Business Profile of the Rahee Infratech Limited
Rahee Infratech is an Indian railway civil engineering, manufacturing, and construction company that offers services including track design, supply, construction, and installation, turnkey bridge construction projects, turnouts, track devices, rail fastening systems, and sleepers. Rahee have patented a Zero Restraint Fastening System for steel sleepers on bridges in 2002. They have been awarded as the "Company of the Year (Construction)" by Outlook Business and "Excellence in Rail Infra Development" by the UrbanInfra Group.
They have completed 105 major railway bridges in India. The company has constructed over 185 kms of ballastless and ballasted tracks for Metro Rail in India, constituting more than 19.5% of the total operational metro network. They are installed in India, Malaysia, Bangladesh, Sri Lanka, Australia, and Mozambique. They have also undertaken landmark projects, such as cantilever erection and spans weighing over 1,000 MT.
Rahee Infratech Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale and fresh issue.
- The OFS consists of up to 2,780,857 Equity Shares aggregating up to Rs. XXXX million. Nothing from those proceeds of OFS will be allotted to company.
- Rahee Infratech IPO offer only has fresh issue of Rs. 4, 200 million. As per DRHP document, the company aims to utilize IPO proceedings towards capital expenditure, funding working capital expenditure and general corporate purposes.
| Particulars | Estimated amount |
| Funding of capex requirements for purchase of machinery, equipment and vehicles | 500 |
| Funding the working capital requirements of company | 2800 |
| General Corporate Purposes | XXXX |
(₹ Million)
IPO Details of Rahee Infratech Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹2 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | Up to [●] Equity Shares |
| (aggregating up to ₹3042.62 Cr) | |
| Fresh Issue | Up to [●] Equity Shares |
| (aggregating up to ₹420 Cr) | |
| Offer For Sale | Up to 2,780,857 Equity Shares |
| (aggregating up to ₹XXXX Cr) | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: Rahee Infratech Limited IPO
The issue price of Rahee Infratech Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 420 crores as well as offer for sale of 4, 780, 857 equity shares.
Launch Date of Rahee Infratech Limited IPO
The IPO opening date of Rahee Infratech hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Rahee Infratech Limited Financial Statements
| Particulars | FY24 | FY23 | FY22 |
| Income | |||
| Revenue from Operations | 9657.37 | 7858.21 | 5568.38 |
| Other Income | 94.43 | 33.02 | 43.2 |
| Total Income | 9751.8 | 7891.23 | 5611.58 |
| EXPENSES | |||
| Cost of materials consumed | 4757.01 | 3787.1 | 2406.82 |
| Changes in Inventories of Finished goods, Work-in-Progress and Stock-in-Trade | -264.85 | -91.33 | -41.25 |
| Employee Benefits Expense | 722.75 | 443.49 | 390.08 |
| Finance Costs | 255.04 | 184.89 | 145.86 |
| Depreciation and Amortization Expense | 162.22 | 139.57 | 118.07 |
| Other Expenses | 3295.66 | 2746.1 | 1970.18 |
| Total Expenses | 8927.83 | 7209.82 | 4989.76 |
| Profit /(Loss) before Tax | 823.97 | 681.41 | 621.82 |
| Profit /(Loss) for the year | 761.25 | 521.24 | 470.96 |
| Particulars | FY24 | FY23 | FY22 |
| Revenue from operations | 967.37 | 7858.21 | 5568.38 |
| Total Income | 9751.8 | 7891.23 | 5611.58 |
| Two year revenue CAGR (FY22 to FY24) (%) | 31.69% | - | - |
| Order Book (in ₹ million) | 22962.7 | 14345.75 | 9748.6 |
| Order book-to-bill ratio | 2.38 | 1.83 | 1.75 |
| EBITDA (in ₹ million) | 1241.23 | 1005.87 | 885.75 |
| EBITDA margin (in %) | 12.73% | 12.75% | 15.78% |
| PAT (excluding share profit of Associate | 609.97 | 505.31 | 439.01 |
| profit after tax | 713.11 | 496.45 | 378.07 |
| PAT margin (excl share of profit of associate) | 6.25% | 6.40% | 7.82% |
| Net Worth (in ₹ million) | 3133.49 | 2423.92 | 1937.96 |
| Net debt to equity ratio | 0.54 | 0.43 | 0.42 |
| Net debt to EBITDA ratio | 1.64 | 1.32 | 1.23 |
| Return on Net worth (in %) | 22.76% | 20.48% | 19.51% |
| ROCE (in %) | 19.96% | 20.98% | 22.21% |
| Net Working Capital (in ₹ million) | 3564.82 | 2463.01 | 1904.24 |
| Net Working Capital Days | 135 | 114 | 125 |
| % of revenue from repeat customers | 84.30% | 90.54% | 82.99% |
| Revenue from top 10 customers (in %) | 87.80% | 88.72% | 90.43% |
| Bid Closed (in ₹ million) | 45505 | 33850 | 55420 |
| Bid Won (in ₹ million) | 13880.00% | 7970 | 7970 |
| Bid to Win Ratio (in %) | 30.50% | 23.55% | 14.38% |
Rahee Infratech Limited Promoters & Shareholding
As of date, there are two promoters of the company.
The promoter along with promoter group in aggregate collectively holds 79.15% of the paid-up share capital of company.
| Name of the Shareholder | No. of Equity Shares held | % of the pre- offer Equity capital |
| Promoters | ||
| Pradeep Khaitan | 40,74,320 | 6.28 |
| Ravi Khaitan | 48,11,810 | 7.42 |
| Pawan Khaitan | 25,86,520 | 3.99 |
| Mridul Commodities Private Limited | 3,09,25,890 | 47.66 |
| Rahee Viniyog Limited | 1,73,58,300 | 26.75 |
| PPR Associates | 3,11,500 | 0.48 |
| Total holding of the Promoters | 60,068,340 | 92.57 |
| Promoter Group | ||
| Shashi Khaitan | 6,29,710 | 0.97 |
| Nandini Khaitan | 5,22,860 | 0.81 |
| Rahul Khaitan | 13,15,290 | 2.03 |
| Ayush Khaitan | 1,78,000 | 0.27 |
| Pawan Kumar Khaitan (HUF) | 1,77,760 | 0.27 |
| Pradeep Kumar Khaitan (HUF) | 15,70,930 | 2.42 |
| Ravi Kumar Khaitan (HUF) | 75,470 | 0.12 |
| Nehal Mittal | 1,89,000 | 0.29 |
| Prerna Agarwal | 49,290 | 0.08 |
| Grand Total | 6,47,76,650 | 99.83 |
Should You Subscribe to Rahee Infratech Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Rahee Infratech Limited:
Integrated construction and manufacturing company
Pandrol Rahee is an integrated construction and manufacturing company with a strong track record in project management and execution. They have constructed over 185 kms of ballastless and ballasted tracks for Metro Rail in India, constituting 19.5% of the total operational metro network. Their manufacturing facilities include four in Howrah, West Bengal and Sangareddy District, Telangana, and two steel fabrication sites in Howrah, West Bengal and Dhenkanal, Odisha. They also design and manufacture turnout and track devices, rail fastening systems, and H-beam steel sleepers for bridges. They have a 12 member design and engineering team, which has designed multiple types of turnouts and obtained a patent for improved switch expansion joint design. Their integrated model ensures products and services meet quality standards and are delivered on time, reducing contractual risks.
Strong technical capabilities
Pandrol Rahee is an integrated construction and manufacturing company with a strong track record in project management and execution. They have constructed over 185 kms of ballastless and ballasted tracks for Metro Rail in India, constituting 19.5% of the total operational metro network. Their manufacturing facilities include four in Howrah, West Bengal and Sangareddy District, Telangana, and two steel fabrication sites in Howrah, West Bengal and Dhenkanal, Odisha. They also design and manufacture turnout and track devices, rail fastening systems, and H-beam steel sleepers for bridges. They have a 12 member design and engineering team, which has designed multiple types of turnouts and obtained a patent for improved switch expansion joint design.
Long standing relationship with clients
The company has established long-term relationships with customers, including railway divisions in India, IRCON, RVNL, and railways in Bangladesh. These relationships demonstrate their commitment to quality and advanced design, engineering, construction, and manufacturing capabilities. With over 60 years of experience in manufacturing rail fastening systems, the company has expanded its product and service offerings and geographic reach. These relationships also allow the company to plan capital expenditure, benefit from economies of scale, and achieve sustainable growth and profitability.
| Particulars | FY24 | FY23 | FY22 |
| As a percentage of revenue from operations (%) | |||
| Top 20 repeat Customers | 83.48% | 90.16% | 82.34% |
Future strategies
- Strengthen its market position in India's railway infrastructure sector and expanding its portfolio of 240 projects.
- Leveraging their experience in the sector and explore tunneling projects
- Grow business in HSR, Metro Rail, and modern track systems in a cost-effective manner.
- Leverage in-house design capabilities and supply modern fastening systems to the railways.
- Partnering with international rail technology leaders to bring best-in-class technology to Indian railways and expand capabilities.
- Enhance automation of internal manufacturing and construction processes to improve cost effectiveness.
- Strengthen in-house design engineering capabilities in bridges and track structures to offer high value solutions.
Risk Factors of Rahee Infratech Limited:
Segment contribution
Railway infrastructure projects are important for business as it contributes significant portion to its revenues. As can be seen for table below, the company has received significant revenue from projects from government and government elated entities. Any changes in government policies, lowering of budget allocations could negatively impact ability to bid for and win these projects.
