Investment Opportunity in Highway Infrastructure: Is the Excitement Validated as GMP Soars by 57%? Key Points to Understand
The Highway Infrastructure IPO, currently valued at Rs 130 crore, has garnered significant attention from investors. The public offering, which is open for bidding from August 5 to August 7, has been subscribed 7.01 times overall on its first day of bidding.
The IPO comprises a fresh issue of 1.39 crore shares worth about Rs 97.5 crore and an Offer for Sale of 46 lakh shares aggregating Rs 32.48 crore from promoters. The company plans to use Rs 65 crore from the fresh issue for working capital needs and allocate the rest for general corporate purposes.
The strong interest in the Highway Infrastructure IPO is driven by multiple factors. The company boasts a robust order book of ₹666.3 crore, mostly from toll and EPC projects, and a credible business model in tollway collection and EPC infrastructure. This, coupled with institutional investor backing and the anticipation of significant listing gains, has attracted investors.
The grey market premium (GMP) stands around ₹36-40 per share, translating to a listing gain potential of approximately 51-57% over the upper IPO price of ₹70. This GMP reflects investor enthusiasm and expectation of strong post-listing performance, driven by perceived growth prospects and healthy order backlog.
A day before the IPO opened, Rs 23.4 crore was raised via anchor placement. Key anchor investors included HDFC Bank, Abans Finance, Sunrise Investment Opportunities Fund, and VPK Global Ventures Fund.
The retail portion of the IPO was subscribed 9.16 times, while non-institutional investors (NIIs) came in at 6.51 times. The unofficial grey market price for Highway Infrastructure's unlisted shares on its first day of bidding is trading at Rs 110, indicating a 57% premium over the upper price band of Rs 70.
It is important to note that the grey market premium (GMP) does not guarantee listing performance and changes as per market sentiment. The listing is scheduled for August 12.
Brokerage house Anand Rathi has issued a "Subscribe - Long Term" recommendation for the IPO. Bajaj Broking has attributed FY25 annualized earnings to the asking price, making the P/E 22.44. Based on FY24 earnings, the P/E stands at 23.41.
Investors can apply for a minimum lot of 211 shares, which requires an investment of Rs 14,770. It's a promising opportunity for retail investors interested in infrastructure, as the company's focus on tollway collection and EPC infrastructure offers a stable investment prospect.
However, it's crucial to remember that investing in IPOs involves risk, and potential investors should conduct thorough research before making investment decisions. The exact number of shares being offered in the IPO is not specified.
The Highway Infrastructure IPO is drawing more attention than its size would suggest, with a grey market premium (GMP) hovering around 57%. This underscores the persistent positive market sentiment towards the infrastructure sector in India and the confidence of investors in Highway Infrastructure.
- Infrastructure investments are not confined to the realm of traditional finance; decentralized finance (defi) platforms might also offer opportunities for investors participating in the burgeoning market of digital assets.
- Trading in the Highways Infrastructure IPO has sparked interest among institutional investors, who have shown support through various investment channels like HDFC Bank, Abans Finance, Sunrise Investment Opportunities Fund, and VPK Global Ventures Fund.
- The positive sentiment towards the infrastructure sector in India is further illustrated by the strong retail and non-institutional investor interest in the Highway Infrastructure IPO, with subscriptions exceeding the upper price band.
- Beyond individual investments in the Highway Infrastructure IPO or the broader infrastructure market, a well-diversified portfolio could prove to be a more robust investment strategy that minimizes potential risks and maximizes returns for businesses and investors alike.
