IPO Update: Unity Infraprojects

Small fish at price of Big fish, Avoid it

Unity Infraprojects is entering the capital markets with a issue of 34 lac equity shares at a price band of Rs. 651-732. Investment Guru recommends Investors to avoid the issue since the company is asking too big a price to fit its mouth. The established peers in the sector are quoting at much lower valuations. The IPO may give some premium on listing (thanks to Indian stock markets!) but the risk reward ratio is not favourable for retail investors.

Lets look at the company :
The company provides integrated engineering, procurement and construction services for civil construction and infrastructure sector projects.

The company has put significant experience and strong track record ,operations in diverse segments, ability to execute turnkey projects in time, large fleet of sophisticated instruments , profitability and growth as its strength.

Company’s order book is Rs 1171.85 crore, which is 4.4 times FY 2005 revenue on 31 December 2005. Of this 50% comes from civil construction ,36% from construction for private corporates, 32% from irrigation projects; and 18% from transportation projects.

Net profit for nine months ended 31st December stood at 16 crores as compared to 7 crores last year.

The weighted average EPS comes to 8.66 . Weighted average return on networth comes to 21.64%.

At the higher band of the offer price the issue comes at a P/E of 84 times which is too high given that other leading companies are available in the market at much better price.

The company has recently ( March 2006) issued 6 lac shares to institutional investors at a price of Rs. 490 per share. So, why such a huge premium from public ?

Issue opens : May 19th, 2006
Issue closes : May 24th,2006
Registrar : Karvy Computershare

8 comments:

RAVI said...

HELLO RAJESH,

mARKETS ARE EXTREMELY VOLATILE SIR.
wHAT TO DO AT THIS MOMENT OF TIME.
i HAV BEEN ALLOTED SOME SHARES OF PATEL ENGG. WHAT TO DO WITH IT SIR.

tHANKS.

Anonymous said...

To all investors: This is not the time to invest in the market. Don't be fool by bottom picking now. Be patient. You will get planty of opportunity to invest for long term. Book your profit if you have any. The market has not seen the bottom yet. Market has to go down straight or after rebound. Don't be greedy. Stay in Cash or FD's in the banks is the best bet for short to medium term. Rest is your choice.
A wise advise : from a Wise Man.

Anonymous said...

wise man! the markets have finally gone up today. How much fall do you expect from current levels. Please be specific.

Anonymous said...

soni ji aj market kuch
uthan par tha...
ap ko dhanyawad...

Anonymous said...

Where’s the bottom? Nobody knows. But the legendary Jim Rogers quote sure applies: “markets can fall farther than you can possibly imagine.” And when it hit the bottom, it will not go up in hurry, which will give planty of time to choose.
A wise advise : from a Wise Man.

insider said...

BSE up by 200 points on Monday. IT and Bank stocks to rally.

Anonymous said...

buy infosys, Mphasis BFL, satyam computers, NTPC, Reliance Industrial infrastructure, Adlab films,indusind bank for good gains in short term.

Rajesh Soni said...

The leasson that we have learmt in the past few FPO is that FPO's generally do not give good returns. Hence at this moments avoid investing in FPO and focus more on IPO's. You can hold patel engineering for long term since the company has a strong business model.Its recent association with L&T has led to the sharp spurt in the valuation. Dont expect much for short term in this stock.