Proposed issue of 6,226,600 equity shares, including greenshoe option, aims to raise Rs.2.5 to 2.75 billion.
 
CRISIL has assigned a CRISIL IPO Grade ‘2/5′ (pronounced ‘two on five’) to the proposed initial public offer of Prince Foundations Ltd (PFL). This grade indicates that the fundamentals of the issue are ‘below average’, in relation to other listed equity securities in India.

PFL has an established presence in the fast-growing Chennai realty market which has seen strong demand growth driven by the diverse industrial base in the city led by the IT/ITeS sector. Though the company was incorporated as recently as 2004, its promoters have sound experience of more than 20 years in the construction segment in Chennai, and enjoy good relationships with local authorities and customers. The company has shown healthy growth in turnover and profits in the last three years, thanks to the buoyancy in the sector.

However, PFL’s operations are restricted largely to Chennai which makes it vulnerable to any downturn in the real estate market in the city. PFL’s earnings prospects in the next few years will be critically dependent on its ability to scale up human resources and systems for the timely execution of projects. Moreover, the recent sharp increase in property prices in Chennai has adversely affected affordability. Also, PFL faces stiff competition, with the entry of larger players in Chennai. One of the promoter and key management personnel are owners of the land in case of some joint development projects which could lead to potential conflict of interest.