The company has a 51% equity interest in Ramky Elsamex Hyderabad Ring Road Project, a SPV formed for the Hyderabad Ring Road project. The company is currently developing three integrated township projects (around Hyderabad and Warangal in AP) with an aggregate saleable area of 16.4 million sq ft including 14 million sq ft from a project, which is developed as one of the consortium partner with an equity interest of 29.19%. The other consortium partners in the large township project are other promoter group companies.

Five industrial park projects are being developed on an aggregate land of 2,938 acres. The company will sell the developed plots with common infrastructure developed by the company. The company has 100% equity stake in all barring the 2,143-acre Ramky Pharma City at Vizag, where it has 51% equity stake.

While the Rs 180-crore proceeds from offer for sale goes to the selling share holders (Alla Ayodya Rami Reddy, Tara India Holdings, and Tara India Fund III Trust), the Rs 350-crore proceeds from fresh issue of shares will be deployed in capital equipment (Rs 80.46 crore), working capital requirement (Rs 175 crore) and repayment of loans (Rs 25.05 crore).

Strengths

Order book stood at Rs 7431.71 crore end March 2010, translating into 3.4 times its trailing sales and offers strong revenue visibility. Since April 1, 2010 to June 30, 2010, the company has added orders worth Rs 3147.31 crore to the total order book.

One of the niche players in the execution of water and waste water projects, with strong completion track record of 104 water and waste water projects in the last eight years. Apart from water and waste water projects, has completed about 82 building construction projects, 15 irrigation projects, 28 transportation project and 32 industrial projects will provide strong reference. Strong pre-qualification capabilities across verticals on the back of strong execution track record, financial net-worth and equipment fleet to ensure steady order flow. Expertise in strong growth verticals such as water and waste water along with other infra segments such as roads, urban infra, power T&D will stand good given strong investment in the pipeline in water and power segments.

Strong infrastructure investment provides huge opportunity. Competition is intense in less complex and small ticket size projects. Foray into BOT projects will give the company edge over other medium size players in non-water verticals such as transportation. Currently, preference for PPP projects in roadways is greater. Thus, a construction provider without presence/participation in BOT projects will be at a disadvantage. Bagging of handful of BOT projects strengthens effectiveness in the area even though the company is a late entrant and has little to show in terms of mature BOT projects.

Share of revenue from external client contracts was about 86% in FY 2010.

Weaknesses

About 35% of the total order book as of March 2010 is from Andhra Pradesh. Moreover the irrigation orders from Andhra Pradesh and part of total order book stand at Rs 1431.33 crore (or 19.25% of total orders book) as of March 2010. Recently, construction players executing irrigation projects in AP have been slowing on execution due to delay in payments. With the environment still fluid in AP the execution of the order backlog from AP might go off schedule affecting the revenue and profit.

Considering streamlining its activities and concentrating on core business of construction and infrastructure development. If the company were to pursue this strategy, it may transfer some or all of its non-core businesses to appropriate entities within the promoter group. The non-core businesses that could be transferred include, among others, certain waste management projects that have been awarded to the company either alone or jointly with other entities within the promoter group, but which have been established, financed, solely operated and managed by such other entities within the promoter group.

Promoter group companies such as Ramky Enviro Engineers and Ramky Estate & Farms have presence in the waste management business and real estate development activities, respectively. Even though Ramky Estates and Farms has executed a non-compete undertaking dated December 10, 2007, in favour of Ramky Infra, of late they have come together to execute realty projects where the former having greater share than Ramky Infra. Therefore, conflict of interest cannot be ruled out.

The company is a relatively new entrant in the BOT road project business, having completed only one project with other one being delayed on account of want of possession of land. Hence, its execution capability has to be seen.

The company has to repay the secured debt of Rs 519.61 crore in the current fiscal ending March 2011. End of March 2010, secured debt stood at Rs 1011.02 crore. This can strain the financials of the company.

Assistant Registrar of Companies, Hyderabad, sent a showcause notice in June 2010 to Ramky Pharma City alleging that it has provided financial assistance to its shareholders to fund the purchase its equity shares. The company has contended that it has erroneously quoted Ramky Pharma City instead of Ramky Infrastructure in the declaration of beneficial interest (i.e., Form 22B).

Registered negative cash flow from operating activities for consecutive last three fiscals. The negative cash flow from operation stood at Rs 111.02 crore in FY 2010, Rs 191.12 crore in FY 2009, and Rs 201.38 crore in FY 2008.

Under the working capital loan agreement with State Bank of India, the latter has the right to convert the loan outstanding to equity shares if there is any default in payment. The loan outstanding amount end July 2010 was Rs 239.37 crore.

Valuation

For FY 2010 the company clocked consolidated revenue of Rs 2182.72 crore, a growth of 40%, and a net profit (after minority interest) of Rs 128.85 crore, a rise of 55%. The EPS works out to Rs 22.2 and Rs 22.6 on post-issue equity of Rs 58.06 crore (on lower price band) and Rs 56.90 crore (on upper price band), respectively. The offer price of Rs 405-468 discounts the consolidated FY 2010 EPS by 18.2-20.7 times. Listed player Patel Engineering is available at a PE of 16.2 times and Nagarjuna Construction at a PE of 16.4 times its FY 2010 consolidated earnings.

