A B Infra NSE SME RI review (May apply)

• The company is engaged in providing civil and structural work with prime focus on Railways infra.
• It posted growth in its top and bottom lines for the last two fiscals.
• The RI was originally scheduled for June 2024, but finally it is seeing the light of the day in this month.
• The issue is attractively priced considering its last traded price.
• Well-informed investors may park funds for long term.

PREFACE:
It is very surprising to note that this company has a record date of May 17, 2024 for its Rights Issue that is opening today. The RI was originally scheduled for June 2024, but got delayed till now. Why this abnormal delay in bringing rights issue needs to be clarified by the company. The financial data page in the offer document is blurred and unreadable (Refer page no. 39).

ABOUT COMPANY:
A B Infrabuild Ltd. (ABIL) is providing various services such as civil and structural work, new station infrastructure, redevelopment of old stations, new railway lines, gauge conversion, track linking, track formation, etc. The company engages in activities like building steel grinder bridges, building of Railway Infrastructure and Road Contracts (BOT & Turnkey basis). The Company has 100% revenue from Government Contracts in case of Infra.

Its major clients include Western Railways, Central Railways, MRVCL, MCGM, MMRDA, etc. and Western Railway has been a major contributor of the company's revenue and has been a client since 2006.The company has been well established and shall continue to focus on strengthening long-standing relationship with customers. Its revenues from key customers for the period ended March 31, 2023 amounts to 100% of total revenue. Its ability to maintain and nurture these customer relationships stems from its history of continuously creating value for customers. The offer document is silent on its employees' strength.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 5527180 equity shares of Rs. 10 each at a fixed price of Rs. 18 per share to mobilize Rs. 9.95 cr. The RI opens for subscription on September 24, 2024, and will close on October 04, 2024. The company is offering RI in the ratio of 1 for 8 to its eligible stakeholders as of the record date of May 17, 2024.The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on NSE SME. The company is spending Rs. 0.20 cr. for this RI process, and from the net proceeds, it will utilize Rs. 7.50 cr. for working capital, and Rs. 2.25 cr. for general corporate purposes.

The issue is self-managed by the company and Bigshare Services Pvt. Ltd is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 44.22 cr. will stand enhanced to Rs. 49.75 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 89.54 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit of Rs. 123.79 cr. / Rs. 7.54 cr. (FY23), and Rs. 184.49 cr. / Rs. 11.42 cr. (FY24).

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. The offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: ABINFRA (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 62.30 on May 16, 2024, and opened on an ex-right basis at Rs. 54.55 on May 17, 2024. Since then, it has marked a high/low of Rs. 88 / Rs. 49. The scrip last closed at Rs. 87.00 as of September 23, 024. For the last 52 weeks' it has posted a high/low of Rs. 88.00 / Rs. 25.51. Its current trading lot is 2000 shares.

The promoters' holding has been constant at 36.82% for the last three quarters ended on March 31, 2024. The counter is well managed above RI pricing, to tempt investors.

Conclusion / Investment Strategy

The company is engaged in providing civil and structural work with prime focus on Railways infra and related matters. It posted growth in its top and bottom lines for the last two fiscals. Its RI was originally scheduled for June 2024, but finally it is opening in this month and the delay in the process needs clarification from the management and remains the major concern. Well-informed investors may park funds for long term.

Review By Dilip Davda on September 24, 2024

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

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A B Infrabuild Limited Review by Dilip Davda

The A B Infrabuild Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if A B Infrabuild Rights Issue 2024 worth investing. The A B Infrabuild Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if A B Infrabuild Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in A B Infrabuild Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

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A B Infra NSE SME RI review (May apply)

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