B.R.Goyal Infrastructure Ltd

About B.R.Goyal Infrastructure

Incorporated as a partnership firm in Aug’1986 and converted into a public limited company in May’2018, B.R.Goyal Infrastructure works on roads, highways, bridges and buildings. Its other activities include toll collection contracts, ready-mix concrete manufacturing, wind power generation and residential plotting. The company’s unexecuted order book was about INR 873 Cr. as of 30-Sep’24, spread across 7 states and primarily sourced from government clients.

B.R.Goyal Infrastructure IPO Details

Objects of the Issue

• Capital expenditure: INR 8.02 Cr.
• Working capital requirement: INR 42.00 Cr.
• Inorganic growth and general corporate purposes: Funding expenditure for acquisitions and other strategic initiatives, and general corporate purposes. The amount is printed as [●] in the report.

Strengths

• Established infrastructure track record: The company has over 20 years of experience in infrastructure projects and intends to expand into airport runways, railways, metro work, earthwork, water treatment and sewage-related projects.
• Large, diversified order book: The unexecuted order book was about INR 873 Cr. as of 30-Sep’24, or 1.48x FY24 revenue. It included 15 roads and highways projects, 9 building projects and 2 toll projects, contributing 76%, 20% and 4% of the order mix, respectively.
• Credit rating upgrade: CARE upgraded the company’s rating to BBB+/Stable in Jan’24 from BBB/Stable, citing growth in operating scale, order-book diversification and improved financial metrics.
• Owned construction equipment: The company owns 199 pieces of construction equipment; the report notes that this and limited reliance on contract workers support execution efficiency.

B.R.Goyal Infrastructure Key Financials

Revenue rose across FY22 to FY24, while EBITDA and PAT margins declined over that period. The company notes that H1 : H2 revenue contribution is 30:70.

Business and Order Book

The order book is to be executed over 12-36 months from Sep’24. Government clients, including NHAI, NHIDCL, MoRTH, Central PWDs and State PWDs, represented 99.4% of outstanding order value; private clients accounted for 0.6%. The company is also bidding for contracts in existing and new states, including Arunachal Pradesh and Ladakh.

• Toll collection: The company entered into NHAI Toll Collection Contracts in Haryana and Uttar Pradesh from FY25 onwards.
• Ready-mix concrete: Its RMC facility in Indore has installed capacity of 1,80,000 cubic metres; utilization was 29.88% in 4M-FY25, compared with 20.4% in FY24.
• Wind power and plotting: The company owns a 1.25 MW wind mill in Jaisalmer and has launched 2 residential plotting projects in Sanawadiya, Indore.

Management

The report identifies Brij Kishore Goyal as Chairman & Managing Director, and Rajendra Kumar Goyal and Gopal Goyal as Whole-time Directors. It notes that the Chairman has been associated with the company since inception and has over 18 years of civil construction experience; the two Whole-time Directors each have over 31 years of experience in road construction or infrastructure and have also been associated since inception.

IPO Valuation and Our View

At the IPO price band, the issue is valued at P/E and P/Sales ratios of 14.69x and 0.55x, respectively, based on FY24. The report says 4M-FY25 annualized performance is not representative because of the impact of elections and monsoons. Citing the management team, order book, rating upgrade and operating track record, Minerva Capital Research Solutions recommends Subscribe.

Key Risks

• Order-book client concentration: Government clients contributed 99.4% of the outstanding order value as of 30-Sep’24.
• Margin mix: The report gives PAT margins of ~5% to 6% for EPC and 1% to 1.5% for TCC, and notes that blended margins came down in FY24 as toll collection became a larger part of the business.
• Recent margin trend: EBITDA margin decreased from 8.4% in FY22 to 5.5% in FY24, while PAT margin moved from 3.3% to 3.7% after reaching 4.9% in FY23.
• Working capital: NWC was 85 INR Cr. and NWC days were 66 in 4M-FY25, compared with 67 INR Cr. and 41 days in FY24.

Our View

Minerva Capital Research Solutions recommends Subscribe, pointing to the company’s execution history, order book and diversified activities. The high share of government clients in the outstanding order book and the lower stated margins for toll collection are relevant considerations alongside the recommendation.

Standard disclosures

• Research Analyst has served as an officer, director or employee of subject company(ies): No
• We or our associates have received compensation from the subject company(ies) in the past 12 months: No
• We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past12 months: No
• We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months –No
• We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report –No
• We or our associates or Research Analyst or his/her relative's financial interest in the subject company(ies)- No
• Nature of financial interest in subject company, if any –Nil
• We, our associates or Research Analyst have actual/beneficial ownership of 1% or more securities of the subject company (ies) at the end of the month immediately preceding the date of publication of Research Report – No
• Subject company (ies) may have been client during twelve months preceding the date of distribution of the research report-No.
• We or our Associates or Research Analyst are engaged in market making of subject company – No
• By referring to any particular sector, Minerva Capital Research Solutions does not provide any promise or assurance of favorable view for a particular industry or sector or business group in any manner. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and take professional advice before investing. Such representations are not indicative of future results.
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Regulatory disclosures

Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).

Registration granted by SEBI and certification from NISM in no way promise or guarantee that the research recommendation will provide any assured, minimum or risk-free return to the investors.

The research report serves as general information and does not account for individual investment goals, financial situations, or needs. Minerva Capital Research Solutions strives to provide reliable and comprehensive information, sourced from what are believed to be trustworthy channels. However, this information has not been independently verified by Minerva Capital Research Solutions or its analysts, and no guarantees are made regarding its accuracy or completeness. The opinions expressed in this report reflect the views of the research analyst at the time of publication and may change over time. Minerva Capital Research Solutions and its affiliates as on date of publication of this report do not hold any positions in the securities discussed. The views presented are general and do not consider individual risk tolerance or investment objectives; therefore, readers should seek independent professional advice before making investment decisions. Minerva Capital Research Solutions does not guarantee a favorable outlook for any specific industry or sector and urges investors to consider all relevant risk factors, including their financial circumstances, before investing. The analyst certifies that their views accurately represent their personal opinions on the companies discussed and that no part of their compensation is tied to specific recommendations made in this report. This material should not be interpreted as an offer or solicitation to buy or sell securities in jurisdictions where such offers would be illegal. Consequently, brokerage and investment services described herein are not available to Canadian or U.S. persons. Distribution outside India requires prior written consent. This Research Report assumes that the recipient will assume all risks associated with its contents. If there are any disagreements or dissatisfaction with this report or its disclaimer, the only recourse is to cease using it. Minerva Capital Research Solutions and its affiliates will not be liable for any direct or indirect losses resulting from the use of this report. Recipients are required to adhere to these restrictions. The material is for the personal use of authorized individuals and does not constitute a solicitation or offer to buy or sell any securities in jurisdictions where such actions would be illegal.

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Rating rationale

Minerva Capital Research Solutions endeavors to provide objective opinions and recommendations. Ratings are assigned to stocks according to their fair value vs current market price and then categorizes them as Buy, Hold, Reduce, Sell. The performance horizon is one year unless specified and fair value is defined as analyst’s valuation for a stock.

• Buy:> 15%
• Hold: -5% to 15%
• Reduce: -15% to -5%
• Sell: <-15%