Suntech Infra Solutions

• Suntech Infra Solutions is coming out with an initial public offering (IPO) of 51,61,600 equity shares in a price band Rs 81-86 per equity share.
• The issue will open on June 25, 2025 and will close on June 27, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 8.10 times of its face value on the lower side and 8.60 times on the higher side.
• Book running lead manager to the issue is GYR Capital Advisors.
• Compliance Officer for the issue is Kanika.

Profile of the company

The company is a business-to-business (B2B) construction company. The company is engaged into the business of civil construction services such as Civil Foundation Works, Civil Structural Works; on direct contracting and sub-contracting basis and Renting of Construction Equipment. It has served both public and private sector clients, delivering solutions across industries such as Power, Oil & Gas, Steel, Cement, Renewable Energy, Refineries, Petrochemical Plants, Fertilizer Plants, and Process Plants. Additionally, it contributes to urban and rural infrastructure projects, including bridges, metros, and irrigation systems.

Its expertise spans a wide range of infrastructure projects, including - Piling and Foundation work, Super Structure, Earthworks, Bridges and flyovers, Industrial and commercial structures, it also provides construction equipment rentals on a hire basis. The company is now venturing into Irrigation and Port Construction. It secures contracts generally through One-to-One negotiation and Tenders. Geographically the company generates revenue in India from the states like Delhi, Bihar, Gujarat, Orissa, Rajasthan etc. Further, the company generates revenue majorly from Civil Foundation Work. 

The company is an ISO 9001:2015 certified organization for Quality Management System, ISO 14001:2015 certified organization for Environmental Management System and ISO 45001:2018 certified organization for Health and Safety Management System. It is committed to provide quality work to its customers that meets the project standards and specifications for materials, workmanship and schedules while maintaining profitability and competitiveness.

Proceed is being used for:

• Funding working capital requirements 
• Funding of capital expenditure requirements of the company towards purchase of construction equipments for civil construction business
• General corporate purposes

Industry Overview

India’s high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Infrastructure is a key enabler in helping India become a $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs.

In Interim Budget 2024-25, capital investment outlay for infrastructure has been increased by 11.1% to Rs. 11.11 lakh crore ($133.86 billion), which would be 3.4 % of GDP. As per the Interim Budget 2023-24, a capital outlay of Rs 2.55 lakh crore ($30.72 billion) has been made for the Railways, an increase of 5.8% over the previous year. Starting with 6,835 projects, the NIP project count now stands at 9,142 covering 34 sub-sectors, as per news reports. Under the initiative, 2476 projects are under the development phase with an estimated investment of $1.9 trillion. Nearly half of the under-development projects are in the transportation sector, and 3,906 are in the roads and bridges sub-sector.

With a 37% increase in the current fiscal year, capital expenditures (capex) are on the rise, which bolsters ongoing infrastructure development and fits with 2027 goals for India's economic growth to become a $5 trillion economy. In order to anticipate private sector investment and to address employment and consumption in rural India, the budget places a strong emphasis on the development of roads, shipping, and railways. India, it is estimated, needs to invest $840 billion over the next 15 years into urban infrastructure to meet the needs of its fast-growing population. This investment will only be rational as well as sustainable, if it additionally focuses on long-term maintenance and strength of its buildings, bridges, ports, and airports.

Pros and strengths

Established track record for timely execution: It has a track record of effectively utilizing its management bandwidth, skills, and internal systems to execute projects that span several years for completion. The company has proven its execution capabilities in managing significant Civil Contract, such as construction of ATC Tower, Versace Tower and Pachpadara Refinery etc. Typically, the average period for the execution of Turnkey Pile Foundation Contracts ranges between 06 to 07 months and for Civil Construction For Bridge and Industrial Building, etc. ranges between 12 to 17 months. A project's timely or early completion results in technical competency, which is advantageous when a company is being evaluated technically before being awarded the contract.

