Subscribe to Ircon International: ICICI Direct

September 12
21:33 2018

Established in 1976 by the Government of India, Ircon International Ltd is a Miniratna (Category–I) Schedule ‘A’ public sector enterprise. The company is an integrated engineering and construction company, specialising in major infrastructure projects, including, railways, highways, flyovers, tunnels, aircraft maintenance hangars, commercial & residential properties, EHV-sub stations, etc. It provides EPC services on a fixed-sum turnkey basis and also executes several BOT projects.

However, the company’s primary focus and strength remain in the railway sector since inception. It reported revenue, adjusted PAT CAGR of 29.4%, 2.3% in FY16-18 to | 4001.2 crore, | 411.6 crore, respectively. Ircon’s IPO consists of offer for sale of 0.99 crore shares at a price band of | 470-475/share. Post IPO, the government’s stake would reduce to 89.2%.

Valuation and Outlook
Ircon’s revenues grew at 29.4% CAGR to | 4001.2 crore in FY16-18. The order book was at a robust | 22407 crore, which implies an order book to bill ratio of 5.6x on FY18 numbers, indicating revenue growth getting better ahead. At the IPO price band of | 470-475, the stock is available at 10.7-10.9x FY18 EPS. Adjusting for subsidiary investments worth ~| 700 crore, the issue is available at 9.2x FY18 EPS on higher band, which is attractive valuation vis-à-vis its peer companies. Hence, we have a SUBSCRIBE recommendation on the issue at the offer price only for

listing gains.

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