PSP Projects IPO to hit next week; should you subscribe?

Construction company PSP Projects is set to enter the markets through initial public offering on May 17. 

PSP projects Limited was incorporated on August 26, 2008, as a private limited company. The company was converted into a public limited on June 30, 2015 and consequently, the name of the company was changed to PSP Projects Limited and a fresh certificate of incorporation was issued on July 10, 2015.

The company provide their services across the construction value chain, ranging from planning and design to construction and post-construction activities to private and public sector enterprises, as said by Axis Capital in its research report. 

Should you subscribe?

The company has set a price band of Rs 205-210 per piece of face value of Rs 10 each. Reportedly, the company eyes to raise Rs 212 crore via IPO. 

The issue, which closes on May 19, includes a fresh issue of up to 72 lakh equity shares and an offer for sale of up to 28.8 equity shares, as reported by PTI. 

Quoting company's Chief Financial Officer Hetal Patel, the report said, "We plan to utilise the funds raised from the proceeds to meet our working capital requirements and capital expenditure."

As per the report, company's execution capabilities have grown significantly with time, both in terms of the size of projects that they bid for and execute, and the number of projects that they execute simultaneously.  Since their incorporation in August 2008, the company has executed 80 projects as of March 31, 2017.

Moreover, according to a  report by HDFC Securities, the company’s total order book as of March 31, 2017, was Rs.7,291.65 million, which comprised of 17 institutional projects, four industrial projects, four government projects and two government residential projects. 

Further, its subsidiary’s and Joint Venture’s total order book as of March 31, 2017, was Rs.908.54 million and Rs.1,073.92 million, respectively.

Giving outlook for investing in this IPO, myinvestmentideas, said that as PSP Projects share price is reasonable and looking at a broader picture, investors can invest in this IPO with a two-three years time horizon.