Vishnu Prakash R Punglia IPO: Oversubscribed On Day 1, Check Latest GMP; Apply Or Not?

Engineering, procurement, and construction (EPC) enterprise, Vishnu Prakash R Punglia oversubscribed on the first day of its initial public offering (IPO). HNIs and retail investors were the biggest drivers of the IPO. The public offer opened on August 24 and will close on August 28. The IPO is purely a fresh issue of equity shares worth Rs 309 crore. Proposed equity shares under the IPO will be listed on BSE and NSE.

As per the data on NSE, cumulatively, the IPO received bids of 8,27,14,500 equity shares against the offered size of 2,19,30,000 equity shares, registering a subscription of 3.77 times on Thursday which was day 1 of the offer.

Further, on Day 1, the portion reserved for Non Institutional Investors (NIIs) aka high-networth investors booked 6.26 times subscriptions, while the retail individuals investors (RIIs) portion subscribed by 4.88 times. However, the IPO received dull demand from qualified institutional buyers (QIBs) which merely subscribed by 5% of the reserved shares.

Of the total size, 50% of the IPO allotted size is kept for QIBs, while 35% portion is reserved for RIIs, and the rest of the 15% is kept for NIIs.

The price band for the IPO is fixed at Rs 94 to Rs 99 per equity share having a face value of Rs 10 each. The bid lot size is 150 Equity Shares and in multiples thereof.

Choice Capital Advisors and Pantomath Capital Advisors are the book-running lead managers of the IPO, while Link Intime India is the registrar.

The company plans to use the proceeds from fresh issue for Link Intime India, and fund working capital requirements of the company, and for general corporate purposes.

On August 24, the grey market premium (GMP) of Vishnu Prakash stood at Rs 54 per share. As per TopShareBrokers, this suggests a 54.55% premium listing to Rs 153 per share (upper price band of Rs 99 + Rs 54 per share).

Vishnu Prakash R Punglia on August 23, raised Rs 91.77 crore from anchor investors ahead of the IPO. Foreign Investors and Domestic Institutions who participated in the anchor were Quant Mutual Fund, Kotak Mahindra Life Insurance Company Ltd, Max Life Insurance Company Limited, BNP Paribas, Copthall Mauritius Investment Limited, Milky Investment and Trading Company, Societe Generale and Minerva Emerging Opportunities Fund Limited.

Should you subscribe to the IPO?

According to Geojit, at the upper price band of ₹99, VPRPL is available at a P/E of 13.6x (FY23), which appears to be fairly priced compared to its peers. The consistent topline growth and operational efficiencies, experience of over three decades in the industry, strong support from government orders, healthy order pipeline, and new initiatives from Govt. of India to boost the sector will position the company well for growth.

Hence, Geojit's IPO note said, " We assign a "Subscribe" rating for the issue on a short- to medium term basis."

However, Geojit also higligted key risks for the company. These are --- client concentration: ~93.5% of FY23 revenue from operations is derived from the top 10 clients; regional concentration (~62% of the pending order book is concentrated in Rajasthan); any adverse political condition may have an impact on its business activity.

Post the listing, the company will compete against PNC Infratech, HG Infra Engineering and NCC.

Jodhpur-based Vishnu Prakash R Punglia serves Central and State Governments, autonomous bodies, and private entities across nine States and one Union Territory in India. The company's operational focus revolves around four key domains: Water Supply Projects (WSP), Railway Projects, Road Projects, and Irrigation Network Projects.

Disclaimer:

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