A B Infrabuild Limited
Prospectus research note
verified extraction · 137 verified factsA B Infrabuild Limited operates in two segments, x Creation of Infrastructure x Operating a Ready Mix Concrete Plant.
The commercial hook is that steps involved in Contract Execution: 1) Tender is Floated by client for a specific Work /Contract 2) Pre-Bid Meeting held for discussion and resolving Queries in regard to floated Tender 3) Tender is bidded by Contractor taking into its eligibility for that particular Contract 4) Job /Work is awarded to the lowest Quote – Letter of Acceptance issued to the lowest Bidder 5) Contractor has to deposit Security in form of performance Guarantee for the contact awarded 6) Drawing issued , Site handover for execution of Work.
The DRHP places the company in Infrastructure & Construction, so the issue needs to be read as a sector-specific manufacturing and distribution story rather than only as an SME listing.
Source: DRHP p.58, p.63, p.72
The operating mix covers Railways - Designing and constructing platforms, station building, gauge conversion and laying of railway tracks, Bridges - Perform contracts across various bridge works, Roadways - Construction of bituminous and concrete roads, Ready Mix Concrete (RMC) manufacturing.
Management's own case rests on quality, transparency, marquee Clientele and Long Standing Relationship, modern Techniques and Innovation, experienced and Professional Team.
The same filing also shows concentration risk: municipal Corporation of Greater Mumbai.
A key dependency is explicit in the DRHP: western Railway contributes 52% of orders on hand.
Geographically, the disclosed footprint includes Mumbai, Maharashtra.
Source: DRHP p.63, p.65, p.66, p.67, p.71, p.76
This is a Infrastructure & Construction issue.
The industry section gives a scale-and-growth frame: US$ 400 billion in 2015; US$ 1,000 billion expected by 2025; US$ 24.67 billion FDI in construction development (Apr 2000 to Dec 2017); CAGR of 10.5% for logistics sector (2017-2020); India's GDP growth >7% in 2017; Cumulative growth of eight core industries 4.2% in 2017-18.
Demand drivers cited in the DRHP include government flagship programs: Smart Cities, AMRUT, Make in India, Power for All, eased FDI norms in 15 sectors including real estate and construction, rising industrialization, urbanization, disposable income, population growth, investment requirement of US$ 1 trillion in infrastructure during 12th Five-Year Plan.
The counterweight is competitive intensity: highly fragmented and working capital intensive market; organized and unorganized sector competition; slow pace of government projects; working capital crunch may affect profitability; changes in government policies.
Source: DRHP p.22, p.58, p.59, p.62, p.76
The proceeds are not just a balance-sheet event: the named objects are to meet the Working Capital Requirements: ₹1130 Lakhs; general Corporate Purposes: Amount to be determined.
- 1
To meet the Working Capital Requirements: ₹1130 Lakhs
- 2
General Corporate Purposes: Amount to be determined
Source: DRHP p.48
Profit after tax
reported sequenceFinancial trend. Revenue from operations decreased from ₹9021.12 Lakhs in FY2015 to ₹6053.05 Lakhs in FY2018
Financial trend. Net profit after adjustments increased sharply from ₹15.86 Lakhs in FY2017 to ₹314.66 Lakhs in FY2018
Financial trend. Short term borrowings increased from ₹3082.27 Lakhs in FY2014 to ₹3537.35 Lakhs in FY2018
Revenue. 86,61,35,00,000
Revenue. 90,21,12,00,000
Source: DRHP p.26, p.27
Control is concentrated before the issue, with Amit Bholanath Mishra holds 7,495,476 equity shares (90.949% pre-issue); Hatim Sakerwala holds 9% of equity shares.
Related-party angle. Loan taken from KMP/Board of Directors: ₹68.4 lakhs in FY2018
Legal overhang. None of the Directors are on RBI list of willful defaulters
Source: DRHP p.93, p.98, p.100
14
risk items extracted from the filing
The first layer is execution/legal risk: we, Our Promoter and Directors are currently involved in certain litigation which is currently pending at various stages; any adverse decision in such proceedings may render us liable to liabilities and penalties and may adversely affect its business and results of operations.
Customer concentration matters because municipal Corporation of Greater Mumbai.
Financial risk is also visible: a B Infrabuild Limited had negative cash flow in recent financial years. Sustained negative cash flow could adversely impact its business, financial condition and results of operations.
Regulatory risk is material because our clients operate in a highly regulated environment, and existing and new laws, regulations and government policies affecting the sector in which they operate could adversely affect its business, financial condition and results of operations. Any failure to obtain licenses and approvals by our clients, could adversely affect its business, financial condition and results of operations.
Risk We, Our Promoter and Directors are currently involved in certain litigation which is currently pending at various stages; any adverse decision in such proceedings may render us liable to liabilities and penalties and may adversely affect its business and results of operations.
Risk Majority of our revenues will be dependent on one customer, Indian Railways, which is our largest customer, contributing to 57% of our revenue in Fiscal 2018. Loss of Indian Railways as our largest customer due to any reason whatsoever, would result in a significant dip in our revenues, thereby adversely affecting our profitability, business, financial condition and results of operations.
Risk The Issue price of our Equity Shares may not be indicative of the market price of our Equity Shares after the Issue and the market price of our Equity Shares may decline below the issue price and you may not be able to sell your Equity Shares at or above the Issue Price.
Customer/supplier risk Our revenues largely depend on acceptance of the bids submitted to the Government and Government Departments. Our performance could be affected in case majority of the bids are not accepted / awarded to us or we negotiate a lower bid value.
Customer/supplier risk Our attempts to secure government and PSU projects may not always be successful. Our financial condition would be materially and adversely affected if we fail to obtain new contracts.
Customer/supplier risk We generate major portion of our revenue from its operations in certain geographical regions especially Mumbai and any adverse developments affecting its operations in these regions could have an adverse impact on our revenue and results of operations.
Customer/supplier risk The contracts in our order book may be adjusted, cancelled or suspended by our clients and, therefore, our order book is not necessarily indicative of our future revenues or earnings.
Financial risk A B Infrabuild Limited had negative cash flow in recent financial years. Sustained negative cash flow could adversely impact its business, financial condition and results of operations.
Source: DRHP p.11, p.12, p.13, p.14, p.16, p.17
Exchange filings
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