Since listing, the stock price has fallen further and is trading at Rs 404, almost the same as the IPO price.
Although the IPO was oversubscribed, a respectable 14 times, the actual listing performance was below initial expectations, influenced by market conditions at the time.
Analysts said the company’s focus on specialized infrastructure projects and efficient execution model remain its main strengths, but the mid-market listing highlights the challenges posed by large contingent liabilities, reliance on government contracts and fierce competition.
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“Seagull India’s long-term prospects will depend on whether it can effectively manage these challenges and leverage its core competencies despite a muted listing. We advise investors to hold positions with stop loss at 378,” said Shivani Nyathi, head of wealth at Swastika Investmart.
The IPO, consisting of a fresh issue of Rs 6,176.9 crore and an offer for sale (OFS) of up to 142 million shares, received a strong response from investors and was overall oversubscribed 13.78 times.
The funds raised this time are expected to be used for the purchase of equipment, repayment and prepayment of borrowings of the Company and its subsidiaries, and other general corporate purposes.
Ceigall India was established in July 2002 and over the last two decades has grown from a small construction company into a leading Engineering, Procurement and Construction (EPC) company specialising in the design and development of a range of road and highway projects.
The company has been experiencing steady growth in revenue and profitability, with revenue, EBITDA and PAT growing at CAGR of 63.5%, 66.9% and 55.5% respectively from FY2022 to FY2024.
EBITDA margin and PAT margin were 17% and 10% respectively in FY24. Profitability remains strong with RoE at 33.6% and RoCE at 31.9% during the same period.
“As of June 2024, Sagar has an order backlog worth Rs 9,471 crore, which is 3.2 times FY24 revenue and ensures strong earnings outlook for the coming years. The order backlog comprises 61% EPC projects and 39% HAM projects,” Geojit said.
IIFL Securities, ICICI Securities and JM Financial are the lead managers for the issue, while Link Intime India is the registrar for the offer.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of The Economic Times)
