Globe Civil Projects Ltd. IPO: Key Details

Globe Civil Projects

• Globe Civil Projects is coming out with a 100% book building; initial public offering (IPO) of 1,67,60,560 shares of Rs 10 each in a price band Rs 67-71 per equity share.
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on June 24, 2025 and will close on June 26, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 10 and is priced 6.70 times of its face value on the lower side and 7.10 times on the higher side.
• Book running lead managers to the issue is Mefcom Capital Markets.
• Compliance Officer for the issue is Vineet Rattan.

Profile of the company

Globe Civil Projects is an integrated engineering, procurement and construction (EPC) company headquartered in New Delhi. It has undertaken projects in eleven states of India, namely, Uttar Pradesh, Haryana, Delhi, Maharashtra, Andhra Pradesh, Karnataka, Gujarat, Chhattisgarh, Rajasthan, Uttarakhand, and Himachal Pradesh. It is into execution and construction of infrastructure projects comprising of Transport and Logistics projects, Social and Commercial projects and Non-Infrastructure projects comprising of commercial offices and housing. 

While its primary focus and strength had been deeply rooted in construction of education institution buildings and railway infrastructure, it has diversified in undertaking specialized infrastructure and non-infrastructure projects, such as railway bridges, airport terminal, elevated railway terminal and railway bridges and hospitals. Additionally, it also undertakes trading of goods, particularly TMT steel.

It also provides mechanical, electrical and plumbing (MEP), architectural and structural work, HVAC, firefighting and fire alarm systems (forming part of the construction project receipts segment). It is also registered Class-1 Super contractor with the Central Public Work Department (CPWD), Government of India to tender for any work up to Rs 6,500 million. The said license is valid for a period of five years from date of order i.e., November 24, 2022.

Proceed is being used for:

• Funding working capital requirements of the company
• Funding capital expenditure requirements towards purchase of equipment/machineries
• General corporate purposes

Industry Overview

India's construction market is expected to be the second largest globally by 2030, with construction sector GVA expected to grow to Rs 20.7 trillion, projected to grow at 5.8% CAGR between FY 2025-30. Separately, projections by the United Nations indicate that India's population will reach 1.64 billion by 2047, with 51% living in urban centres. A growing young population migrating to cities creates a demand for new housing units, student accommodation, and rental properties. This puts pressure on existing infrastructure and necessitates construction of new schools, hospitals, and public transportation systems. The construction sector is set to witness a robust growth, driven by higher budgetary allocation on infrastructure on yearly basis and flagship infrastructure projects like NIP, PM Gati Shakti, Smart Cities, Swachh Bharat Mission, and metro rail expansions.

On policy side, the government is streamlining regulations and processes to make it easier for companies to invest in construction projects. Efforts to simplify environmental clearances and land acquisition are expected to overcome previous delays. This fosters a more business-friendly environment and attracts new players to the sector. The downside risk to sector includes slowed credit flow from banks and rupee depreciation affecting costs. Nevertheless, the sector’s long-term prospects remain strong, supported by government initiatives such as the National Infrastructure Pipeline and PM Gati Shakti project, which will boost construction activity.

So, EPC growth prospects in the country remains intact on the back of substantial government infrastructure planned in major end user industries under National Infrastructure Pipeline and recently announced PM Gati Shakti project. Basis the historical trend, construction GVA is assumed at 35.9% share in the total construction sector output and with projected 5.8% CAGR and, the total economic output of construction sector is expected to reach Rs 57,661 billion with economic output of Dwellings, Other Buildings & Structures is expected to grow to Rs 56,941 billion. The value of the residential construction is estimated to reach Rs 10,844 billion while non- residential and other construction is estimated to reach Rs 46,097 billion.

Pros and strengths

Strong project management and execution capabilities: With a legacy of over two decades, the company has established a track of successfully executing a diverse mix of construction projects. Currently, it has completed 37 projects in the last two decades and have 13 on-going projects, for a diverse set of corporate, government and other customers across various segments. The largest project by area it successfully completed was Academic and Admin Block at AIIMS, Raipur, Chhattisgarh with an area of 463,801.51 sq. ft and a project cost of Rs 1,813.47 million. Among its ongoing projects, the largest project by area and value is NIT Narela Campus with an area of 688,908.57 sq. ft and an estimated project cost of Rs 3,270 million.

Strong and consistent financial performance: The significant growth of its business in the last three financial years has contributed considerably to its financial strength. Its total revenue from operations increased from Rs 2,857.09 million in Fiscal 2022 to Rs 3,321.62 million in Fiscal 2024, representing a CAGR of 7.82%. Its profit before tax increased from Rs 70.19 million in Fiscal 2022 to Rs 209.87 million in Fiscal 2024, representing a CAGR of 72.92%. It has been able to achieve its growth through its client relationships, efficient project execution and strong quality control systems in the projects that it constructs. It strives to maintain a robust financial position with emphasis on having a strong balance sheet.

