Penna Cement IPO
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Last Updated: 10 June 2022 4:28 PM by anjali
Hyderabad-based Penna Cement Industries has received a green signal from SEBI for its Rs 1,550-crore initial public offering (IPO).
The IPO comprises a fresh issue of Rs 1,300 crore and an offer for sale of up to Rs 250 crore by the promoter PR Cement Holdings. Currently, PR Cement Holdings holds a 33.41 percent stake in the company.
Axis Capital, ICICI Securities, Edelweiss Financial Services, Yes Securities (India) and JM Financial are the merchant bankers to the IPO.
Objective of the Issue
Penna Cements intends to utilise part of the fresh issue funds:
1. For repaying of debt (Rs 550 crore)
2. Capital expenditure requirements (Rs 105 crore) for its KP Line II Project.
3. Rs 80 crore will be used for upgrading raw grinding and cement mill in Talaricheruvu
4. Rs 110 crore and Rs 130 crore will be utilised for setting up a waste heat recovery plant in Talaricheruvu and Tandur, respectively
Established in 1991, the Hyderabad-based cement company, promoted by P Prathap Reddy, Pioneer Builders and P R Cement Holdings, is one of the largest privately held cement companies in India and a leading integrated cement player in terms of cement production capacity. It has a strong brand presence in the southern and western regions of India
It has four integrated manufacturing facilities and two grinding units across Telangana, Andhra Pradesh and Maharashtra with an aggregate capacity of 10 million tonnes per annum (mmtpa) in 2021, and its capacity is expected to reach 16.5 mmtpa by FY24. In FY21, it met 53 % of its power requirements from captive sources.
The cement demand in India is expected to grow at a CAGR of 6-7 percent between FY21 and FY26 on account of infrastructure investments, healthy revival in the housing demand and various Government Initiatives.
In May 2019, the company acquired Singha Cement, a Sri Lankan Cement Company that operates a packing terminal in Colombo, to focus on having and strengthening a port-based distribution strategy. Additionally, in March 2018, it has commissioned one of the largest port-based cement terminal in India at Krishnapatnam with an automated ship loading facility and packing terminals at Cochin, Gopalpur and Karaikal ports. Recently Union Minister Sonowal inaugurated a bagging and bulk cement terminal at Syama Prasad Mookerjee Port.
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Revenue | 2,476.40 | 2,167.61 | 2,156.18 |
| EBITDA | 479.85 | 338.36 | 308.95 |
| PAT | 152.07 | 23.02 | 85.13 |
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Total Assets | 3,774.43 | 3,752.23 | 3,721.84 |
| Share Capital | 133.80 | 133.80 | 133.80 |
| Total Borrowings | 1,351.95 | 1,470.32 | 1,552.61 |
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Net cash generated from / (used in) operating activities | 562.80 | 277.54 | 255.20 |
| Net cash from / (used in) investing activities | -130.39 | -38.80 | -343.92 |
| Net cash flow from / (used in) financing activities | -322.78 | -301.48 | 126.99 |
| Net increase (decrease) in cash and cash equivalents | 109.63 | -62.74 | 38.27 |
Peer Comparison
| Name of the Company | Total Revenue | Basic EPS | Nav Rs. per share | PE | RoNW% |
|---|---|---|---|---|---|
| Penna Cement Industries Limited | 2,476.40 | 11.36 | 86.48 | NA | 13.14% |
| UltraTech Cement Limited | 42,124.83 | 201.61 | 1,355.35 | 31.58 | 14.90% |
| Shree Cement Limited | 12,868.39 | 435.35 | 3,650.06 | 65.91 | 11.70% |
| Ambuja Cements Limited | 24,516.17 | 11.91 | 114.61 | 25.93 | 10.40% |
| ACC Limited | 13,785.98 | 76.16 | 676.28 | 24.65 | 11.30% |
| Dalmia Bharat Limited | 9,674.00 | 11.61 | 547.32 | 130.32 | 2.10% |
| The Ramco Cements Limited | 5,389.30 | 26 | 212.3 | 37.62 | 12.10% |
| India Cements Limited | 5,186.44 | 9.18 | 177.41 | 17.82 | 0.90% |
| Birla Corporation Limited | 6,915.69 | 65.6 | 624.09 | 13.99 | 10.50% |
| J.K. Cement Limited | 5,801.64 | 62.56 | 391.83 | 44.61 | 16.40% |
| JK Lakshmi Cement Limited | 4,364.07 | 21.08 | 143.36 | 19.2 | 14.70% |
| Orient Cement Limited | 2,421.80 | 4.23 | 54.59 | 24.93 | 7.70% |
| Sagar Cement Limited | 1,175.15 | 12.36 | 433.96 | 58.83 | 2.80% |
Strengths
1. One of the market leaders in south India with a strong brand recall and extensive distribution network
2. Strategically located integrated manufacturing facilities and packing terminals which provide access to south, west and east India markets
3. Well positioned to benefit from the growth in the cement industry
4. Established track record of operational and financial performance
5. Experienced promoter and management team with an established track record of project and timely execution
Risks
1. Dependency on the pricing and continued supply of coal and raw materials, the costs and supply of can be subjected to significant variation due to factors outside its control
2. Promoters have pledged their Equity Shares and entered into agreement for the pledge of shares with certain lenders
3. Operates in a highly competitive industry occurring from basis of price, quality and brand name.
4. Limited experience in port based logistics, which is subject to the risk of accidents and rough weather on the high seas
5. Cement industry is capital intensive, hence, the company may need to seek additional financing in the future to support its growth strategies
6. Ongoing proceedings filed by the CBI and the Directorate of Enforcement against the company, one of the promoters and others, relating to alleged corruption in the allotment of certain land parcels, mining lease and a prospecting license
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The IPO comprises a fresh issue of Rs 1,300 crore and an offer for sale of up to Rs 250 crore by the promoters.
PR Cement Holdings Ltd.
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Axis Capital, ICICI Securities, Edelweiss Financial Services, Yes Securities (India) and JM Financial are the merchant bankers to the IPO.
The proceeds will be used for
1. For repaying of debt (Rs 550 crore)
2. Capital expenditure requirements (Rs 105 crore) for its KP Line II Project.
3. Rs 80 crore will be used for upgrading raw grinding and cement mill in Talaricheruvu
Rs 110 crore and Rs 130 crore will be utilised for setting up a waste heat recovery plant in Talaricheruvu and Tandur, respectively
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1. Login to your 5paisa account and select the issue in the current IPO section
2. Enter the number of lots and price at which you wish to apply for
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