Due to completion, company’s ability to negotiate contract terms with government and state governments is limited, and they may be required to accept unusual or onerous provisions. Termination of contracts with customers may result in resources being idle or permanently redundant.
| Particular | FY24 | FY23 | FY22 |
| As a % of revenue from operations | |||
| Government authorities and entities related to the government | 77.31% | 67.46% | 73.51% |
Client concentration
The company is dependent on its top client’s for significant portion of its revenue. As can be seen from table below, revenue from top clients keep fluctuating. The revenue has nearly jumped 2x from FY23 to FY24. Its top 10 clients has maintained its revenue contribution to nearly 90%. Relying on top customers for the foreseeable future, could negatively impact its business operations and financial condition. Failure to retain or negotiate contracts with these customers could also affect profitability and financial performance.
| Customers | FY24 | FY23 | FY22 |
| As a % of revenue from operations | |||
| Largest customer | 46.65% | 25.31% | 32.12% |
| Top 10 customer | 87.80% | 88.72% | 90.43% |
| Top 20 customer | 90.01% | 92.55% | 94.54% |
Raw material
The company procures raw materials like structural steel, plates, rounds, rails, and cement from both domestic and international sources, primarily for construction sites. In an environment where government plays an important role in economy, bigger deficits and concentration on capex can boost raw material prices. Therefore, the company faces price risks and may be required to allocate additional working capital in maintaining raw material inventory. If the company failed to pass on rising cost to its clients, it may also apply financial restraints on company.
| Particular | FY24 | FY23 | FY22 |
| As a % of total expenses | |||
| Cost of raw material consumed | 53.28% | 52.53% | 48.24% |
The company relies on a limited number of suppliers for raw materials, and loss of these suppliers may have an adverse effect on the company's production utilization capacity and financial conditions.
| Particular | FY24 | FY23 | FY22 |
| % of total raw materials sourced | |||
| Largest supplier of raw materials | 29.79% | 42.23% | 23.35% |
| Top 5 suppliers of raw materials | 60.05% | 70.88% | 54.49% |
| Top 10 suppliers of raw materials | 70.40% | 80.17% | 63.07% |
Project winning through bidding process
The company obtains a significant portion of its business through a competitive bidding process, based on factors such as pricing, technical capabilities, performance, reputation, experience, past track record, and financing capabilities. The growth of the business depends on the ability to obtain projects and being awarded tenders. The company spends considerable time and resources in preparing and submitting bids, but cannot guarantee that they will bid where prequalified or accept their bids. The company also faces potential costs escalation due to long implementation periods and potential litigation from unsuccessful bidders. Any unsuccessful outcome could lead to contract termination, negatively impacting future revenues and profits.
The company may lose bids due to competitive bidding processes, which may be due to factors beyond its control. Successful bids may result in delays in awarding projects, procurement of approvals, and starting dates, affecting the company's financial condition. Additionally, the company may face additional regulatory scrutiny for commercial transactions with government-owned entities. The company's order book as of March 31, 2024, was ₹22,962.70 million. Any delays, modifications, or cancellations of orders can impact revenue, cash flows, and financial conditions. The company cannot guarantee future order cancellations or terminations, and may face cash flow issues and difficulty maintaining production capabilities.
| Year | Bids submitted | Bids won | Bid to win ratio | |
| Number of bids | in value (%) | |||
| FY24 | 46 | 15 | 38.46% | 30.50% |
| FY23 | 22 | 7 | 31.82% | 23.55% |
| FY22 | 15 | 5 | 33.33% | 14.38% |
Stringent quality requirement
Focus is on manufacturing and construction services for track substructure and superstructure, including turnkey bridge construction, supply and installation of railway tracks, design and manufacture of turnouts and track devices, rail fastening systems and sleepers.
The company has to meet high quality standards and stringent customer specifications as per its business domains demand.
Which may result in order cancellations, recalls, liquidated damages, performance bank guarantees, security deposit, warranty, indemnity or liability claims. We may face delays in project completion schedules due to additional works required, resulting in increased expenditure and potential litigation. We cannot assure you that any claims regarding our construction or products will not arise in the future and may adversely affect our business operations and financial condition.
Dependency on engineering teams
Company’s in-house resources are crucial for delivering projects from conceptualization to completion. They ensure timely and efficient execution of orders, also support in construction and manufacturing processes, and continuously improve processes and designs. The team consists of 10 engineers, and their ability to accurately estimate project costs and execute orders could negatively impact business fundamentals and financial condition. They also conduct detailed inspections of relevant areas for construction to identify issues and ensure the accuracy of pre-approval engineering studies. Any deviation in these estimates could negatively impact operations.
Joint ventures
The company relies on forming joint ventures for project implementation and success of these joint ventures depends on the satisfactory performance of the joint venture partner and fulfillment of their obligations. Inability to enter or successfully manage long term relation with partner could impose additional financial and performance obligations. Other than joint venture, agreements can be terminated prematurely due to various reasons, including failure to comply with operational standards, performance security, defaults and failure to perform work in accordance with the agreement.
Rahee Infratech Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Rahee Infratech Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
