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BACKGROUND

VPRP is an EPC company mainly focused in Water Supply Projects (WSPs) which constitutes 78% of its outstanding order book. It is also present in projects related to railways, roads and irrigation. Rajasthan constitutes the largest share in its order book at 62%. The company’s in-house integrated model ensures that products and services required for development and construction of a project meet quality standards and are delivered in a timely manner, thus reducing contractual risks associated with third party suppliers. Its revenue has grown at a CAGR of 55% from FY21-23, with the help of a robust order book. As of July 15, 2023, VPRP has an order book of Rs. 3,800 Cr which is 3.3x its FY23 revenue of Rs. 1168 Cr.

Objects and Details of the Issue:

The public issue consists of fresh issue of equity shares aggregating upto Rs. 309 Cr. The net proceeds from the fresh issue will be utilised towards: (i) Funding working capital requirements (Rs. 150 Cr) and (ii) Capex for purchase of equipments/machineries (Rs. 62 Cr).

Investment Rationale:

* Strong tailwinds in infrastructure to support growth

* Focused player in Water Supply Projects (WSPs)

* Diversification towards other segments

* In-house integrated model

* Track record of strong growth; Robust order book provides visibility for future growth as well

Valuation and Recommendation:-

VPRP’s niche focus on WSP (Water Supply Projects), low revenue base and demonstrated track record of high growth with margin expansion along with reasonable valuations makes the issue attractive compared to listed peers. With strong industry tailwinds likely to persist in water related projects, railways and roads, we believe VPRP is a decent proxy play on the infrastructure industry offering high growth with good profitability. Thus we recommend to Subscribe to the IPO.

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