Rachana Infrastructure IPO

Competitive Strength: Leading Road-focused BOQ and EPC Contractor. Management and an integrated in-house project team with strong execution capabilities and extensive industry experience. Visible growth through a robust order book.

Weak in FINANCIAL PERFORMANCE: On the financial performance front, for the last three fiscals, RIL has posted turnover/net profits of Rs. 113.93 cr. / Rs. 4.66 cr. (FY19), Rs. 158.41 cr. / Rs. 5.97 cr. (FY20) and Rs. 107.06 cr. / Rs. 4.55 cr. (FY21). For the first nine months of FY22 ended on December 31, 2021, it has earned a net profit of Rs. 1.40 cr. on a turnover of Rs. 41.71 cr. For the last three fiscals, it has posted an average EPS of Rs. 3.20 and an average RoNW of 14.31%. The issue is priced at a P/BV of 5.35 based on its NAV of Rs. 25.80 as of December 31, 2021, and at a P/BV of 3.23 based on its post-IPO NAV of Rs. 42.76. If we annualize FY22 earnings and attribute it to post IPO fully diluted equity capital, then the asking price is at a P/E of 138, making it an exorbitantly priced issue.