Chavda Infra IPO Review: Chavda Infra is coming up with the SME IPO which is all set to be listed on the NSE SME and will open for subscription on September 12th, 2023, closing on September 14th, 2023.

In this article, we’ll dive into the strengths and weaknesses of Chavda Infra IPO and give you a comprehensive review of their IPO. Keep reading to learn more!

Chavda Infra IPO Review – About The Company

Chavda Infra Limited, part of Chavda group, is a construction company based in Ahmedabad, Gujarat. It was incorporated in 2012 and has over 30 years of experience in the construction industry and is engaged in the business of civil construction of residential and commercial projects The company has successfully executed more than 100 projects worth ₹ 67,099.45 Lakhs. It has a team of over 217 technical staff and generates revenue from three business verticals:

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Contracting Services(Revenue-91.9%): The company works as a contractor for renowned builders in Gujarat. Its project portfolio includes a total of 147 projects (including ongoing projects), which includes residential, commercial, industrial, and institutional projects.

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Development Services(Revenue-7.2%): The company undertakes development projects, such as re-development projects. In the FY 2022-23, it undertook one re-developer project in Ahmedabad City for the first time. Under this project, the company is developing 42 residential flats.

Commercial Renting Services(Revenue-0.87%): The company owns various residential and commercial properties in Ahmedabad City, which it rents out to third parties.

Projects: In the residential sector, they have developed well-known buildings in Ahmedabad such as Straft Laxuria, Shivalik Parkview, and Shivalik Sharda Harmony. Their commercial ventures include prominent projects like AAA Corporate House, Sadbhav House, Solitaire Sky, Sandesh Press, Suyash Solitaire, and Solitaire Connect.

As of May 31, 2023, Chavda Infra has 26 ongoing projects worth approximately ₹ 60,139 lakhs. Its order book includes 4 commercial projects, 4 institutional projects, and 18 residential projects.

Chavda Infra IPO Review – Industry Overview

The Indian infrastructure industry is poised for growth in the coming years, driven by government investment, private sector participation, and rising FDI. There is a significant need for investment in order to meet the country’s growing needs.

The Indian government has been increasing its investment in infrastructure in recent years, with a capital outlay of Rs.10 lakh crore (US$ 122 billion) in Budget 2023-24.

In the Union Budget 2023-24, the Government has  announced Rs. 76,431 crore (US$ 9.2 billion) to the Ministry of Housing and Urban Affairs, which is a significant increase from the previous year’s allocation of Rs. 68,000 crore (US$ 8.4 billion).

This increased allocation is in line with the government’s focus on urban development and the creation of affordable housing, construction of affordable houses, development of smart cities and improvement of urban infrastructure.

Increasing Investment by Foreign Direct Investment (FDI) in the infrastructure sector is also rising, with FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.23 billion and US$ 28.95 billion, respectively, between April 2000 – September 2022.

The growth of the Indian infrastructure sector is expected to boost economic growth and create around 100 million job opportunities  by 2025.

Chavda Infra IPO Review – Financial Highlights

As we  look at the financials of Chavda infra we find out that their assets have increased from  86.6 crores in March 2021 to 154.2 crores in March 2023. 

Their revenues also follow a similar trend, increasing from ₹91.31 crores in March 2021 to ₹162 crores in March 2023. The rise in revenues is accompanied by increasing profits, which have increased from 4.43 crores in March 2021 to ₹12 crores in March 2023.

As of March 2023, the company’s debt-to-equity ratio is 1.75, which indicates that it has a high amount of debt compared to its equity.

Financial Metrics 

Financials of chavda Infra

(Source: RHP of the company)

Competitors of Chavda Infra

Chavda Infra IPO Review - Competitors details

Strengths Of Chavda Infra:

  • Chavda Infra has strong execution capabilities, including a robust in-house operations team consisting of design, engineering, procurement, construction, and quality assurance teams.
  • In the infrastructure industry, a company’s order book is considered a key indicator of its future performance. As of 2023, Chavda Infra has 26 ongoing projects worth approximately ₹ 60,139 lakhs, indicating a strong order book and suggesting that the company is experiencing growth
  • Chavda Infra is a technology-driven company that uses the latest construction technologies to deliver projects efficiently and effectively.
  • The company has strong and long standing relationship with its customers.
  • Chavda infra is lead by experienced promoters and management team.

Weaknesses of Chavda Infra

  • Chavda Infra derives 100% of its revenue from the state of Gujarat. This geographical concentration makes the company vulnerable to changes in the demographics, policies, laws and regulations, or the political and economic environment of Gujarat.
  •  The company is dependent on a few large customers for sales. The loss of any of these large customers could significantly impact the company’s revenue and profitability.
  • Chavda Infra has a high dependency on its top ten suppliers. Any default by these suppliers could impact the company’s revenue and operations.
  • As of march 2023, the company has 53.28 Cr outstanding debt which increases the vulnerability to risk and may have adverse affect on the business
  • Another weakness of the company is that it may be significantly impacted by delays in collecting receivables from its clients. This could result in the company being unable to recover adequately on its claims.

Chavda Infra IPO Review – GMP

The Chavda Infra SME IPO is priced at a band of 60-65 Rs. The last grey market price was 30 Rs. Consequently, it is estimated to list at a premium of 46.1%. This translates to an estimated listing price of Rs 95 , indicating a significant premium.

Chavda infra  IPO Review – Key IPO Information

IPO Size43.26 Cr
Fresh Issue43.26Cr
Opening dateSeptember 12, 2023
Closing dateSeptember 14, 2023
Face Value10 per share
Price Band₹60 to ₹65
Lot Size2000 shares
Minimum Lots1 (2000 shares)
Maximum Lots1 (2000 shares)
Investment amount ₹1,30,000
Listing DateSeptember 25, 2023

Promoters: :  Mr Mahesh Gunvantlal, Mrs Dharmishtha Mahesh kumar chavda, and Mr Johil Maheshbhai chavda.  

Book Running Lead Manager: Beeline capital Advisors private  limited

Registrar to the Offer: KFin Technologies Limited

The Objective of the Issue:

Chavda Infra Limited intends to use the net proceeds from its initial public offering (IPO):

  • To meet working capital requirements
  • Fund general corporate purposes, and
  • Meet public issue expenses.

In Closing

In conclusion, Chavda Infra’s SME IPO presents a unique opportunity for investors to invest in a company with a proven track record of delivering quality and prestigious projects, enhancing its growing reputation.

With plans to expand beyond Gujarat and grow its business, Chavda Infra is well-positioned for future growth. However, it is important to note that the minimum investment amount for this IPO is ₹1,30,000, which is higher than mainline IPOs.

What’s your take on the company’s future? Will you be applying for the IPO?

Share your thoughts with us in the comments below!

Written By Niharika Jadhav

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions.

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