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Company Overview

Incorporated in 1995, GR Infraprojects is an integrated road engineering, procurement and construction (EPC) company with experience in design and construction of various road / highway projects across 15 states in India. It primarily operates in the road EPC as well as HAM spheres. Over the last 25 years, GR has constructed more than 100 projects and has built its experience in constructing state and national highways, bridges, culverts, flyovers, airport runways, tunnels and rail over-bridges.

Details and Objects of the Issue

The public issue consists of offer for sale worth Rs. 962 Cr constituting the promoters (Rs. 121 Cr), Private Equity arms of Motilal Oswal (Rs. 801 Cr) and other shareholders (Rs. 40 Cr)

Investment Rationale:

* Robust execution track record.

* Strong order book provides earnings visibility; Wide geographical presence.

* Strong sector tailwind for Roads and Highways.

* Strong financial performance; Superior operating metrics compared to peers.

Valuation and Recommendation

Over the years, the company successfully transformed from being a sub contractor to a prime contractor. Over the last five years (FY16-21), GR has demonstrated good execution skills with revenues growing at 31% CAGR, one of the highest in the listed space. GR also commands above average ROCE of 24% (four year avg. of 28%), while the order book/sales is in line with industry peers at 2.6x (Rs. 19,026 Cr) which offers strong growth visibility for coming years. On the valuation front, at the given upper price band of Rs. 837, GR Infraprojects appears attractive at P/E of 8.7x its FY21 EPS and EV / EBITDA of 5.8x its FYFY21 EBITDA. We recommend subscribing to the issue.

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SEBI Registration number is INH000001766

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