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Man Infraconstruction Ltd IPO

February 18, 2010 by

Incorporated in 2002, Man Infraconstruction Ltd is a construction company located in Mumbai. In the recent past, the Company has undertaken various construction projects in the six states of Maharashtra, Kerala, Gujarat, West Bengal, Goa and TamilNadu. The Company provides construction services for port infrastructure along with residential, industrial, commercial and road infrastructure projects. Man Infra works with real estate developers in Mumbai and Pune and is in the process of constructing a residential complex in the western suburbs of Mumbai with an aggregate area of 1.95 mn sq. ft., a slum rehabilitation authority project in Mumbai and 5,166 tenements at a mass housing project at Pune.

The Company intends to raise funds Upto Rs. 1.42 bn to purchase capital equipment and for general corporate purposes.

We see the issue as an excellent investment opportunity as:

• The Company’s sales have clocked a 82% CAGR during FY06-09, while net profits have grown at a CAGR of 78% in the same period.
• The Company has expertise in providing construction services for high growth port, residential, industrial, commercial, and road infrastructure projects.
• The Company’s consolidated order book stood at Rs. 20.21 bn as on Dec’09 spread across the construction sectors, which provides a strong near to medium term revenue visibility.
• The Company enjoys long term relationships with reputed clients and has an established track record and qualified and experienced management.

IPO Issue details

Man Infra is entering the capital market with a public issue of 5,625,150 equity shares of Rs 10 each. Upto 2, 25,150 equity shares of Rs 10 each will be reserved for subscription by eligible employees at the issue price. The issue less the employee reservation portion shall constitute 5,400,000 equity shares. The net issue will constitute 11.36% of the fully diluted post issue paid-up capital of the Company. The price band is Rs. 243 to Rs. 252 per equity share of Rs 10 each. The issue opens on February 18, 2010, and closes for subscription on February 22, 2010. The equity shares of the company are proposed to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Issue objectives

• Purchase of Capital Equipment: The Company intends to use Rs.1,225.30 mn from the net proceeds for the purchase of capital equipment to execute various projects
• General Corporate Purposes: The Company intends to deploy a part of the proceeds towards brand building and the strengthening of marketing capabilities
• Issue Related Expenses: A part of net proceeds would be used to pay all the issue related expenses