Vishnu Prakash R Punglia (VPRPL) has made a stunning entry into the stock market, leaving investors and analysts alike in a state of anticipation. The infrastructure company, specializing in water supply projects, made its grand debut on September 5, 2023, with an impressive 66.7 percent premium over the issue price of Rs 99. As the opening bell rang, the stock began trading at Rs 165 on the NSE and Rs 163.30 on the BSE, delivering substantial gains to early investors.
However, the euphoria surrounding VPRPL’s remarkable listing has sparked a lively debate among market experts. Some analysts believe that the stock’s valuations have caught up, raising concerns about its near-term outlook. On the other hand, there are those who firmly believe in the industry’s robust growth potential, advocating for a long-term investment strategy.
Parth Shah, a Research Analyst at StoxBox, expressed optimism about the company’s prospects, citing a strong order book, a proven track record in project execution, robust financial performance, and attractive valuations. His advice to investors who were fortunate enough to secure allotment is to capitalize on the opening day gains and wait for potential dips for re-entry.
During the book-building process, VPRPL’s IPO garnered an overwhelming response from investors, achieving a subscription rate of 87.82 times, attracting both Qualified Institutional Buyers (QIBs) and High Net-Worth Individuals (HNIs) who applied for 171.69 times and 111.03 times the allotted quota, respectively.
This enthusiastic response carried over to the listing day.
Anita Gandhi, Director of Arihant Capital Markets, suggested that investors who received shares should consider holding them for the long term. She also highlighted the opportunity to purchase additional shares on the listing day if they are available near the issue price, emphasizing the importance of aligning investment decisions with market conditions and individual financial goals.
VPRPL’s strong fundamentals further support its case as a compelling investment option.
As of July 15, 2023, the company boasted an impressive order book of Rs 3,800 crore, equivalent to 3.3 times its FY23 revenue. Notably, water supply projects constituted 78 percent of the order book, with Rajasthan contributing significantly at 62 percent. Additionally, the company has diversified its presence in the railways, roads, and irrigation sectors, ensuring revenue visibility for the next three years.
In terms of financial performance, VPRPL has demonstrated remarkable growth. Revenue from operations exhibited a Compound Annual Growth Rate (CAGR) of 55.10 percent during FY21-FY23, reaching Rs 1,168.4 crore in FY23. Simultaneously, the net profit recorded a substantial CAGR of 118.52 percent, culminating at Rs 90.64 crore in FY23.
Prashanth Tapse, Senior VP-Research at Mehta Equities, recommended that investors holding allotted shares should consider retaining their investments, given the company’s high growth potential. With a promising future ahead, VPRPL appears to be a compelling choice for those eyeing a long-term investment horizon.
The successful IPO has enabled the Rajasthan-based company to raise Rs 308.88 crore, with all proceeds, excluding IPO expenses, earmarked for equipment and machinery acquisition, working capital requirements, and general corporate purposes. This prudent capital utilization underscores VPRPL’s commitment to its growth trajectory.
In conclusion, Vishnu Prakash R Punglia’s bumper listing gains have divided the market, with contrasting views on its immediate prospects. While some advise booking profits and waiting for potential dips, others believe in its long-term growth potential. With a robust order book, impressive financial performance, and a diversified project portfolio, VPRPL presents an intriguing opportunity for investors to consider in line with their investment goals and market conditions.