Incorporated in Andhra Pradesh in the year 1998, Likhitha Infrastructure is coming up with IPO of 51,100,000 equity shares of face value of Rs 10 each amounting to Rs 61.20 crore. It comprises of:
Rs 117- Rs 120 per equity share.
Unistone Capital Pvt. Ltd.
Bigshare Services Pvt Ltd.
Oil & Gas pipeline infrastructure service provider in India focused on laying pipeline networks along with construction of associated facilities; and providing Operations & Maintenance services to the City Gas Distribution (“CGD”) Companies in India. They provide diversified services ranging from CrossCountry Pipeline Projects (CCP); City Gas Distribution (CGD) Projects to providing Operation &Maintenance (O&M) Services to CGD Companies. The client base comprises of established players in the Oil and Gas Industry, both in public and private sector.
Likhitha Infra has presence (including past operation) in more than 16 states and 2 Union Territories in India. Likhitha Infra has successfully laid over 600 kmsof Oil and Gas pipelines including steel and Medium-Density Polyethylene (“MDPE”) network in past 5 fiscals. Likhitha Infra has executed 10.75” OD x 69 Kms Petroleum Product Pipeline for the first ever Trans-National Cross-Country Pipeline of South-East Asia connecting India to Nepal, in the Year 2019, for supply of petroleum products.
Likhitha Infra business can be divided into:
Contracts are primarily awarded through “Competitive Bidding” Tender method based on combination of factors amongst which technical qualifications, proposed project team, schedule, past performance on similar projects, the bid amount are the major determining factors.
Financial performance of Likhitha Infra is strong; it has shown consistent and strong financial performance indicators since the last three fiscals.The total revenue for FY 20 has increased by 15% to Rs 162.8 crores. PAT has increased to 19.8 crore in FY 20 from 17.9 crore in FY 19. Operating and net margins are strong at 19.18% and 12.14% in FY 20 and FY 19 respectively. Likhitha posted healthy RoNW of 28.24% in FY 20. Cash flow from operations has plummeted in FY20 (in the year of IPO) to Rs 19.16 crore from Rs 3.19 crore in FY19!
Likhitha Infra has no listed peers as per the RHP. Its EPS for FY20 is Rs 13.59 and at upper price band the P/E is Rs 8.83. With NAV of Rs 47.83P/BV comes at Rs 2.51.
|Cash flow from operating activities||19.16||3.19||4.02|
|Return on new worth(%)||28.24%||25.54%||22.14%|
Likhitha Infra is geographically well-diversified and has an efficient business model required for growth. It has a strong balance sheet aided by healthy margins and profitability. However, dependency on few customers and project execution delays remain its key challenges. Being a small-sized company, it could be more vulnerable to market risks and sentiments. Also, the BRLM associated with the IPO has handled two issues of which one has listed below the listing price. Hence Investors may avoid this IPO and can invest post listing for the long term.
Review By CA Priyanka Choudhary on 14th Sep 2020
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About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
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