PKH Ventures – IPO – Construction and Hospitality Company

by Dilip Shaw Date: June 27, 2023

in Stock Markets

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About The Company – PKH Ventures Limited:

It’s a real estate builders & construction company in Mumbai, Maharashtra.

Address: 201, A Wing, Fortune 2000, C-3 Block, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra 400051

PKH Ventures Limited is a construction company mainly engaged in construction and development, hospitality and management services business. The company completed construction of the Delhi Police Headquarters on April 21, including the construction of the 17-storey twin towers. Garuda Construction Co., Ltd., a subsidiary of Garuda Construction, is responsible for the civil engineering business. The Company has several in-house development projects underway including a property development in Amritsar, Punjab. Food park in Jalore, Rajasthan. Cold Storage/Facility in Indore, Madhya Pradesh. Chiplung, Maharashtra has wellness centres and resorts. In addition, the Company has received two Government Project Contracts relating to Hydropower Project and Nagpur Project, which are being implemented through its subsidiary/SPV. The company plans an IPO consisting of approximately 7.4 million OFS shares and 18.3 million new shares, for a total value of Rs 3.79 billion. Leveraging strong hospitality sector expertise

Founded in 2000, the company managed and operated restaurants, lounges, retail stores, concessions, bars, canteens and catering at various airports around the country. The company currently offers a range of mechanical, electrical and plumbing (MEP) services, including annual project maintenance and certain third-party O&M contracts. The Company has owned, manages and managed hotels in Mumbai since 2015, developing its two hotels in Mumbai, Golden Chariot Hotel & Spa, Vasai and Golden Chariot (Mumbai Hotel), a boutique hotel near Mumbai International Airport. We operate. With the knowledge and experience gained during the development of the hotel, the proponent entered the civil engineering business through Garuda Construction, which provides integrated construction services for residential and commercial buildings.

Asset-light and Diversified Business Models:

The company adopts an asset-light model in its civil engineering business, relying primarily on third-party suppliers for equipment and labour. Additionally, these companies generate income from a variety of completely independent activities. For example, a retired subsidiary, Eternal Building Assets, has already received a three-year pension, partly in cash, and will receive an annuity of Rs.780 crore per annum until FY2033. We not only grow our backlog but also undertake high-quality projects with the potential for higher profit margins, as well as well-known projects that lead to increased reputation, market penetration and visibility. Focusing. The Company is currently engaged in the construction of six residential projects for MMR’s third-party developer and promoter groups.

Overview of Financial Data:

FY0-22 Revenue/EBITDA/Adjusted PAT grew at a CAGR of 10%/127%/70%. FY2022 revenue was Rs 1,994 million and EBITDA was Rs 530 million. The EBITDA margin increased significantly from 6.2% in FY2020 to 26.6% in FY22. adjective The PAT was Rs.141 million, Rs.360 crore and Rs.450 crore for FY2020, FY21 and FY22 respectively. Profit margins are healthy with an average RoE/RoCE of 8.5%/4.6% for fiscal 2020/22. The average book value turnover was 1.7x for fiscal 2020/22.

Price Band of the Stock:

It has fixed a price band of Rs 140-148 a share for its initial share sale, which will open for public subscription on June 30. The initial public offering (IPO) will conclude on July 4 2023. The public issue comprises a fresh issue of 1.82 crore equity shares and an Offer for Sale (OFS) of 73.73 lakh shares by its promoter Pravin Kumar Agarwal.

The company through its IPO will fetch Rs 358.85 crore and Rs 379.35 crore at the lower and the upper ends of the price band, respectively. Proceeds from the fresh issue to the tune of up to Rs 124.12 crore will be used for investment in its subsidiary, Halaipani Hydro Project, for the development of a hydropower project. In addition, Rs 80 crore will be utilised for investment in the subsidiary, Garuda Construction, for funding long-term working capital requirements, and Rs 40 crore for pursuing inorganic growth and other strategic initiatives and general corporate purposes

Final View:

Financial figures for fiscal 2022 indicate that the IPO’s PER is 30 times, EV/EBITDA is 24.5 times, and EV/sales is 6.5 times, which is at the upper end of the price range. The company expects to grow in the coming years with several projects underway. The Company has received orders for three government-owned hotel development projects, and its subsidiary, Garuda Construction, is currently constructing six housing projects. PKH is also running several development projects in the future. Given the strong business outlook, strong financial position, hospitality expertise, synergies from the Amar Remedies acquisition and experienced management team.

Disclaimer: This is an educational post. Please do thorough research before investing in this IPO.

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About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.