IPO Update : Supreme Infrastructure

Making Roads to Success

Supreme Infrastructure has entered the capital markets with an offer of 34.75 Lac shares at a price band of Rs. 95-Rs. 108. Investment Guru is of the view that the company's business model of integrated construction setup has worked well and has enabled it to garner higher margins in an otherwise low margin business. There are few factors such as over-dependence on government projects and inexperience in the construction of office spaces which are relatively dark areas. However, the company has priced its IPO very modestly and investors in the IPO can expect good listing gains. Given its entry in the construction of IT parks and related areas, the stock would be worth watching from a medium term perspective.

About the Company
  • Supreme Infrastructure is a medium sized Company in the infrastructure sector and is engaged in construction of Roads, Highways and widening of Highways.
  • The company owns and operates a Ready Mix Concrete (RMC) Plant (powai) for captive consumption and also for sale to other parties.
  • It also owns and operates Asphalt Plants (Bhiwandi and Powai) for captive consumption and also for sale to other parties and Wet Mix Plant for captive consumption
  • The company operates crushing Plant (near Thane) for crushing the stones / boulders into aggregates to be used in the building and road construction.
  • Supreme Infrastructure has completed 56 projects valued at Rs. 198.77 Crores till July 31, 2007.
  • The IPO proceeds would be used for purchase / upgradation of Plant and Machinery and Long term working capital requirements.
  • A profit making company for last 10 years.
  • The Company is well equipped to handle large orders and is registered as a Class “I” by PWD and as “A” Class contractor by Bombay Municipal Corporation and Public Works Department as Class “I” Contractor and entitled to bid for and accept Works and Orders as per its bidding capacity.

The New Venture

  • The company plans to foray into the real estate business by undertaking the construction contracting activity. The promoters of the company have incorporated a separate company by the name of Supreme Housing for real estate development business.
  • Supreme Housing and Hospitality Private Limited proposes to develop an Information Technology Park followed by residential complex in Powai area. The area to be developed as information Technology Park would be approximately 4,90,000 square feet and the area to be developed as residential complex would be approximately 5,71,000 square feet. The residential complex will be developed under the Slum rehabilitation scheme . The work for development of information Technology Park is expected to commence by March 2007.

Financials and Valuations

  • Company Top line grew from mere 8 crores in FY03 to 96 crore in FY07. Net profit grew from 12 Lacs in FY03 to 12.75 Crore in FY07.
  • EPS for Year ended FY07 stood at 12.66. Post Issue EPS works out to be Rs. 9.2. The offers comes at a P/E of 11.7 on the upper price band.
  • Return on Networth stood at 32% for FY07.
  • Net Asset Value as of 30th June stood at Rs. 43.64 (Pre-issue).
  • Competitors like MSK Projects and Tantia Constructions are quoting at a P/E of 14.

Issue Opens : 21-Sep-2007

Issue Closes : 26-Sep-2007

Registrar : Bigshare Services

For Allotment status of Supreme Infrastructure IPO, Click Here

Forthcoming IPO's : Saamya Biotech, Maytas Infra, Circuit Systems.

3 comments:

Ranjan said...

Hi Rajesh,

I have been trying to find your email id to seek your permission for sourcing some content of your blog for my personal finance website.

My email id is ranjanvarma-at-gmail.com

Anonymous said...

Hi Rajesh,

Thanks for the wonderful update. Can u provide the grey market premium for Supreme Infra & Power Grid also ?

Thanks
Harish

Anonymous said...

Hi Rajesh,

My name is Yogesh. I did not know where exactly should i ask you so i chose this blog to ask.
Have been hearing a lot about Religare's IPO. You have not mentioned anything about it. Can you please give some info ?

Yogesh