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Bharat Road Network IPO: Should you buy? - IndiaNotes.com
Bharat Road Network IPO: Should you buy?
SMC | Published: 05 Sep, 2017  | Source : IndiaNotes.com

Issue Highlights:


Industry                     : Infrastructure

Net Offer to the Public: 29,300,000

Issue Size (Rs. Cr.)   : 571-600

Price Band (Rs.)       : 195-205

Offer Date                 : 6-Sep-16

Close Date               : 8-Sep-16

Face Value               : 10

Lot Size                   : 73 Per Equity Share


About the Company


Incorporated in 2006, Bharat Road Network Limited, a subsidiary of SREI Infrastructure Finance Ltd is engaged in the business of development, implementation, operation, and maintenance of roads/highways projects. The company is involved in the development, 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. It offers a range of project management services, including design, engineering, and quality control, as well as engineering, processing, and construction management; and project advisory services, such as project management consultancy, project conceptualization, commissioning, and operation and management of the projects, as well as undertakes debt syndication, refinancing, and financial restructuring of its projects.


Valuation


Considering the P/Bv valuation on the upper end of the price band of Rs. 205, the stock is priced at P/B ratio of 1.88x on the pre issue book value of Rs.109 and on the post issue book value of Rs. 142.51 the P/B comes out to 1.44x.


On the lower end of the price band of Rs.195, the stock is priced at P/B ratio of 1.79x on the pre issue book value of Rs. 109 and on the post issue book value of Rs. 142.51 , the P/B comes out to 1.37x.


Outlook


BRNL is a road BOT company in India, focused on development, implementation, operation and maintenance of roads/highways projects. Even though government has focused on infrastructure spending and this may open up opportunities in the BOT segment, but due to higher competitive intensity the company may not get the opportunity in orders. Moreover, the company has been reporting losses in the last 5 years. One may give this IPO a miss.

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About SMC
SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.