MUMBAI: Sharekhan is of the view that Ramky Infrastructure’s strong order book position provides strong visibility in revenue growth in the coming years. According to the brokerage, investors with long term horizon can invest in the stock.

Ramky Infrastructure has entered the capital market with public issue of Rs 530 crore by issuing shares of face value Rs 10 in the price band of Rs 405-468 per share. The issue closes Thursday.

“Ramky Infra has witnessed an impressive growth rate both in terms of revenue and net profit over the past few years. Its revenue and profit after tax (PAT) grew at a compounded annualised growth rate (CAGR) of 44% and 49% respectively over FY2007-FY2010.
Further its strong order book position of Rs10,579 crore provides strong visibility in revenue growth in the coming years. The offer is priced in a band of Rs405 to Rs468, resulting in a price/earning (P/E) of 18.3-20.7x its FY2010 earnings respectively.

It is slightly expensive when compared with valuations of it’s peer group companies. However investors with long term horizon can invest in this stock given the opportunity in the infrastructure sector and its diversified nature of order book which would help the company to tap this opportunity,” the report said.

MUMBAI: HEM Securities has recommended investors to subscribe to initial public offering of Ramky Infra. The company has entered capital market to raise around Rs 530 for investment in capital equipments, meet the working capital requirements and repayment of loans.

“The company is bringing the issue at price band of Rs 405-468 on P/E of 18-21 at post issue EPS on FY’10 basis of Rs 22.65. It has business strategies like achieving higher operating margins by acquiring further capital equipment and other strategic assets and reducing costs of materials through backward integration and importation.

The company with experience and expertise in planning, designing and constructing Water and Waste Water infrastructure projects has a competitive strength that differentiates it from many of its competitors. Also, company’s construction business operates in diverse sectors and has a pan-India presence.

Hence, looking after strong business prospects, we recommend investors to “Subscribe” the issue,” the report said.

Seems to be very expensive,
Presence majorly in Andhra.
Very big size of IPO.
My advice is to avoide this or invest wisely.

KA PRASANNA FAMOUS ANALYST IS HUGELY NEGATIVE ON RAMKY INFRASTRUCTURE
The Andhra Pradesh based integrated construction and infrastructure development company is entering the capital market on 21-09-10 to mobilize funds to the extent of Rs 530cr. The issue consists of fresh issue of equity in the price band of Rs 405 - 468 (Rs 350cr) and offer for sale amounting to Rs 180cr. The issue closes on 23-09-10. Enam and Deutsche Bank are the BRLMs. CRISIL has awarded grade 3 for the IPO.

BACK GROUND AND BUSINESS:


Ramky Infrastructure Ltd (Ramky Infra) was incorporated in April 1994 by Mr Alla Ayodhya Rami Reddy and Mr.Yancharla Ratnakar Nagaraja. Primarily a construction contractor, the company is into construction of water and waste water projects, buildings, irrigation and road projects.


The company operates in two principal business segments - construction business which is operated by the Company, and developer business which is operated through its 11 Subsidiaries. A majority of the development projects are public private partnerships and are operated by separate special purpose vehicles. (BOT)

Ramky Infra has a good track record, which is evident from the fact that out of the many projects executed by it until date, none of the company’s clients have invoked any guarantees or letters of credit. Between 2002 and 2009, the company completed 261 projects across various segments (water & waste water -104, building,construction -82, irrigation- 15, transportation -28, and industrial- 32).

OBJECTS OF THE ISSUE:

The company intends to utilize the funds raised for Investment in capital equipments (Rs80cr) Working capital requirement (Rs 175cr) Repayment of loans (Rs25cr) and for general corporate purposes.

FINANCIALS: CONSOLIDATED – RS IN CRORES.


      
2008
      
2009
      
30-09-09
TOTAL INCOME
      
1014
      
1241
      
711
NET PROFIT AFTER TAX
      

50.25
      

52.30
      

27.80
EPS
      
10.2
      
10.6
      
11.20*


*annualized.

RISKS:

· Dependence on government and government funded projects. More than 70% of revenue accounted from these agencies.
· Heavy working capital requirements.
· Logo is not registered and used commonly with other group companies.
· The company has no history of dividend payment on equity shares.




VALUATION:

The company has limited experience in BOT,BOOT, PPP and Infra business segments. Faces stiff competition from established players like HCC, NCC, L&T, Madhucon and others. Although the company has decent execution record, the premium sought is on the high side. At Rs 405 - 468 price band, the company is demanding a valuation of 40 PE of its FY 10 earnings on the post issue expanded capital of 58cr.

The shares of established players in infra segments, like Consolidated Construction Company (18 PE) and NCC (24PE) are quoting at much lesser PE.

THE ISSUE IS OVER PRICED. AVOID.

gane...

i dont think so....va tech will seem overpriced to people...

tum usko 5 face value se 1 ka kar do..tub log le lete kyunki tub 4 figure nahi hota....

anyways lets.....hope doesnt happpen in case of vatech...

regards

When will those golden days going to return when I applied for REC, cox &kings and JSW in which I got full allotment as well as enjoying profits. Lets see what is going to happen in the forthcoming IPOs which will open in the coming days.

SJ, I think even Vatech will get subscribed heavily due to the popularity given to the IPO in various websites and blogs.

Gane.