Ircon International IPO Review and current GMP

Ircon International is a government company under the Ministry of Railways. Ircon International is a leading integrated Indian engineering and construction company in India. Ircon is integrated Indian Engineering and construction company, specialising in major infrastructure projects including railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangars, runways, EHV substations, electrical and mechanical works, commercial and residential properties, development of industrial areas, and other infrastructure activities. It provides EPC services on a fixed-sum turnkey basis as well as on an item-rate basis for various infrastructure projects.

In 2016, it ranked number 248 in the list of the top 250 international contractors by Engineering News Records of the United States. Headquartered in New Delhi, it has 26 project offices and five regional offices to support and manage its business operations throughout India and five overseas project offices in SriLanka, Bangladesh, Malaysia, South Africa and Algeria to provide onsite support overseas.

As on December 2017, it had an order book of Rs. 22387 crore.


Its workforce as of January 2018 consisted of 1175 full-time employees i a stand-alone basis. It has a debt-free financial profile and comfortable liquidity position. The company has received several awards including Dun and Bradstreet Infra Awards 2016 in Construction & Infrastructure development Railways, CIDC Vishwakarma Awards 2016 and the India Pride Awards 2015-16.

IPO Dates & Price Band:

  • IPO Open: 17-September-2018
  • IPO Close: 19-September-2018
  • IPO Size: Approx Rs. 470 Crore
  • Face Value: Rs.10 Per Equity Share
  • Price Band: Rs. 470 to 475  Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 99,05,157 Shares
  • Discount: Rs.10 (Retail & Employees)

Market Lot:

  • Shares: Apply for 30 Shares (Minimum Lot Size)
  • Amount: Rs. 13,950 (For RII & EMP)
  • Amount: Rs. 14,250 (For QIB & HNI)

Allotment & Listing:

  • Basis of Allotment: 25-September-2018
  • Refunds: 26-September-2018
  • Credit to demat accounts: 26-September-2018
  • Listing: 28-September-2018

Lead Managers:

IDBI Capital Markets & Securities Limited
Axis Capital Limited
SBI Capital Markets Ltd

Registrar to the IPO:

Karvy Computershare Private Limited.

Competitive Strengths:

Our business operates in diverse sectors covering many countries;

Excellent execution track record through strong operating systems and controls;

Strong financial performance and credit profile;

Visible growth through robust order book and steady execution; and
Qualified and experienced employees and proven management team.

Business Strategy:

Continue expanding our geographical footprint within and beyond India.

Paradigm shift in revenue generation.

Focus on high-value projects in the construction business to benefit from economies of scale.

Actively bid for new projects.

Maintain favorable financial risk profile.

Explore different models of project execution to optimize our project portfolio.

Explore potential ways to capture sectorial initiatives undertaken by the Government to improve economic growth.

Attract and retain talented employees.

The promoters:

The President of India acting through the ministry of Railways.

share holder

Objects of the issue:

To carry out the disinvestment of up to 9,905,157 Equity Shares and
to achieve the benefits of listing the Equity Shares on the Stock Exchanges.

The Company will not receive any proceeds from the Offer and all proceeds shall go to the Selling Shareholder.

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  NHAI awarding is expected to rise over the next three years (km)   


Company Financials (Reinstated-Standalone):

The company generated revenue of Rs 4,158.8 Crores for the year ended Mar-14 and Rs 4,123 Crores for the year ended Mar-18.

The company posted a profit of Rs 740 Crores for the year ended Mar-14 and profit of Rs 390.8 Crores for the year ended Mar-18.

Its EPS for FY18 was Rs 40.1 and 3 years average EPS is Rs 38.65.




Ircon’s business and revenues are substantially dependent on construction and infrastructure projects are undertaken or awarded by government authorities and other entities funded by the government. Any change in government policies, the restructuring of existing projects or delay in payments to us, may adversely affect its business and results of operations.

If Ircon faces adverse publicity and incur costs associated with warranty claims or from defects during construction, its business, results of operations and financial condition could be adversely affected.

Projects included in its order book and its future projects may be delayed, extended, modified or canceled for reasons beyond its control which may materially and adversely affect its business, prospects, reputation, profitability, financial condition and results of operations. Revenues generated from its projects are also difficult to predict and are subject to variations driven by various factors.

If Ircon is not successful in managing its growth, its business may be disrupted and its profitability may be reduced.

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Railway sector projects contribute approximately 86.70% of its Order Book as of March 31, 2018. Any change in the sector causing a decline in the numbers of project available may adversely affect its revenues and profitability.

Ircon’s projects are exposed to various implementation and other risks and uncertainties which could lead to material adverse effect on its business, prospects, financial condition and results of operations.

Ircon’s projects may be adversely affected by public and political oppositions, conflicting local interests, elections and protests.

There are certain legal proceedings pending against us and some of its Subsidiaries, which, if determined against them or us, may have a material adverse impact on its business, its financial condition, its reputation and results of operations.


Valuation of the company now. On FY2018 consolidated EPS of Rs 42.13 and on an upper price band of Rs 475, P/E works out to be 11.2x. On last 3 years average consolidated EPS of Rs 40.62, P/E works out to be 11.7x. Similarly, for standalone nos, the P/E is in between 11.9x to 12.2x. Means company is asking for a higher price band Rs 475 where P/E would be in the range of 11.2x to 12.2x. No listed peers are doing similar business.

Grey market trend:

Current GMP is is Rs. 40/-, and Kostak is Rs. 225/-


No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here

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