Fleet of construction equipment: Its range of solutions include renting of construction equipment. Its experience and core competencies in the construction industry has helped it to successfully deliver quality and reliable solutions. The large portfolio of equipment enables the company to correctly take orders with project specifications and provide quality services in a timely and cost-effective manner. It identifies the target customers within the construction industry, which includes infrastructure or construction companies, contractors, developers etc and highlight factors such as cost-effectiveness, innovative technologies, sustainability, or efficiency gains.

Long-standing relationships with customers: Over the years, it has established strong relationships with customers across various industries, with a significant presence in Power, Oil & Gas, Steel, Cement, and Renewable Energy sectors. Its dedicated service teams, focus on operational excellence, and commitment to high-quality standards and employee safety have enabled it to retain existing clients while attracting new ones. Additionally, its long-standing partnerships provide it with key competitive advantages, such as revenue visibility, industry goodwill, and a deep understanding of its clients' needs, reflecting the consistent quality of its services.

Risks and concerns

Dependent upon top ten customers: Its business heavily relies on its customer base, and the potential loss of any of its customers could have a negative impact on its sales and, consequently, its overall business and financial performance. If it was to lose one or more of its significant or key customers or experience a reduction in the volume of business they provide, it could result in adverse consequences for its business, financial health, and cash flow. It cannot guarantee that it will be able to maintain the same levels of business as it has historically or secure long-term contracts with its major customers on mutually beneficial terms.

Defaults in payment from customers: The majority of its sales are to customers on a purchase order basis, with standard payment terms. However, for its domestic orders, it typically relies on its monitoring of the ability of its customers to pay under open credit arrangements. If it is unable to collect customer receivables or if the provisions for doubtful receivables are inadequate, it could have a material adverse effect on its business, financial condition, and results of operations.

Intensive working capital requirement: The company’s working capital requirement is driven by essential upfront and ongoing costs. Initial site setup, including offices, safety facilities, storage, and equipment, represents about 10-15% of total project cost, requiring immediate cash outflow. It also maintains a one-month stock of raw materials and consumables to avoid disruptions, necessitating continual inventory investment. Initial purchases of long-term assets like tools and site infrastructure further demand significant upfront funds. Additionally, a 15-30 day site gestation period requires working capital to support initial operations before full functionality is achieved. With monthly invoicing and typical client payments received 45-50 days post-certification, approximately three months of working capital is essential to sustain site activities until payments commence. These factors together necessitate external funds to support early cash flow needs and ensure uninterrupted progress.

Outlook

Suntech Infra Solutions is engaged into the business of Civil Construction Services such as Civil Foundation Works (including - Piling and Foundation work), Civil Structural Works and Construction Equipment Rentals. The company has provided services to Public as well as Private Sector. On the concern side, it requires several statutory and regulatory permits, licenses and approvals to operate its business, some of which are either received or applied for. Many of these approvals are subject to periodical renewal. Any failure to renew the approvals that may expire, or to apply for the required approvals, licences, registrations or permits, or any suspension or revocation of any of the approvals, licences, registrations and permits that have been or may be issued to it, could result in delaying the operations of its business, which may adversely affect its business, financial condition, results of operations and prospects.

The company is coming out with a maiden IPO of 51,61,600 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 81-86 per equity share. The aggregate size of the offer is around Rs 41.81 crore to Rs 44.39 crore based on lower and upper price band respectively. On performance front, the Revenue from Operations of the company for fiscal year 2024 was Rs 9,559.45 lakh against Rs 8,567.57 lakh total income for Fiscal year 2023. An increase of 11.58% in revenue from operations. This increase was due to increase in hiring business, new projects acquired and increase in margins. Moreover, the Profit after tax for the Fiscal 2024 were at Rs 924.52 lakh against profit after tax of Rs 575.60 lakh in fiscal 2023, An increase of 60.62%.

Meanwhile, it remains committed to enhancing its project execution capabilities to achieve higher client satisfaction and improved operating margins. To support this, it has invested in construction equipment, project management systems, and prioritized workforce development through continuous training in construction techniques and safety protocols. Key steps it has implemented include preparing detailed micro resource mobilization plans and quantity liquidation plans to ensure optimal resource allocation and timely project completion. It adheres to safety protocols, conduct daily tool box talks, and run a Safety Award Program to improve safety and site performance.