Interarch Building Products - Initial Public Offering
Interarch Building Products, a leading provider of pre-engineered steel construction solutions in India, is coming out with its IPO on 19th August 2024. Read to get a detailed view of the company's background, issue details, financial performance, and investment recommendations.
Company Overview
Interarch Building Products Ltd. (IBPL) is one of the leading turnkey pre-engineered steel construction solution providers in India. It offers integrated facilities for design and engineering, manufacturing, and on-site project management for pre-engineered steel buildings (PEB). The company is ranked third in terms of operating revenue from PEB business in FY2023 among integrated PEB players in India. As of March 31, 2024, IBPL had the second largest aggregate installed capacity of 141,000 MTPA and a market share of 6.5% in terms of operating income among integrated PEB players in India.
PEB Construction
IBPL offers turnkey PEB solutions for industrial, infrastructure and building applications.
Completed PEB Project
The company has completed 677 PEB contracts from FY2015 to FY2024, demonstrating its extensive track record.
Objectives of the IPO
Expand Production Capacity
The primary goal of Interarch's IPO is to raise funds to build a new Pre-Engineered Buildings (PEB) factory in Andhra Pradesh, allowing the company to meet growing demand and operate more efficiently.
Upgrade Existing Facilities
Interarch also plans to use IPO proceeds to modernize its existing factories, including updating equipment, improving production processes, and increasing overall efficiency.
Invest in IT Systems
Interarch wants to invest in advanced IT systems to streamline operations, manage data better, and strengthen cybersecurity, enabling the company to make smarter decisions and be more agile.
Product Offerings
PEB Contracts
IBPL provides complete pre-engineered steel buildings on a turn-key basis, including on-site project management for installation and erection.
PEB Sales
This includes sale of metal ceilings, corrugated roofing, PEB steel structures, and light gauge framing systems.
Branded Products
The company offers products under brands like TRAC®, TRACDEK®, and Interarch Life for various applications.
Market Position and Growth Prospects
1
Industry Growth
The Indian PEB industry is expected to grow at a CAGR of 11-12% over FY2024-FY2029.
2
Established Brands
IBPL has been in the PEB industry for over 30 years under its established brands "TRAC®" and "TRACDEK®".
3
Experienced Team
As of March 31, 2024, IBPL had 2114 employees on its payroll and 381 contract laborers.
4
Market Leader
IBPL is positioned to benefit from industry growth as a leading turnkey PEB solution provider.
Financial Performance
The company has posted an average EPS of Rs. 49.35 and an average RoNW of 20.12% for the last three fiscals. The issue is priced at a P/BV of 3.35 based on its NAV of Rs. 268.80 as of March 31, 2024, and at a P/BV of 2.55 based on its post-IPO NAV of Rs. 353.06 per share (at the upper cap).
IPO Timeline
1
IPO Open Date
The IPO will open for subscription on Monday, August 19, 2024, allowing investors to participate in the offering.
2
IPO Close Date
The IPO will close for subscription on Wednesday, August 21, 2024, after which no further bids will be accepted.
3
Basis of Allotment
The basis of allotment for the IPO shares will be finalized and announced on Thursday, August 22, 2024.
4
Initiation of Refunds
Any refunds due to investors will be initiated on Friday, August 23, 2024, ensuring timely processing.
5
Credit of Shares to Demat
The IPO shares will be credited to the successful investors' demat accounts on Friday, August 23, 2024.
6
Listing Date
The shares of Interarch Building Products Ltd. will be listed and commence trading on the stock exchanges on Monday, August 26, 2024.
Issue Details
Total Issue Size
6,669,852 shares
Fresh Issue
2,222,222 shares
Offer for Sale
4,447,630 shares of ₹10
Price Band & Lot Size
Face Value
₹10 per share
Price Band
₹850 - ₹900 per share
Issue Type
Book Built Issue
Lot Size
16 shares
Minimum Investment
₹ 14,400
Investment Recommendation
Strengths
Leading player in PEB segment with steady growth in top and bottom lines.
Order Book
Orders worth Rs. 1100 cr. on hand as of April 01, 2024.
Valuation
Based on FY24 earnings, the issue appears fully priced.
Recommendation
Investors may park funds for the medium to long term.
Key Considerations
Dividend Policy
The company has not paid any dividends for the reported periods but has adopted a dividend policy in January 2024.
Valuation Comparison
Compared to listed peers Everest Ind. and Pennar Ind., which are trading at P/E of 121 and 21.7 respectively, though not directly comparable.
Lead Manager Performance
The two BRLMs associated with the offer have handled 41 public issues in the past three fiscals, with 10 issues closing below the offer price on the listing date.
Basis of Review
The review is based on RHP and other documents available as of date coupled with market perception.