The Globe Civil Projects IPO is set to open for subscription on 24 June 2024 and will remain open till 26 June 2024. With infrastructure being a key driver of India’s growth story, IPOs in this sector are drawing significant investor attention. Globe Civil Projects, a construction services company, is tapping the primary market to raise capital for its expansion and growth plans.
Before you decide to invest, here’s a detailed look at the GMP (Grey Market Premium), key risks, issue details, and other critical aspects of the IPO you should know.
Globe Civil Projects IPO: Issue Details
- IPO Opening Date: 24 June 2024
- IPO Closing Date: 26 June 2024
- Issue Price: ₹71 per share
- Lot Size: 1,600 shares
- Minimum Investment: ₹1,13,600
- Issue Size: ₹42.49 crore
- Listing on: NSE SME Platform
Globe Civil Projects primarily operates in construction project receipts, undertaking civil construction contracts for both infrastructure and non-infrastructure projects, with major business coming from government agencies like the Central Public Works Department (CPWD).
Globe Civil Projects IPO GMP Today
As per the latest data from Investorgain.com, the Globe Civil Projects IPO GMP is currently at ₹9.
➡️ Issue Price: ₹71
➡️ Expected Listing Price: ₹80 (₹71 + ₹9)
➡️ Listing Gain Expectation: ~12.68%
Though GMP gives an early indication of potential listing gains, it should never be the sole factor for IPO investment decisions. Investors are advised to also analyze the fundamentals and associated risks before subscribing.
Key Risks Associated with Globe Civil Projects IPO
As per the company’s Red Herring Prospectus (RHP), there are several critical risks associated with the business that investors should be aware of:
1️⃣ Dependency on CPWD for Revenue
A significant portion of Globe Civil Projects’ revenue comes from projects awarded by CPWD. For fiscal years:
- FY2024 → 29.77%
- FY2023 → 57.48%
- FY2022 → 54.62%
Any slowdown or inability to win fresh CPWD contracts could substantially hit the company’s revenues and profits.
2️⃣ Sectoral Slowdowns Could Impact Growth
Globe Civil Projects is heavily dependent on the demand for construction services, which is directly linked to the government’s infrastructure spending. Any cutback in these budget allocations or delays in project awards can lead to revenue volatility.
3️⃣ Volatility in TMT Steel Trading Segment
Besides construction, the company earns around 10-15% of its revenue from TMT steel trading. This segment is vulnerable to:
- Steel price fluctuations
- Market demand cycles
- Regulatory changes in trade
Any major disruption here could impact their overall revenue figures.
4️⃣ JV Execution Risks
Joint Ventures (JVs) play a significant role in Globe Civil Projects’ operations:
- FY2024 → 33.36%
- FY2023 → 28.98%
- FY2022 → 35.15%
If a JV partner defaults or underperforms, it can burden Globe Civil Projects with additional financial obligations, impacting margins and profitability.
5️⃣ Revenue Concentration Risk
For FY2024, 89.54% of Globe’s construction revenue came from just ten projects. This high concentration makes the business vulnerable to project delays, cancellations, or disputes, which could affect cash flows severely.
Strengths of Globe Civil Projects
Despite the risks, the company holds some positives:
- Established track record of civil construction projects
- Strong relationship with government departments
- Regular involvement in public infrastructure projects
Given India’s focus on infrastructure development, particularly post-2024 elections, the sector outlook remains positive.
Financial Performance Snapshot
| Metric | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,634.83 | 1,293.27 | 2,932.66 |
| PAT (₹ Cr) | 4.26 | 6.18 | 15.64 |
| EBITDA Margin | ~4-5% | ~4-5% | ~4-5% |
The company has posted consistent revenue growth, especially in FY2024, driven by project execution.
Should You Subscribe to Globe Civil Projects IPO?
Positives:
- Affordable IPO valuation in the SME space
- Reasonable GMP suggesting positive market sentiment
- Growth potential with infrastructure push from the government
Negatives:
- High dependency on government contracts
- Revenue volatility from steel trading
- Project concentration risk
Investor Verdict:
For risk-tolerant investors, especially those familiar with SME IPOs, Globe Civil Projects could offer decent short-term listing gains, given the GMP and infrastructure sector tailwinds. However, long-term investors should assess sector risks and closely track the company’s ability to diversify its revenue base beyond CPWD projects.
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