The infrastructure sector is an important segment of the economy in the sense that it creates jobs and fills people’s pockets with money to spend. On the backdrop of this, a company in the infrastructure segment is coming up with its IPO.
Monte Carlo Limited has filed its draft papers with the SEBI for the same. So let us discuss in detail the company’s business fundamentals.
About Monte Carlo Limited
Monte Carlo Limited is an infrastructure construction and development company. It has operations across highways, railways, buildings and factories, mining, energy infrastructure, and water and irrigation verticals of the infrastructure sector.
The company has more than two decades of experience in execution of of infrastructure projects having completed 79 EPC projects. As of June 2019, the company had an order book of ₹9162 crores with 39 ongoing EPC projects spanning across 14 states in India.
The company’s major past clients include NHAI, RVNL, BCCL, and UADD. As of June 2019, approximately 98.66% of the company’s order book comprised of projects being undertaken by the government, relevant state governments or government undertakings. The company owns and maintains a large fleet of modern construction equipment which allows them to undertake multiple projects simultaneously.
Monte Carlo Limited IPO Details
Following are the details about the IPO:
- The company is yet to come up with its IPO subscription dates.
- The company is yet to come up with its IPO price range, through which valuations can be assessed.
- The company will list its shares on the NSE and the BSE.
Objectives of the IPO
Following are the objectives of the company’s IPO:
- The company’s IPO is a combination of offer for sale and a fresh issue.
- The company will receive up to ₹450 crores from the fresh issue of shares.
- The company will use a part of the fresh issue of shares to meet its working capital requirements.
- The company will also use the fresh issue proceeds to invest and finance the six-laning and strengthening of Hubli-Haveri HAM project.
- The company will also use the proceeds for general corporate purposes.
- Further, the company wants to enhance its credibility and corporate image by listing its shares on the exchanges.
Key strengths
Following are the key strengths of the company:
- The company has strong execution and implementation skills with established track record.
- The company has a robust order book which provides visibility for growth.
- The company has a diversified infrastructure portfolio with diverse geographical presence.
- The company has a consistent financial performance and credit profile.
- The company has an experienced and professional management team with end to end execution capabilities.
Key risks
Following are the key risks that the company faces in its business:
- Projects included in the company’s order book may be cancelled, modified or delayed for reasons beyond the company’s control.
- The company’s financial condition would be materially affected if it fails to obtain new contracts for infrastructure projects.
- The company faces a variety of risks in connection with its infrastructure contracts entered into with various government and private sector banks.
- The company’s promoters have limited experience in certain geographical areas which could adversely affect its business.
- There are outstanding criminal cases against the company, which might affect its order book.
- Delays in acquisition of land for the company’s projects might affect the timely execution of their projects and might lead to cost overruns.
- The company requires certain approvals, licenses or permits in its ordinary course of business.
- The company has a long working capital cycle and significant working capital requirements.
- The company’s business is concentrated in a few states, which leads to a concentration risk.
Fundamentals of the company
Following are the fundamentals of the company:
- The company’s revenue from operations increased from ₹115.8 crores in FY17 to ₹144.3 crores in FY19.
- The company posted losses to the tune of ₹25.3 crores in FY17, which stood at ₹11.2 crores as of FY19.
- The company’s net asset value per share stood at -₹0.80 as of FY19.
- The company’s earnings per share stood at -₹1.12 at the end of FY19.
- The company’s long term borrowings increased from ₹6.81 crores at the end of FY17 to ₹285.5 crores at the end of FY19.
Peer comparison
Monte Carlo Limited counts NCC Limited, Simplex Infrastructures Limited, Dilip Buildcon Limited, Sadbhav Engineering Limited, and Ashoka Buildcon Limited, KNR constructions Limited, and HG Infra Engineering Limited among its peer group. Monte Carlo Limited’s return on net worth stood at 22.29% as of FY19, which is better as compared to its peer companies.
Conclusion
Following were the business fundamentals of Monte Carlo Limited. The company has only filed draft papers with the SEBI and has not yet come up with the IPO subscription dates and the IPO price range. Investors should do their due diligence before investing in the company’s shares when it comes up with an IPO.
