Manglam Infra & Engineering coming with IPO to raise Rs 27.62 crore

Manglam Infra & Engineering

• Manglam Infra & Engineering is coming out with initial public offering (IPO) of 49,32,000 shares in a price band Rs 53-56 per equity share.
• The issue will open on July 24, 2024 and will close on July 26, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 5.30 times of its face value on the lower side and 5.60 times on the higher side.
• Book running lead manager to the issue is Unistone Capital.
• Compliance Officer for the issue is Neha Jain.

Profile of the company

The company is an infrastructure consultancy company, and its core business is providing project management consultancy services which includes detailed project reports (DPRs), Supervision and quality control (SQC), and operation & maintenance (O&M) for Highways/Roads, Bridges, Tunnels, Buildings/Urban development. It undertakes various project independently as well as through Joint ventures and MoUs (Memorandum of understanding) with other players in this industry. It caters to various state governments of Madhya Pradesh, Jammu & Kashmir, Bihar, Arunachal Pradesh, Jharkhand, Himachal Pradesh, Uttar Pradesh, Manipur, Nagaland, Maharashtra, Assam, Rajasthan, Uttarakhand and Haryana and central government.

Currently, it has 45 on-going projects out of which 22 projects are being undertaken on an independent basis and 23 projects are being undertaken through Joint ventures and MoUs. It is a team of more than 300 qualified professionals, with experience ranging between 7 to 15+ years. In alignment with its business requirements, it also occasionally engages third-party service providers for specific contracts on need basis.

Its promoters, Ajay Verma and Yogendra Kumar Singh collectively bring more than 33 years of technical experience to its organization in the field of Infrastructure Consultancy Engineering Services. Their role as the guiding force has been paramount in the successful execution of its business strategies over the years. Their industry knowledge, understanding, track record, and relationships within the sector have played a pivotal role in the growth of its business. Moreover, these attributes provide it with a competitive edge, enabling the expansion of its geographical footprint. Simultaneously, their strategic insights have empowered it to explore new avenues for future growth.

Proceed is being used for:

• Meeting the working capital requirements
• General corporate purposes

Industry Overview

India’s high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Infrastructure is a key enabler in helping India become a $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. Prime Minister Mr. Narendra Modi also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors. The government’s focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. 

In Interim Budget 2024-25, capital investment outlay for infrastructure has been increased by 11.1% to Rs 11.11 lakh crore ($133.86 billion), which would be 3.4 % of GDP. As per the Interim Budget 2023-24, a capital outlay of Rs 2.55 lakh crore ($30.72 billion) has been made for the Railways, an increase of 5.8% over the previous year. Starting with 6,835 projects, the NIP project count now stands at 9,142 covering 34 sub-sectors, as per news reports. Under the initiative, 2476 projects are under the development phase with an estimated investment of $1.9 trillion. Nearly half of the under-development projects are in the transportation sector, and 3,906 are in the roads and bridges sub-sector.

With a 37% increase in the current fiscal year, capital expenditures (capex) are on the rise, which bolsters ongoing infrastructure development and fits with 2027 goals for India's economic growth to become a $5 trillion economy. In order to anticipate private sector investment and to address employment and consumption in rural India, the budget places a strong emphasis on the development of roads, shipping, and railways. India, it is estimated, needs to invest $840 billion over the next 15 years into urban infrastructure to meet the needs of its fast-growing population. This investment will only be rational as well as sustainable, if it additionally focuses on long-term maintenance and strength of its buildings, bridges, ports, and airports.

Pros and strengths

Presence in diversified projects: It has a presence across a spectrum of diversified projects, such as road/highway projects, bridges projects, tunnel projects, building and urban development projects. It provides consultancy services for a wide array of infrastructure projects, including detailed project reports (DPRs), Supervision and quality control (SQC), and operation & maintenance (O&M). In the realm of road and highway projects, it has consistently offered its expertise to ensure the successful planning, design, and execution of transportation networks. 

Qualified employee base and proven management team: It has proficient workforce, consisting of over 272 employees as of May 31, 2024, among whom 159 are Engineers. A substantial number of its team members, especially those in senior management roles, have demonstrated long standing commitment to its organization. It recognizes human capital as a paramount asset, with their technical expertise and skill sets providing it a distinct competitive edge in delivering various Infrastructure Consultancy services.

Consistent financial performance: It is an infrastructure consultancy company, and its core business is providing project management consultancy services which include design, engineering, procurement, construction and integrated project management services and it undertakes various project independently as well as through Joint ventures. It has demonstrated consistent growth in terms of revenues and profitability. Its total revenue has increased from Rs 2,581.16 lakh for Fiscal 2022 to Rs 4,024.36 lakh for Fiscal 2024, at a CAGR of 22.98%. Its net profit as restated has increased from Rs 332.96 lakh for Fiscal 2022 to Rs 676.41 lakh for Fiscal 2024, at a CAGR of 42.53% in last 3 years.

Risks and concerns

Dependent on Government Bodies: It is primarily engaged in providing infrastructure consultancy services to various government bodies. Currently, all its revenue is derived from government clients, thereby, implying its heavy reliance on infrastructure consultancy services business as a major revenue stream from government bodies. Most of its transactions with its customers are typically on a work order basis. There can also be no assurance that it will be awarded with the projects in future, since in its industry projects are awarded by customer (which are Government entities) on tender-basis. Consequently, any failure to consistently secure government awarded projects may have adverse implications on its financial performance.

Maximum revenue generated from Madhya Pradesh: A significant portion of its revenue from operations are derived from its services offered to clients concentrated in Madhya Pradesh. For the Fiscals 2024, 2023 and 2022, its revenue generated from operations in Madhya Pradesh was Rs 1,685.04 Lakh, Rs 1,344.77 Lakh, Rs 762.83 Lakh, respectively, which represented 41.87%, 39.07% and 29.55% of its revenue from operations for such periods. Any decrease in revenue from operations, including due to increased competition or supply, or reduction in demand, or its inability to extend or renew subsisting contracts at commercially viable terms, may have an adverse effect on its business, cash flows, results of operation and financial condition.

High working capital requirements: Its business requires funds towards working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, at a future date, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.

Outlook

Manglam Infra & Engineering is engaged in business of providing all kind of advisory and consultancy services related with infrastructure, environment, water supply and sanitation, industrial planning urban designing, urban planning housing & Project Management, civil designing, construction management, to act as consultants for construction of buildings and all types of constructed properties. On the concern side, it faces competition from domestic and international companies. It foresees this competition from organized and unorganized players to continue to grow as the demand. Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition.

The company is coming out with a maiden IPO of 49,32,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 53-56 per equity share. The aggregate size of the offer is around Rs 26.14 crore to Rs 27.62 crore based on lower and upper price band respectively. On performance front, the company's revenue from operations the financial year 2023-24 is Rs 4,024.36 lakh. This represents 16.92% increase compared to the previous financial year's revenue from operations of Rs 3441.88 lakh. The Profit after Tax (PAT) for the financial year 2023-24 reached Rs 676.41 lakh, marking a notable increase from Rs 554.16 lakh in the financial year 2022-23. Going forward, as it evolves, its strategic focus will be shifting from solely providing infrastructure consultancy services to a more comprehensive approach that includes the execution of projects. This transition is guided by a set of business strategies aimed at broadening its scope and enhancing its capabilities in project execution. For this, it looks to develop a holistic service model that integrates consultancy services with project execution, providing clients with end-to-end solutions and create synergies between its existing expertise in consultancy and project execution to offer seamless services.