Ramky Infrastructure IPO gets 3/5 Grade from CRISIL Equities

 | August 19,2010 05:02 pm IST

CRISIL Equities has assigned a CRISIL IPO grade of "3/5" (pronounced "three on five") to the proposed initial public offer (IPO) of Ramky Infrastructure Ltd. This grade indicates that the fundamentals of the IPO are average relative to other listed equity securities in India.

However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, or a comment on the graded instrument’s future market price or its suitability for a particular investor.


The assigned grade reflects huge infrastructure spending in the country, which is expected to continue in the
medium term and accordingly, provide huge growth opportunities for construction players. The grading further reflects Ramky Infra’s strong business position in the waste-water segment of the construction business and its good order-book position, which stood at about 4.1 times its 2008-09 revenues. The company’s strong order book of Rs 58 billion (as on Sept 2009) is diversified across segments and geographical regions.


The grading is moderated by the fact that Ramky Infra is an average player and faces intense competition in
the construction business other than the water & waste-water segment. In the build -operate -transfer (BOT)
road business, the company is relatively a new entrant, having completed only one project; therefore, its
execution capability remains a key monitorable.


Considering the fast pace of growth in future and geographical diversification of company’s order book,  management needs to further enhance and stream line its processes and information systems to support the 
growth. Mr. Ayodhya Rami Reddy, the key promoter of Ramky Infra has a major stake in other group companies, which are in similar lines of business. Although there is a demarcation of business lines of Ramky Infa and other group companies, few overlaps in the business operations from past still exist.