Is Shivalaya Construction's Profit Plummeting by 42% a Cause for Concern?
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Synopsis
Shivalaya Construction's recent financial dip raises eyebrows as the company prepares for its IPO. With profits down by 42% and revenues also falling, what does this mean for potential investors? The upcoming public issue aims to address these challenges as the company seeks to bolster its financial foundation.
Key Takeaways
- Shivalaya Construction reports a 41.6% profit drop in FY25.
- Revenue declined by 11.7%.
- The company plans an IPO to raise Rs 450 crore.
- Funds will be used for debt repayment and corporate purposes.
- Shivalaya has completed 41 projects since its inception.
Mumbai, Sep 8 (NationPress) - The New Delhi-based Shivalaya Construction has submitted its draft documents to the market regulator SEBI in an effort to generate funds through a public offering. The company has reported a staggering 41.6% decline in financial performance for the fiscal year ending March 31 (FY25).
Its net profit has dropped to Rs 343.8 crore in FY25, down from Rs 588.9 crore in the previous fiscal year, as stated in its draft red herring prospectus (DRHP).
Revenue also witnessed a decline of 11.7%, falling to Rs 3,124.5 crore from Rs 3,537.5 crore in FY24.
The total income for FY25 has been reported at Rs 3,200.7 crore, which is lower than the Rs 3,591.6 crore recorded the previous year—indicating an almost 11% decrease.
Total expenses have seen a minor reduction, amounting to Rs 2,715.8 crore in FY25, down from Rs 2,785 crore in FY24, according to its DRHP.
The upcoming IPO will feature a new issue of shares valued at Rs 450 crore, alongside an offer-for-sale (OFS) of 2.48 crore shares by the promoters.
The company also plans to secure an additional Rs 90 crore through a pre-IPO round as part of the fresh issue.
Shivalaya Construction, specializing in infrastructure engineering, procurement, and construction (EPC), intends to allocate Rs 340 crore from the fresh issue proceeds for debt repayment, while the remaining funds will be directed towards general corporate needs.
As of July, the company has total borrowings amounting to Rs 856 crore. Established in 1997, Shivalaya Construction concentrates on the construction and maintenance of roads and highways.
To date, it has completed 41 projects, including 31 road EPC projects, four HAM projects, and six other EPC projects.
The company faces competition from other publicly listed firms such as Ashoka Buildcon, Dilip Buildcon, KNR Constructions, HG Infra Engineering, and PNC Infratech.
The IPO will have a face value of Rs 2 per share and will include a reserved section for eligible employees, who will have the opportunity to purchase shares at a discount.
The offering will be managed by IIFL Capital Services, Axis Capital, and JM Financial.
Point of View
It is crucial to highlight the significant challenges faced by Shivalaya Construction amidst its IPO preparations. While the decline in profits and revenue raises concerns, it also presents an opportunity for the company to reassess its strategies and financial management. For investors, understanding these dynamics is essential, and our commitment to transparency remains unwavering.
NationPress
08/09/2025
Frequently Asked Questions
What caused Shivalaya Construction's profit decline?
The decline in profit can be attributed to various factors, including decreased revenue and market conditions affecting the construction sector.
How much is the IPO expected to raise?
The IPO aims to raise approximately Rs 450 crore through a fresh issue of shares.
What will the funds from the IPO be used for?
The funds will primarily be used for debt repayment and general corporate purposes.
Who are Shivalaya Construction's competitors?
The company competes with other firms such as Ashoka Buildcon, Dilip Buildcon, KNR Constructions, HG Infra Engineering, and PNC Infratech.
What is the face value of Shivalaya's shares in the IPO?
The face value of the shares in the IPO is set at Rs 2 per share.
