Likhitha Infrastructure lists at Rs 130, 8 pct premium to issue price

At a current market price of Rs 136.5 the company is available at a market cap of just below Rs 200 cr.

The IPO of Likhitha Infrastructure is a fresh issue of up to 51 lakh equity shares representing 25.86 percent of the post issue paid up equity capital of the company. It is a book building issue. The price band has been fixed at Rs 117-120 per share. The company targets to raise up to Rs 59.67 cr-Rs 61.20 cr at a price band of Rs 117 - Rs 120 per share, respectively. Unistone Capital is the book running lead manager to the issue.

Background:

Incorporated in 1998, Likhitha Infrastructure Ltd is an oil and gas pipeline infrastructure service provider in India. The company is engaged in providing oil & gas pipelines, city gas distribution projects, Cross-Country Pipeline Projects, and operations and maintenance services as well. It is the first company that has executed the first Trans-National Cross Country Hydrocarbon Pipeline Project between India and Nepal.

With 20+ years of existence, it has spread its geographical presence across 16+ states and 2 Union Territories in India. It has successfully laid over 600 Kms of oil and gas pipelines including steel and medium-density polyethylene (MDPE) network in past 5 fiscals. Additionally, it has laid approximately 800 kms of oil and gas pipelines for on-going projects. Company has executed the first trans-national cross-country pipeline of South-East Asia connecting India to Nepal, in 2019, for supply of petroleum products.

Clients and Order book:

Company has a strong client base in India including both the private and public players such as ONGC, HCG, IndianOil, GAIL, etc. Order book of the company stands at approximately Rs 663 crore as on July 2020. Company says there are no listed companies in India which are engaged in the same line of business.

Competitive strength:

1) Diversified geographical presence in India
2) Strong client base
3) Efficient business model
4) Strong project execution capabilities
5) Long term relationship with clients and repeat business;
6) Highly experienced management team;
7) Diverse fleet of sophisticated equipment.

Objects of the Issue:
The net proceeds from the IPO will be used against following objectives to meet the general working capital requirements of the business.

Understanding Financials of the company:

Likhitha Infrastructure's revenue from operations grew by 15.6% to Rs 161.24 cr in year ended March 20 compared to FY19, revenue increased 60.2% to Rs 139.48 cr compared to FY18. Revenue growth in FY15-FY20 stood at a 38.96 percent CAGR and profit 58.56 percent CAGR. Profit for the financial year 2019-20 rose 11.3% to Rs 19.88 cr YoY and the same grew by 149.3% to Rs 17.85 cr in FY19 YoY, while on the operating front, its earnings before interest, tax, depreciation and amortisation (EBITDA) increased 2.6% YoY to Rs 29.67 cr in FY20 and 158.7% YoY to Rs 28.9 cr in FY19. EBITDA margin for the FY20 stood at 18.40% against 20.72% in FY19 and 12.83% in FY18.

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Company Promoters:

Srinivasa Rao Gaddipati and Likhitha Gaddipati are the promoters of the company, holding 1,42,52,875 equity shares, which constitutes 97.46% of the pre-issue paid-up equity share capital. Sri Lakshmi Gaddipati owns 2.5% shareholding in the company. Likhitha Gaddipati, Sri Lakshmi Gaddipati and Kutumba Rao Gaddipati are Non-executive directors, while Talpa Sai Venkata Sesha Munupalle and Jnanindra Kumar Dhar are Non-executive and Independent directors.

(Authored by Rahul Kamdar)