Growing order Book and higher pre-qualification credentials: The company’s order book represents the estimated contract value of the unexecuted portion of its existing assigned construction project receipts and is an indicator of visibility of future revenue for the company (Order Book). Its Order Book, as at December 31, 2024, March 31, 2024, March 31, 2023 and March 31, 2022 amounted to Rs 7,785.27 million, Rs 9,808.56 million, Rs 9,378.00 million and Rs 3,090.5 million, respectively. Its Book to Bill Ratio for construction project receipts for December 31, 2024 and for Fiscals 2024, 2023 and 2022 was 3.06 times, 2.95 times, 4.02 times and 1.08 times, respectively.

Risks and concerns

Major revenue comes from top ten projects: For the nine months period ended December 31, 2024 and for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, the company’s percentage contribution to revenue from operations (construction project receipts) from its top ten projects was 98.33%, 89.54%, 92.82% and 99.13%, respectively. Further, the company’s revenue from operations (construction project receipts) stood concentrated in the top 10 ongoing projects out of the total ongoing projects during the Fiscals 2024, 2023 and 2022. As on March 31, 2025, there were 13 ongoing projects. Any delay or loss of any of these projects could adversely affect its business, cash flow position, results of operations and financial condition.

Geographical constrain: The company’s business is substantially dependent on revenue from Northern India. In the nine months period ended December 31, 2024 and Fiscal 2024, projects in Delhi contributed 66.07% and 47.19% of its revenue from operations (construction project receipts). Further, its business is concentrated in the states of Delhi, Uttar Pradesh and Karnataka in the nine months period ended December 31, 2024 and Fiscal 2024. Its growth strategy to expand into new geographic areas poses risks. It may not be able to successfully manage some or all of such risks, which may have a material adverse effect on its revenues, profits and financial condition.

High working capital requirement: The company’s business requires a significant amount of working capital. In many cases, working capital is required to finance the purchase of materials and the performance of engineering, construction and other work on projects before payments are received from customers. In certain cases, it is contractually obligated to its customers to fund the working capital requirements of its projects. The company’s working capital requirements may increase if, under certain contracts, payment terms do not include advance payments or such contracts have payment schedules that shift payments toward the end of a project or otherwise increase its working capital burdens. In addition, its working capital requirements have increased in recent years because it has undertaken a growing number of projects within a similar timeframe and due to the general growth of its business.

Outlook

Globe Civil Projects is an integrated EPC company headquartered in New Delhi. The company has successfully executed projects across 11 states in India, including Uttar Pradesh, Haryana, Delhi, Maharashtra, Andhra Pradesh, Karnataka, Gujarat, Chhattisgarh, Rajasthan, Uttarakhand, and Himachal Pradesh. Globe Civil Projects Limited has completed 37 projects. Currently, the company is working on 12 ongoing projects, including five social and commercial projects. On the concern side, the company’s business is concentrated in the states of Delhi, Uttar Pradesh and Karnataka in the nine months’ period ended December 31, 2024 and Fiscal 2024. The company’s growth strategy is to expand into new geographic areas poses risks. It may not be able to successfully manage some or all of such risks, which may have a material adverse effect on its revenues, profits and financial condition. Moreover, the company has high working capital requirements. If it has insufficient cash flows to meet working capital requirements there may be an adverse effect on its results of operations.

The issue has been offering 1,67,60,560 shares in a price band of Rs 67-71 per equity share. The aggregate size of the offer is around Rs 112.30 crore to Rs 119.00 crore based on lower and upper price band respectively. Minimum application is to be made for 211 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations increased by 42.35%, rising from Rs 2,333.45 million in Fiscal 2023 to Rs 3,321.62 million in Fiscal 2024. This growth was primarily driven by a 47.72% increase in construction project receipts, which rose from Rs 1,985.27 million in Fiscal 2023 to Rs 2,932.67 million in Fiscal 2024. The company’s total profit for the year in Fiscal 2024 was Rs 153.78 million compared to a total profit for the year of Rs 48.51 million in Fiscal 2023 which is an increase by 217.03%.

The company is into execution and construction of infrastructure projects comprising of Transport and Logistics projects, Social and Commercial projects and Non- Infrastructure projects comprising of commercial offices and housing. While its primary focus and strength is in construction of education institution buildings and railway infrastructure, it has diversified in undertaking specialized infrastructure and non-infrastructure projects, such as railway bridges, airport terminal, elevated railway terminal and railway bridges and hospitals. This focus and diversification align with the scope of these Government initiatives, which may allow the company to access a range of projects.