CARE assigns 'IPO Grade 2' to Everest Infra
CARE has assigned 'CARE IPO Grade 2' to the proposed initial public offering of Everest Infra Energy Ltd of around 60 lakh equity shares of Rs 10 each.
By ET Bureau |
MUMBAI: CARE has assigned ‘CARE IPO Grade 2’ to the proposed initial public offering of Everest Infra Energy Ltd of around 60 lakh equity shares of Rs 10 each.
The CARE grading, which indicates ‘below average fundamentals’ of the IPO, factors in the long experience of the promoters and infusion of funds during the last three years, healthy order book position with major clientele being reputed government enterprises / departments, moderate financial position with negligible long term debt and increased thrust on infrastructure by the government.
However, the grading is constrained by the relatively small size of the company, low profitability, declining Return on Net worth, volatile input prices and high average collection period leading to working capital intensiveness of the business. While the company is, by and large, in compliance with the regulatory requirement pertaining to corporate governance practices, it may be early to draw any inference on the quality of the same as the major initiatives in this regard have been made in the recent past. The company also needs to strengthen its organisational structure and MIS.
Everest Infra is engaged in electrical construction contracts on turnkey basis starting from design & engineering to supply of materials & erection and maintenance. It mainly undertakes contracts (including supply contracts) in the field of power transmission lines, sub-station construction and rural electrification. The company has also undertaken some civil construction work. The client portfolio comprises mainly government enterprise / departments with Department of Power, government of Andhra Pradesh and NHPC awarding the maximum contracts to the company.
On a total income of Rs.92.0 crore, Everest Infra earned a PAT of Rs.1.8 crore in FY09. Everest Infra’s EPS saw a decline in FY09 due to expansion of equity base owing to preferential allotment of equity shares. However, Return on Net worth (RONW) witnessed a declined trend during the past three years.
The CARE grading, which indicates ‘below average fundamentals’ of the IPO, factors in the long experience of the promoters and infusion of funds during the last three years, healthy order book position with major clientele being reputed government enterprises / departments, moderate financial position with negligible long term debt and increased thrust on infrastructure by the government.
However, the grading is constrained by the relatively small size of the company, low profitability, declining Return on Net worth, volatile input prices and high average collection period leading to working capital intensiveness of the business. While the company is, by and large, in compliance with the regulatory requirement pertaining to corporate governance practices, it may be early to draw any inference on the quality of the same as the major initiatives in this regard have been made in the recent past. The company also needs to strengthen its organisational structure and MIS.
Everest Infra is engaged in electrical construction contracts on turnkey basis starting from design & engineering to supply of materials & erection and maintenance. It mainly undertakes contracts (including supply contracts) in the field of power transmission lines, sub-station construction and rural electrification. The company has also undertaken some civil construction work. The client portfolio comprises mainly government enterprise / departments with Department of Power, government of Andhra Pradesh and NHPC awarding the maximum contracts to the company.
On a total income of Rs.92.0 crore, Everest Infra earned a PAT of Rs.1.8 crore in FY09. Everest Infra’s EPS saw a decline in FY09 due to expansion of equity base owing to preferential allotment of equity shares. However, Return on Net worth (RONW) witnessed a declined trend during the past three years.
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