PKH Ventures IPO(Updated): Construction and hospitality firm PKH Ventures has withdrawn its initial share sale amid disappointing participation from investors, particularly from institutional buyers, over a three-day period.

The initial share sale of PKH Ventures was subscribed just 65 per cent on the last day of subscription on Tuesday.

The Initial Public Offering (IPO) received bids for 1,67,25,800 shares, against 2,56,32,000 shares on offer, according to NSE data.

While the category for non-institutional investors got fully subscribed by 1.67 times, the Retail Individual Investors (RIIs) quota received 99 per cent subscription.

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However, the portion for Qualified Institutional Buyers (QIBs) got only 11 per cent subscription.

PKH Ventures Limited is coming up with its Initial Public Offering (IPO). The IPO will be open for subscription on June 30th, 2023, and closes on July 4th, 2023. The company is looking to raise Rs 379 Crores through IPO out of which Rs 270.22 Crores will be a fresh issue and the remaining will be an offer for sale of Rs 109.13 Crores.

In this article, let us look deeper into the PKH Ventures IPO Review and its future prospects, financials, opportunities, threats, and many more. Keep reading to know more!

PKH Ventures IPO Review – About The Company

PKH Ventures Limited is a non-government company that is engaged in the business of construction and development, hospitality, and management services. Incorporated in the year 2000 by visionary Mr. Pravin Agarwal, the company started its journey by providing services at various airports in India.

Over the years, it has managed restaurants, lounges, ticket counters and other services at more than 15 airports in India. Later due to reduced margins in airport services, PKH Ventures entered into the construction and development business.

PKH Ventures execute civil construction works for third-party developer projects through its subsidiary company, Garuda Construction. Its construction projects include Delhi Police Headquarters, Garuda Zenith Projects, etc, and the management.

Currently, it has been awarded 2 government projects namely the Hydro Power Project and Nagpur Project, 3 government hotel development projects executed through its subsidiaries, and 6 other residential projects.

As of 2021, PKH Ventures Limited constructed more than 1.5 million square feet in various private and government projects. In addition to this, the company is planning to construct its own residential and commercial projects in the upcoming years. At present under Management Services vertical, the company provides services for the annual maintenance of the Delhi Police Headquarters and runs restaurants under the names Golden Chariot, Hardy’s Burger, Casablanca, and many more. 

Industry Overview

In a broader sense, if we look at the construction sector in India, which is the lucrative sector of PKH Ventures Limited, it is the second-largest economic segment after agriculture and is expected to contribute 15% to the Indian Economy by 2030. Moreover, increasing growth in the infrastructure sector indirectly contributes to the growth of the construction sector.

Moving forward, PKH Ventures Limited is also into the hotel management industry. Hence, if we look into the Indian Hotel and Tourism industry, it is one of the key drivers of growth in the service sector in India and is expected to show an annual growth rate (CAGR 2023-2027) of 8.29%, resulting in a projected market volume of US$10.53bn by 2027.

In addition to its notable presence in the construction and hospitality sector, it is also into QSRs, spas, and the sale of food products. In brief, PKH Ventures Limited has its presence in multiple sectors along with expertise in each of the fields. As a rational investor, we can see it as a growth opportunity in the near future.

Products and services of the company

PKH Ventures Limited is into multiple business segments including construction and development, hospitality, and management services. The following flow chart explains its current business segments.

Products and service

PKH Ventures IPO – Financial Highlights

If we look at the financials of PKH Ventures Limited IPO we can see that their assets have increased from Rs 244.81Crs to Rs 1,248.03 Crs from FY20 to FY22. But the revenue from operations of the company has decreased from Rs 169 Crores to Rs 155.03 from FY20 to FY22 due to the impact of the global pandemic Covid-19 which had a negative impact, especially on the Hospitality sector.

But, if we see the net profits of the company, the company has tried to cut off its expenses to increase the profit margin. As a result, we see an overall increase in the net profit from Rs 14.09 Crores to Rs 28.64 Crores from FY20 to FY22. 

The reserves of the company have also increased from Rs 141.89 Crores to Rs 641.5 Crores from FY20 to FY22, which is a sign of the long-term sustainable growth of the company. Another key metric to be considered here is that the borrowings of the company have also increased from Rs 25.91 Crores to Rs 172.01 Crores From FY 20 to FY 22. 

The Balance Sheet of PKH Ventures Limited

PKH Ventures IPO - Balance Sheet

The Profit and Loss Statement of PKH Ventures Limited

profit and Loss Statement

PKH Ventures IPO Review – Competitors of the company

PKH Ventures Limited majorly operates under two sectors namely the construction and Hospitality sector which majorly includes hotels and restaurants. Hence under this section of PKH Ventures Limited IPO review let us look into the competitors for the company in both sectors.

PKH Ventures IPO - Competitors

Peers for the PKH Ventures Limited in the Construction and Development

Peers Data

Strengths Of the Company

  • The company has an established track record of over 20 plus years in hospitality management services which is a core strength in the development of strategies compared to its peers.
  • The company has shown visible growth through the increase in orders over the year and by receiving robust government projects in both the construction and hospitality sector
  • The core competency of PKH Ventures lies in its diverse business model including construction & development, Hospitality, and Management Services. These kinds of diverse business model help in reducing overall business risk as the pros and cons of one sector compensate the other.
  • The company uses the asset-light model for its civil construction business, which means relying on third-party suppliers for equipment and labor at the construction locations. This strategy would significantly help in the reduction of fixed costs and increase the profit margins.

Weaknesses Of the Company

  • As the company has many government projects on the table currently, the execution may be delayed if it does not get the approvals of the various authorities in the government.
  • Although the company has experience in the construction and hospitality industry, it lacks in experience developing hydropower plants. This shows that the success rate of the project may be lesser in the future.
  • The company has been experiencing negative cash flows for the last 3 years. This could be a sign of long-term adverse effects on the financial condition of the company if neglected.
  •  The construction & Development sector, which is the lucrative sector of PKH Ventures Limited, may be adversely affected if any contracts are not obtained in the future or terminated.

PKH Ventures IPO Review – Key IPO Information

PKH Ventures IPO - Information
IPO SizeRs 379 Crs
Fresh IssueRs 270.22 Crs
Offer For SaleRs 109.13 Crs
Opening DateJune 30, 2023
Closing DateJuly 4, 2023
Face ValueRs 5 Per Share
Price BandRs 140 to Rs 148 per share
Lot Size100 shares
Minimum Lot Size1 (100 shares)
Maximum Lot Size13 (1300 shares)
Listing DateJuly 12, 2023

Promoters: Mr.Pravin Kumar Agarwal

Book Running Lead Managers: IDBI Capital Markets & Securities Limited

Registrar to the Offer: Link Intime India Private Limited

 The Objectives of the Issue

Following are the Objectives of the issue by the company

  • Investment by way of equity in their subsidiary, Halaipani Hydro Project Private Limited for the development of Hydro Power Project (Civil Construction and Electromechanical Works).
  • Investment in the Garuda Construction project, for funding long-term working capital requirements.
  • Pursuing inorganic growth through acquisitions and other strategic initiatives.
  • General corporate purposes.

PKH Ventures IPO Review – GMP

The shares of PKH Ventures Limited are traded at a premium of 3.26% in the grey market on June 26th,2023. The shares are estimated to trade at Rs 153. This gives it a premium of Rs 5 per share over the cap price of Rs 148.

Closing Thoughts

In this article, we looked at the details of PKH Ventures IPO Review in detail. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.

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