Likhitha Infrastructure Ltd IPO

Likhitha Infrastructure IPO Details

Likhitha Infrastructure IPO Tentative Timetable

About the Company – Likhitha Infrastructure Limited

Likhitha Infrastructure Limited is an Oil and Gas pipeline infrastructure provider in India. It was established in the year 1988 and has been engaged in the same line of business since its inception. The company has been focused on laying pipeline networks, construction of associated facilities, and providing Operations & Maintenance services to the City Gas Distribution (CGD) Companies in India. The three primary business lines across which the operations of the company are spread are:

1. Cross Country Pipelines and associated facilities
2. City Gas Distribution including CNG Stations
3. Operation & Maintenance of CNG/PNG services

The client base of the company comprises of some established players from the Oil and Gas industry from the public and private sectors. With a presence in more than 16 states and 2 union territories in India, the company has laid more than 600 kilometers of pipelines including steel and MDPE (medium-density polyethylene) over the last five years. For on-going projects, the company has laid around 800 kilometers of oil and gas pipelines. It has also increased the scale of its operations and expanded to geographies where the demand for pipeline infrastructure is growing. 

In 2019, the company executed a 10.75” OD x 69 kilometers petroleum product pipeline for the first-ever trans-national cross-country pipeline of South-East Asia connecting India to Nepal for the supply of petroleum products.

1. Strengths of Likhitha Infrastructure Limited

• Likhitha has a strong presence in India with a significant experience.
• It has an efficient business model that involves careful identification and assessment of the project with emphasis on cost optimization which is a result of executing its projects with careful planning and strategy.
• The company has strived to maintain a strong financial position with emphasis on having a strong balance sheet and increased profitability. Between 2015 and 2020, the income of the company has increased at a CAGR of 38.96%.
• A large equipment base, technically qualified and experienced employee pool, comparatively lower cost center of operations and strong project management systems and capabilities enable the company to execute large as well as complex projects.
• Despite the increase in competition, the company enjoys a good reputation in its field and receives repeat orders from most of its prominent clients.
• The company owns and maintains a diverse range of equipment such as Pipe Layers (Side-boom), Excavators, Horizontal Directional Drilling Machines, Compressors, Generator sets, Welding Machines, etc. which allows it to meet the majority of the requirements for its on-going projects.

2. Objects of the Offer

Likhitha Infrastructure Limited proposes to utilize the net proceeds from this issue towards funding the following objects:

• To meet the working capital requirements.
• General corporate purpose.
• To meet issue expenses.

3. Risk Factors

• Likhitha Infrastructure’s business is dependent on a few clients and the loss of, or a significant reduction in purchase orders from such clients could adversely affect its business and financials. It depends on a limited number of clients for a significant portion of its revenue.The loss of any of its major client due to any adverse development or significant reduction in business from its major client may adversely affect its business, financial condition, results of operations, and future prospects.
• The contracts entered into by the company are usually standard in nature and may contain terms that favor its clients, which may enable them to terminate the contracts prematurely under various circumstances beyond its control.
• The company may not be able to realize the amounts reflected in its order book which may materially and adversely affect its business, prospects, reputation, profitability, cash flows, financial condition, and results of operation.
• The actual cost of executing a project may vary from the assumptions underlying the company’s bid. Hence, it may or may not be unable to recover all or some of the additional expenses, which may have a material adverse effect on its results of operations, cash flows, and financial condition.
• The company is required to furnish financial and performance bank guarantees as part of its business. Its inability to arrange such a guarantee or the invocation of such guarantees may result in forfeiture of bid security or earnest money deposit and termination of the relevant contract thereby affecting results of its operations, financial condition, and other prospects.
• Given the long-term nature of many of its projects, the company faces various implementation risks and its inability to successfully manage such risks may have an adverse impact on the functioning of its business.

Important information about Likhitha Infrastructure Limited

Here is a quick look at some important information about Likhitha Infrastructure Limited:

1. Overview of Likhitha Infrastructure’s Financials

All amounts in INR lakhs

2. Promoters of Likhitha Infrastructure IPO

1. Mr. Srinivasa Rao Gaddipati
2. Ms. Likhitha Gaddipati

Summing Up

If you are looking at gaining exposure to the Oil and Gas Infrastructure industry, then the Likhitha Infrastructure IPO can be considered. Before you invest, ensure that you read through the company’s financials and the Red Herring Prospectus (RHP) carefully. 

Happy Investing!