Ceigall India shares fall further to IPO price after tepid debut. What should investors do?

The shares of Ceigall India, which is focused on specialized infrastructure projects, made a subdued debut on the stock exchanges, listing at Rs 419 per share. This represents a modest 4% gain over its issue price of Rs 401.

Post the debut, the stock fell further and is trading at Rs 404, almost flat to the IPO price.

While the IPO received a respectable subscription of 14 times, the actual listing performance fell short of initial expectations, likely influenced by the prevailing market conditions.


Analysts said the company's strong focus on specialized infrastructure projects and efficient execution model remain its key strengths. However, the moderate listing highlights the challenges posed by significant contingent liabilities, reliance on government contracts, and intense competition.

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"Ceigall India's long-term prospects, despite the muted listing, hinge on its ability to effectively manage these challenges and capitalize on its core competencies. Investors are suggested to hold their position by keeping a stop loss of 378," said Shivani Nyati, Head of Wealth, Swastika Investmart.

The IPO, which comprised a fresh equity issue of Rs 617.69 crore and an offer for sale (OFS) of up to 1.42 crore shares, received a healthy response from investors with overall subscription at 13.78 times.

The proceeds from the fresh issue will be utilized by the company for purchase of equipment, repayment/ prepayment of certain borrowings of the company and its subsidiaries and general corporate purposes.

Ceigall India was established in July 2002 and over the past two decades has evolved from a small construction firm to a prominent player in engineering, procurement, and construction (EPC), specializing in the design and development of various road and highway projects.

The company has consistently grown in revenue and profitability, with revenue, EBITDA, and PAT achieving a CAGR of 63.5%, 66.9%, and 55.5%, respectively, from fiscal 2022 to 2024.

In FY24, the EBITDA margin and PAT margin stood at 17% and 10%, respectively. Return ratios have remained strong, with RoE at 33.6% and RoCE at 31.9% for the same period.

"As of June 2024, Ceigall holds an order book valued at Rs 9,471 crore, which is 3.2 times its FY24 revenue, ensuring strong revenue visibility for the coming years. The order book comprises 61% EPC and 39% HAM projects," said Geojit.

IIFL Securities, ICICI Securities and JM Financial are the book running lead managers to the issue, while Link Intime India is the registrar to the offer.

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