Sadbhav Infra lists above IPO px

Sadbhav Infrastructure Projects got listed on the BSE today at Rs.110.75 and soon scaled up to Rs.112.25. It is now hovering at Rs.108 levels. This is very good as the issue price was at Rs.103.

Sadbhav Infrastructure, 77.42% subsidiary of Sadbhav Engineering Limited, owns 10 road BOT projects, 6 of which are operational, 1 partially operational, while 3 are expected to be operational starting Oct 2015 to Jun 2016. 9 of the 10 projects are toll based, while 1 is annuity based. Company is acquiring 2 BOT projects, one under construction and another operational, although it is currently loss-making at the PBT level.

The company’s issue got subscribed 2.24 times and this was purely on account of its parentage. Otherwise given the fact that nearly one-third of promoters stake is pledged and its huge consolidated debt, the issue was only for the brave hearted.  

The object of the issue itself was to repay debt of ICICI Bank loan of Rs.180 crore and parent Sadbhav Engineering’s unsecured loan worth Rs. 85 crore. Given the total outstanding debt of Rs. 6,600 crore, as of 31-7-15 (having risen from Rs. 6,200 crore on 31-3-15), this repayment of Rs 265 crore is pocket change. Post this listing, debt equity ratio remains steeply high at 4.8:1.

Thus in the coming days, it would not be a surprise to see the stock price below the issue price