Ceigall India IPO Fully Subscribed! GMP, Details, and Review—Should You Apply Before It Closes Today?

The initial public offering (IPO) of Ceigall India Ltd., a company specializing in infrastructure, is wrapping up today. The second day of the IPO saw a strong response, with the offering fully subscribed. According to BSE data, the IPO was subscribed 1.23 times in total.

Retail investors subscribed 1.65 times their allocated shares, while non-institutional investors subscribed 1.75 times. The employee portion saw a subscription rate of 5.47 times. On the first day of bidding, 61% of the total subscriptions were already in.

Before the public bidding started, Ceigall India raised ₹375 crore from anchor investors. The IPO price range is set between ₹380 and ₹401 per share, and subscriptions opened on August 1 and will close on August 5.

Company Background

Ceigall India, established in 2002, focuses on specialized infrastructure projects like flyovers, elevated roads, bridges, tunnels, highways, expressways, and runways. As of June 2024, the company had an order book worth ₹9,470 crore. Its clients include public sector organizations like Military Engineer Services, Indian Railway Construction International Ltd., and Bihar State Road Development Corporation Ltd.

For the fiscal year 2024, the company’s operating revenue increased by 46.5% to ₹3,029.35 crore, while profit after taxes rose to ₹304.3 crore from ₹167.27 crore in the previous year.

Expert Opinions

Indsec Securities: The brokerage firm highlights Ceigall India’s focus on civil construction projects and notes the company’s impressive growth in revenue, EBITDA, and profit after tax (PAT) from FY22 to FY24. They point out the company’s strong return on equity (ROE) and return on capital employed (ROCE), and the long-term visibility of their revenue. They recommend subscribing to the IPO, citing the company’s strong order book, focus on infrastructure diversification, and plans to use IPO funds to reduce debt.

Nirmal Bang: This brokerage praises Ceigall India’s solid track record in sales, EBITDA, and PAT growth. The company’s asset-light model has led to higher ROCE and ROE than industry averages. With a debt-to-equity ratio of 0.7x, which is expected to decline after using IPO funds to repay some debts, Nirmal Bang recommends subscribing to the IPO, citing the company’s premium valuation justified by its strong growth record.

IPO Details

The IPO includes a fresh issue of equity shares worth ₹684.3 crore and an offer-for-sale (OFS) of 1,41,74,840 equity shares by existing shareholders, including the promoters. The company plans to use the funds for general corporate purposes, equipment purchases, debt repayment, and to support its subsidiary, Ceigall Infra Projects Private Limited.

The IPO’s book-running lead managers are ICICI Securities Ltd, IIFL Securities Ltd, and JM Financial Ltd. The registrar for the IPO is Link Intime India Private Ltd.

Grey Market Premium (GMP)

As of today, the Ceigall India IPO’s grey market premium (GMP) is +53, meaning the shares are trading at a premium of ₹53 in the grey market. This suggests an estimated listing price of ₹454 per share, which is 13.22% above the upper IPO price of ₹401. However, GMP trends over the last ten sessions indicate a possible lower listing, with GMP ranging from ₹0 to ₹140.

‘Grey market premium’ reflects how much investors are willing to pay over the IPO price.