Ircon International IPO fully subscribed on Day 2

NEW DELHI: The Rs 470-crore initial public offering (IPO) by miniratna Ircon International was subscribed over one times on the second day of bidding on Tuesday.

The offer for sale (OFS) received bids for 1,01,10,000 shares compared with the total issue of 9,905,157 shares.
The category set aside for qualified institutional buyers (QIBs) was subscribed 1 per cent, non institutional investors 19 per cent and retail investors 2.96 times, the exchange data showed.


The government is looking to offload Ircon shares in Rs 470-475 price band, which some analysts say looks reasonable and offers enough on the table for listing gains, as there is an additional Rs 10 discount for retail investors.

The initial public offering (IPO) of miniratna Ircon International was subscribed 29 per cent on the first day of the bidding process on Monday.

Strong order book, which implies an order book-to-bill ratio of 5.6 times on FY18 numbers, reflects earnings visibility, but a high concentration towards railways segment, any materialisation of contingent liabilities and vigilance issues raised by statutory auditors are among key analyst concerns.

Ircon is being offered at a valuation of 10.9 times FY18 against private road EPC companies’ average of 19.3 times, said Nirmal Bang Securities. "Based on the business capabilities, industry growth prospects and valuations, we believe Ircon is attractively priced and recommend subscribing to the issue," the brokerage said.

Data showed that the order book of the company, which undertakes construction of roads, highways, bridges, tunnels, commercial and residential properties, and development of industrial areas, swelled at a robust 12.9 per cent compounded annually to Rs 22,400 crore over FY16-18. Around 87 per cent of these orders were secured from the Railways segment.

These included some 20 orders with an average ticket size exceeding Rs 500 crore.

Adjusting for subsidiary investments worth Rs 700 crore, the issue is available at 9.2 times FY18 EPS on higher band, which is an attractive valuation vis-à-vis its peers, said ICICI Securities.

The brokerage has recommended subscribe on the issue “only for listing gains”.

Motilal Oswal Securities noted that. It said the company is trying to improve international business and is also looking at diversification to aid growth. Valuations appear decent, given the order book position and financials, Motilal Oswal Securities said while advising investors to subscribe the issue for listing gains.

In June this year, railway consultancy firm RITES made a successful initial share sale. The scrip is ruling up 39 per cent at Rs 257 on Monday over its issue price of Rs 185.