Ceigall India IPO Subscription Status: A Strong Showing Amid Market Volatility
Despite a challenging market environment, Ceigall India Limited’s initial public offering (IPO) has made a remarkable impact, achieving a subscription rate of 13.75 times on the final day of bidding. This surge in interest underscores investor confidence in the company, even as broader market indices struggled.
Subscription Details
According to data from the Bombay Stock Exchange (BSE), the IPO attracted bids for a staggering 30,67,62,708 shares, significantly surpassing the 2,23,13,663 equity shares that were on offer. The price range for the IPO was set between ₹380 and ₹401 per share.
On the second day of bidding, Ceigall India’s IPO was fully subscribed, with a total subscription rate of 1.23 times. Retail investors showed robust interest, with their quota subscribed 1.65 times, while non-institutional investors subscribed 1.75 times. The employee component saw an impressive subscription rate of 5.47 times, although the portion reserved for qualified institutional buyers (QIBs) remained at 1%.
Notably, 61% of the total subscribers were active on the first day of bidding, indicating a strong initial response to the offering.
Anchor Investment and IPO Timeline
Just a day before the public subscription period commenced, Ceigall India announced that it had secured ₹375 crore from anchor investors. The IPO officially opened on August 1 and will remain open until August 5, providing investors a limited window to participate in this promising offering.
Company Background
Founded in 2002, Ceigall India specializes in constructing critical infrastructure, including flyovers, elevated roadways, bridges, railroad overpasses, tunnels, highways, expressways, and runways. As of June 2024, the company boasted an impressive order book worth ₹9,470 crore, with notable clients such as Military Engineer Services, Indian Railway Construction International Ltd., and Bihar State Road Development Corporation Ltd.
The company has demonstrated substantial growth, with operating revenue increasing from ₹2,068.17 crore in fiscal 2023 to ₹3,029.35 crore in fiscal 2024—a remarkable 46.5% increase. Additionally, profit after taxes surged to ₹304.3 crore from ₹167.27 crore, reflecting the company’s strong financial performance.
Expert Reviews
Indsec Securities
Indsec Securities has provided a favorable outlook on Ceigall India, highlighting its specialization in civil construction and a robust growth trajectory. The brokerage noted a compound annual growth rate (CAGR) for revenue, EBITDA, and adjusted profit after tax (APAT) of 63.5%, 66.9%, and 55.5%, respectively, for FY22–24. With a return on equity (ROE) of 32.6% and return on capital employed (ROCE) of 33.6% in FY24, the company is well-positioned for future growth. Indsec recommends a “Subscribe” rating, citing the strong order book and the potential for debt repayment to strengthen the balance sheet.
Nirmal Bang
Nirmal Bang echoed similar sentiments, emphasizing Ceigall India’s solid growth history and asset-light business model, which has resulted in higher ROCE and ROE compared to industry averages. The brokerage pointed out that the company’s manageable debt-to-equity ratio of 0.7x is expected to decline further with IPO proceeds used for debt repayment. Given the government’s ongoing focus on infrastructure development, Nirmal Bang also recommends a “Subscribe” rating, noting that the company’s P/E multiple of 22x is justified given its strong growth prospects.
IPO Structure and Use of Proceeds
The Ceigall India IPO consists of an offer-for-sale (OFS) of 1,41,74,840 equity shares by existing shareholders, including promoters, alongside a fresh issue of equity shares amounting to ₹684.3 crore. The proceeds from the IPO will be utilized for general corporate purposes, equipment purchases, and the repayment of certain loans.
The registrar for the IPO is Link Intime India Private Ltd, with ICICI Securities Ltd, IIFL Securities Ltd, and JM Financial Ltd serving as the book-running lead managers.
Grey Market Premium (GMP)
As of today, the grey market premium (GMP) for Ceigall India stands at +₹53, indicating that shares are trading at a premium in the grey market. This suggests an estimated listing price of ₹454 per share, which is approximately 13.22% higher than the upper end of the IPO price band. However, analysts have noted that the GMP has shown signs of volatility, with expectations of a potential lower listing.
Conclusion
Ceigall India Limited’s IPO has garnered significant interest from investors, reflecting confidence in the company’s growth potential and the broader infrastructure sector. With a strong order book and a commitment to debt repayment, Ceigall India appears well-positioned for future success. As always, investors are advised to conduct thorough research and consult with financial experts before making investment decisions.