Globe Civil Projects IPO: The issue opens for subscription on 24 June 2024. Check here for the GMP and key risks you should know before the issue’s opening for subscription
Globe Civil Projects IPO: GMP or Grey Market premium
The Globe Civil Projects IPO GMP (grey market premium) stands at ₹9. This means that the Globe Civil Projects shares are commanding a ₹9 premium over the issue price of ₹71 in the grey market. The same also means that the market participants are expecting 12.68% listing gains, and the listing of Globe Civil Projects shares is expected to be at ₹80, or a 12.68% premium over the upper band of the offer price of ₹71 a piece, as suggested by investorgain.com data.
Globe Civil Projects IPO: key risks
As per the RHP, or the Red Herring Prospectus, the company highlighted the following risks:
1. In fiscal 2024, fiscal 2023, and fiscal 2022, Globe Civil Projects derived 29.77%, 57.48%, and 54.62%, respectively, of its revenue from operations from the construction project receipts business segment from projects developed by the by Central Public Works Department (“CPWD”), its top customer. Any slowdown or inability to win new project awards from CPWD (whether due to a slowdown or cessation in new projects being undertaken by such entities, an inability to qualify for and successfully compete for new projects, or otherwise) or the loss of any of Globe Civil Projects’ current significant projects (whether due to restructuring or termination of such projects) could adversely affect its business, results of operations, and financial condition.
2. Globe Civil Projects’ business and profitability are substantially dependent on the demand for construction services, changes in budgetary allocation, and the requirements for construction projects in the infrastructure and non-infrastructure sectors across India. Any reduction in the activity and expenditure levels in such sectors may adversely affect its business and prospects and may reduce the number of projects Globe Civil Projects undertake and impede its growth
3. In fiscal 2024, fiscal 2023, and fiscal 2022, Globe Civil Projects derived 11.71%, 14.92%, and 11.23%, respectively, of its revenue from operations from trading of goods, primarily TMT steel. Any reduction in trading activity, changes in market demand, or fluctuations in the price of TMT steel may reduce its revenue from this segment and, consequently, impact its total revenue from operations.
4. For the fiscal years 2024, 2023, and 2022, Globe Civil Projects’ revenue from operations from projects undertaken under JVs contributed 33.36%, 28.98%, and 35.15%, respectively, amounting to ₹978.44 million, ₹575.36 million, and ₹891.50 million, respectively. The failure of a JV counterparty or consortium member to perform its obligations could impose additional financial and performance obligations, resulting in reduced profits or, in some cases, significant losses, and it may adversely affect its business, results of operations, and financial condition.
5. For fiscal 2024, fiscal 2023, and fiscal 2022, its % contribution to revenue from operations (construction project receipts) from its top ten projects was 89.54%, 92.82%, and 99.13%, respectively. Any delay or loss of any of these projects could adversely affect Globe Civil Projects’ business, cash flow position, results of operations, and financial condition.
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