Atal Realtech Ltd. Launches IPO, to Close on 7th October

For FY 20, the company reported net profit of Rs.2.62 crore and revenue of Rs. 58.69 crore. For the last three fiscals, ARL has posted an average EPS of Rs. 5.45 and an average RoNW of 11.72%. The issue is priced at a P/BV of 1.22 on the basis of its NAV of Rs. 59.07 as on March 31, 2020 Atal Realtech Ltd. (ARL) is a construction company providing integrated civil works contracting and engineering services. It is a registered contractor with the Government of Maharashtra Public.

Works Department in Class I-A Atal Realtech Ltd. (ARL) is a construction company providing integrated civil works contracting and engineering services for structural construction and infrastructure sector projects and is a registered contractor with the Government of Maharashtra Public Works Department in Class I-A. It engages in contracting and sub-contracting for various government and private projects which includes the construction of commercial structures and industrial structures.

Atal Realtech Ltd. (ARL) is entering into the capital market through an SME IPO this week itself. It will issue 15, 04, 000 equity shares of Rs. 10 each at a fixed price of Rs. 72 per share. It will raise Rs. 10 .83 cr. through this issue. Issue will open on 30th September, 2020 and will close on 7th October, 2020. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge platform. Aryaman Financial Services Limited and Galactico Corporate Services Limited are Lead managers of the issue and Bigshare Services Private Limited is the Registrar to the issue.

Aryaman Capital Markets Ltd. is acting as a Market Maker for this company. Having issued initial equity at par, the company raised/converted further equity in the price range of Rs. 100 – Rs. 118 between August 2018 and February 2019. Atal Realtech is situated at Nashik and many of its project sites are located in the State of Maharashtra, though it has undertaken projects in other parts of India. Majority of the construction activity being undertaken includes civil & structural construction and infrastructure contracts under subcontracting by main contractors, who have been allotted the project by a principal employer. Further, ARL has undertaken a few projects directly as a Contractor for certain private construction companies and real estate developers.

It offers construction of projects which ranges from civil construction projects, Water Supply and Drainage Projects, Road and Bridges Projects, Major and Minor Irrigation Projects. Civil Construction projects include structures such as sports complex projects (Indoor and Outdoor Sport Stadiums), multipurpose hall, and Commercial structures, industrial structures, Hospitals, Cold Storages, Educational Institution, mass housing projects.

The company has an employee base of 23 including skilled, semi- skilled and unskilled laborers and employees.

Company’s revenue model also includes trading of certain construction materials. Besides undertaking contracted and/or sub-contracted projects, it is also engaged in trading activities, wherein the company is supplying construction materials to various clients as per their specific requirements. According to market sources, word on the street is that the IPO seems investor friendly and could benefit investors substantially. The company has a large number of ongoing projects with huge order book of approximately 13829.55 lakh from blue chip clients including Government projects.

On financial front, ARL has reported net profit of R.2.32 crore and revenue of Rs. 51.57 crore for the FY18, net profit of Rs. 2.12 crore and revenue of Rs. 58.26 crore for the FY19. For FY 20, it reported net profit of Rs.2.62 crore and revenue of Rs. 58.69 crore. For the last three fiscals, on a standalone basis, ARL has posted an average EPS of Rs. 5.45 and an average RoNW of 11.72%. The issue is priced at a P/BV of 1.22 on the basis of its NAV of Rs. 59.07 as on March 31, 2020, and at a P/BV of 1.20 on the basis of post- issue NAV of Rs. 59.87. If we attribute FY20 earnings on fully diluted post issue equity, then asking price is at a P/E of around 13.53 against an industry average of 18.3.

The company has gained significant experience and has established track record and reputation for efficient project management, execution and timely completion. It has, since inception; successfully completed more than 20 projects under various contracting and / or sub-contacting agreements. Its expertise in successful and timely implementation of projects provides it with significant competitive advantages. In terms of resources, it has access to large number of construction equipments out of which some are owned and some are on hire, through which it seeks to minimize its operating and asset cost. This is also aided by its skilled employees who have the necessary qualification and experience in the evaluating projects and in the use and handling of modern construction equipment and machinery.

In terms of raw material, it shares a good working condition with all its suppliers to readily avail the raw material. It also has access to contractual labor for its projects. Its experience, among other factors, enables it to get the projects.

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