Globe Civil Projects
IPO Size: Rs. 119 cr, Entirely Fresh Issue
- For working capital Rs. 75 cr
- Capex Rs. 14 cr
Price band: Rs. 67-71 per share
- Raised Rs. 5 cr at Rs. 56.47 per share in July 2024
M cap: Rs. 424 cr, implying 28% dilution
IPO Date: Tue 24th Jun to Thu 26th Jun 2025, Listing Tue 1st Jul 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Delhi-based EPC Player
Globe Civil Projects is an engineering, procurement and construction (EPC) company, building education institutions, housing and commercial projects and railway terminals infrastructure. It’s outstanding order book of Rs. 669 cr, as of 31.3.25, has been on a decline from Rs. 778 cr as of 31.12.24 and from Rs. 981 cr as of 31.3.24. The book-to-bill ratio of 2x is very mediocre, based on FY24 revenue of Rs. 332 cr.
Margin Surge before the IPO
Company has a topline of only Rs. 255 cr in 9MFY25, implying it is a small and local player. Moreover, 95% of revenue is generated from just 10 projects.
Just prior to going public, EBITDA margin expanded from 9% in FY23 to 15% in 9MFY25, while PAT margin strengthened from 2% in FY23 to 7% in 9MFY25. EPS stood at Rs. 4.1 on 9MFY25 PAT of Rs. 18 cr. RoE of 22% may contract once net worth expands, post IPO.
High Working Capital
Government being company’s biggest client, trade receivables remain inflated, to as high as 3.5 months. Even inventory is over 3 months. Thus, need for working capital will always remain elevated in the business.
As of 31.12.24, net debt was at Rs. 132 cr, on a pre-IPO net worth of Rs. 100 cr. No debt is planned to be re-paid from fresh issue proceeds, implying an unhealthy net-debt to EBITDA ratio of over 2x.
Unexciting Pricing
M cap of Rs. 424 cr and enterprise value of Rs. 557 cr, implies PE multiple of 12x, on FY25E estimated EPS of Rs. 5.75. This is fully valued for the very tiny scale of operations, high debt-to-EBITDA and a declining order book. Due to the large dilution, promoter holding will also drop significantly from 88% to 63%, post IPO.
