Important Details You Need to Know About Bharat Highways InvIT and Its IPO

Key Highlights:

• Bharat Highways InvIT handles various infrastructure assets in India
• Important IPO details:
  • Fresh issue consisting of Rs 2500 crores
  • A total of 250,000,000 shares with a price band of Rs 98 to Rs 100
  • A minimum 150 lot size
• Closely look at valuations before investing and go through the company DRHP to understand the risks

Increasing investor optimism and India’s surging stock markets have resulted in a rush of initial public offerings (IPOs). Companies across industry verticals are looking to cash in on optimism, raise funds and list on stock exchanges. Bharat Highways Infrastructure Investment Trust is launching its IPO on 28th February. If you are looking forward to investing in its IPO, you need to know certain essential things. What are these? Let’s find out.

About Bharat Highways InvIT

Bharat Highways InvIT, a SEBI-registered InvIT, is a trust handling various infrastructure assets in India. Operating on a hybrid annual model, its portfolio consists of several roads across states, including Punjab, Gujarat, Uttar Pradesh and Maharashtra, among others. The company enjoys high credit ratings from agencies like CRISIL, India Ratings and Research and CARE.

IPO Details

The IPO’s issue size consists of an entirely fresh issue of Rs 2,500 crores with no offer for sale. The book-building IPO will offer a total of 250,000,000 shares. The other details of the IPO are as follows:

While 75% of the shares will be for qualified institutional buyers (QIB), 25% are for non-institutional buyers. With the proceeds received, the company plans to:

Prepay in part or in full its outstanding loans Deploy funds for general corporate purposes

Company financials

The company’s profit after tax (PAT) has fluctuated over the years. The firm’s PT stood at Rs 149.45 crores on 31st March 2021, Rs 62.87 crores on 31st March 2022 and Rs 527.05 crores on 31st March 2023. It marks a notable increase in profits between 2022 and 2023. Its debt-to-equity ratio stood at 5.14 as of 31st March 2021, 6.16 on 31st March 2022 and 3.36 by 31st March 2023.

Strengths and Risks

The company boasts of the following strengths:

• Nil construction risk with stable profitable assets with long-term predictable cash flows.
• Stable income stream thanks to a diverse portfolio of roads across different regions in India.
• Solid fundamentals with strong government support.
• A long history of maintaining and managing road projects in India.

However, there are certain risks associated with the company too. These include: The company's revenue depends on annuity income from the National Highways Authority of India. A decrease in it could impact bottom lines. The company depends on third parties to maintain and operate its assets. It exposes it to the risk of defaults, delays and unsatisfactory performance. Failure to maintain its assets per standards can result in contract termination.

Should you invest in Bharat Highways InvIT IPO?

If you have a long-term investment horizon, consider investing in Bharat Highways InvIT IPO. The industry is attractive, with strong fundamentals and favourable government policies.

Also, the geographically diversified road asset portfolio reduces concentration risk. That said, you need to look closely at valuations and read the company's draft red herring prospectus to understand if the IPO warrants a place in your investment portfolio.

If you want to invest in it, you can easily do so through Kotak Securities mobile trading app. Log in with your credentials and visit the IPO section to invest.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions.