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Bharat Road Network IPO: Poor financials & low growth; Avoid - IndiaNotes.com
Bharat Road Network IPO: Poor financials & low growth; Avoid
Hem Securities | Published: 06 Sep, 2017  | Source : IndiaNotes.com

Issue Date      : 06th Sept-08th Sept 2017

Price Band Rs : 195-205/Share

Bid Lot            : 73 & in multiplethereof

Face Value      : Rs 10/Share

Listing             : BSE,NSE

Issue Size       : 29,300,000 Eq Shares


Incorporated in 2006, co is a road BOT company in India, fo-cused on development, implementation, operation and mainte-nance of roads/highways projects. Co is involved in the devel-opment, operation and maintenance of national and state highways in several states in India with projects in states of Uttar Pradesh, Kerala, Haryana, Madhya Pradesh, Maharashtra and Odisha through partnerships with experienced EPC players in the local space where the project is located. At present, all of co’s projects are implemented through special purpose vehi-cles, either through its Subsidiary or in partnership with other infrastructure players. Co also provide project advisory activi-ties including, project management consultancy, project con-ceptualisation, commissioning, operation and management of the projects during the entire life cycle of co’s projects. Co also undertake debt syndication, refinancing and financial restruc-turing of its projects. Co have a project portfolio consisting of six (6) BOT Projects, of which two (2) are Projects operational under Final COD, three (3) are Projects operational under Pro-visional COD and one (1) is a Project under Construction.

Co intends to raise funds for advancing of subordinate debt in form of interest free unsecured loan to its subsidiary, STPL, for part financing of the STPL Project (“STPL Sponsor Investment”) & acquisition of the subordinated debt in the form of unsecured loans/OCPIDs/warrants/OCDs, advanced/held by SREI to/in STPL, KEPL and MTPL


Concerns


Co have reported consolidated net loss (as restated) of Rs 738.85 million, Rs 925.44 million and Rs 264.22 million in Fis-cal 2017, Fiscal 2016 and Fiscal 2015, respectively. Both BRNL’s subsidiaries and all of its associate companies have incurred losses in the last three preceding Fiscals. This could impose additional financial and performance obligations on company, resulting in reduced return on investments or in some cases, losses from the investment activities. On topline front also, co has posted minimal growth as from FY14 to FY17 , the topline of co grew at meagre CAGR of 2% thus depicting very low growth rate in topline . Co, as a part of its business operations borrow funds to meet its capital requirements. As on March 31, 2017, on consolidated basis, co’s total outstand-ing borrowings (short term and long term borrowing including current maturities) was Rs 5,683.81 million.


Valuation


Co is bringing the issue at price band of Rs 195-205/share . Due to poor financials & low growth, at present co is not looking attractive investment opportunity. Hence we recommend "Avoid" on issue.

 

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About Hem Securities
The Hem Securities is one of the leading broking Network in India. It provides trading platform in all the leading exchanges namely - BSE, NSE, MCX , NCDEX & MCX-SX. Their mission is to build wealth for their investors by offering them best financial services through trading & investment strategies and honoring commitment with ethical & transparent business practices.

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