Venture and growth capital investor Sequoia Capital India's shareholding in Pratibha Industries Ltd, an infrastructure solutions provider focusing on water management and urban infrastructure space, has crossed 5 per cent. Sequoia Capital now holds 5.01 per cent stake in Pratibha, which raised Rs 100 crore from the private equity major ChrysCapital last year.
The share price of Pratibha Industries, which has been hammered along with other small and mid-cap companies, is currently trading near its 52-week low. Sequoia Capital, which has been buying into the company since the beginning of 2011, would have spent approximately Rs 25 crore for its stake, according to VCCircle estimates.
On Tuesday, the share price of Pratibha Industries closed at Rs 29.35 on the BSE, down 6.53 per cent from the previous close. A chunk of the stake was acquired by Sequoia in February for Rs 19.24 crore (at Rs 55 per share). The recent deals have been done at Rs 36-Rs 37 per share, bringing down the average acquisition price.
Incidentally, ChrysCapital had recently picked up shares in the construction firm NCC Ltd, subscribed to a fresh issue at Rs 92 per unit.
Sales of Pratibha Industries went up 26 per cent to Rs 1,268 crore, with net profit of Rs 71.4 crore, for FY11. Pratibha has an order book of Rs 5,840 crore and the focus on the water segment helps it maintain higher margins, compared to other EPC players. The company is currently trading at just over 3.51x FY12E earnings.
“Pratibha Industries’ operating margins have been improving at around 13?13.5 per cent over the past years and we expect it to sustain owing to its focus towards the high-margin segment of water engineering. Also, 96 per cent of order book is well protected through escalation clause,” a report by Networth Stock Broking stated on December 9.
“Given a sturdy order book, coupled with proactive nature of the management, the company’s execution track record and upcoming opportunities in water engineering, we believe that it can register a top line CAGR of 23 per cent over FY11?FY13E,” the report added. The company is also planning to sell off its pipe division (with a capacity of 90,000 TPA) as it wants to focus on the core business.