Promoters Increase Stake in Double Digits: A New Era for SEPC

Introduction to SEPC

SEPC (Shriram EPC Ltd until February 2021) was incorporated in June 2000. Since September 2022, Mark AB has become its majority stakeholder following an infusion of Rs 350 crore. SEPC specializes in executing EPC (Engineering, Procurement, and Construction) contracts, providing integrated solutions encompassing design, engineering, procurement, construction, and project management services in water, P&M, and infrastructure segments.

Promoters Increase Holdings Significantly

In a notable development, the promoters have increased their holdings from 26.96% to 37.64% in the quarter ending June 2024. This double-digit spike in promoter holding is noteworthy. Let’s delve into how this promoter holding has increased in this stock.

Financial Support and Strategic Investments

The company continues to receive strong financial support from its promoters, chiefly Mark AB, which initially infused Rs 350 crore in equity, then used to repay debt. The promoters have also committed to meeting any additional funding requirements as needed. As of March 2024, they have infused Rs 49 crore as quasi-equity bearing 0.01% interest, payable via a single bullet repayment in fiscal 2035. Additionally, the company successfully completed a Rs 100 crore rights issue in fiscal 2024 with further plans to raise an additional Rs 200 crore through rights issue this fiscal.

Leveraging Global Experience and Best Practices

Though Mark AB is new to the Indian markets, it has considerable experience in investing in and managing EPC businesses worldwide, including in Russia, Algeria, and Kuwait. Its experience in the EPC business in the Middle East will help bring globally accepted best practices to SEPC for timely project execution. Mark AB has taken over the operational and management control of SEPC, bringing its expertise to enhance the company’s performance.

Network and Business Expansion

Mark AB has access to a network of partners in both construction and technology, enabling SEPC to increase business volume by bidding for projects that it would otherwise not qualify for. This is already reflected in order wins, such as the AED 20.05 million contract to set up an Experience Centre in Dubai announced in March 2024, and a bid pipeline of Rs 2900 crore in place for new orders.

Commitment to Long-term Growth

The promoters have demonstrated their commitment to SEPC’s long-term growth by continually providing financial support and leveraging their global experience to bring best practices to the company. With a solid foundation and strategic investments, SEPC is well-positioned to capitalize on new opportunities and achieve sustained growth in the competitive EPC sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.