IPO Update : Atlanta Limited

Riding on Infrastructure wave

Atlanta Limited has entered the capital market with the offer of 43 Lac equity shares of Rs. 10 Each at a price band of Rs. 130-150. Investment Guru rates this IPO as “Average”. The recommendation would be to subscribe with objective of garnering listing gains. Investor should not compare this issue with Tech Mahindra in terms of listing gains. The listing gains on this issue basically arise from a relatively smaller equity on the offer and the markets sentiments at the time of listing may affect the outcome.

Let’s have a look at the company in detail:
Atlanta Limited started its business in the year 1977 as Atlanta Construction Co. (I) Ltd. as BMC Contractors. Presently the Company's core competence lies in Highways, Runways, Mining, Realty and Infrastructure Concessions.

The net proceeds of the issue shall be used for investing in Balaji Tollways, a SPV set up for the execution of the Nagpur-Kondhali four-lane BOT project., purchase of Plant & Machinery, Repayment of high cost debt and investment in real estate projects.

The company has successfully executed the Udaipur Bypass Road Project II . It is currently working on two projects on BOT basis: the Mumbra Bypass Project and the Nagpur-Kondhali section.

Company is carrying out the work of extraction of coal for Mahanadi Coalfields Limited (“MCL”), a subsidiary of Coal India Limited at various locations. MCL has awarded contracts for extracting 12.78 million cubic meters of coal over a period of 3 years, of which, the Company has extracted 6.37 million cubic meters as of June 30, 2006 and the balance quantity has to be extracted by October 31, 2007. This the only work company has in mining business.

The real estate business of Atlanta consists of both residential and commercial complexes. The company has executed projects such as Amba Shanti Chambers, Atlanta Arcade and Atlanta Towers in Mumbai. The company plans to develop 31000 sq. mt. of land on NH-4 in Thane as a residential complex.

Net profit after tax for year ending March 2006 at Rs. 15 crore has increased three folds over the year 2005. The topline has risen by 30% during this period.

The equity shares are prices at Rs. 130-150. Given the weighted average EPS of 11 (over last three years) the issue comes at a P/E of 12 at lower band and 14 at higher band. Shares of its competitors are quoting at a P/E band of 15-21.

The Retrun on Net Worth comes to 19% on a weighted average of last three years. Competitors are generating a return of 15-30% .

Book Value of the company is Rs. 44.40. Hence the issue is priced at 3.37 times the book value at the higher price band.

Issue Opens : 01-Sep-2006
Issue Closes : 07-Sep-2006
Registrar : Karvy Computershare


1 comments:

Mohit said...

Dear Sir,
Another IPO of Action constructions Equipment is also open. Can u please put an article on this IPO and advice us as to which is the better option.
I am a regular visitor of your blog and I also want to start my blog on Management.

Thanks
Mohit