Mumbai-based Transrail Lighting, a prominent engineering and construction company specializing in power transmission and distribution, has launched its ₹838.91 crore IPO. The price band is set at ₹410-432 per share, and investors can apply for a minimum of 34 shares or in multiples thereof.
- Issue Details:
- Fresh Issue: ₹400 crore.
- Offer for Sale (OFS): Up to 1,01,60,000 equity shares worth ₹438.91 crore.
- IPO Dates: Opens on December 19, closes on December 23.
- Listing Date: Expected on December 27, 2024, on BSE and NSE.
Key Highlights
- Strong Global Presence:
- Operations in 58 countries, including Kenya, Nigeria, Finland, and Poland.
- Completed 34,654 CKM of transmission lines and 30,000 CKM of distribution lines globally.
- Robust Financials:
- Q1 FY24 revenue: ₹929.70 crore.
- Net profit: ₹51.74 crore.
- Unexecuted order book worth ₹10,213 crore, providing revenue visibility for the medium term.
- Use of IPO Proceeds:
- Financing working capital requirements.
- Funding capital expenditure.
- General corporate purposes.
- Valuation Metrics:
- P/E ratio: 24.9x.
- EV/EBITDA: 12.1x, lower than industry peers.
Strengths
- Track Record:
Over four decades of experience in turnkey EPC projects in power transmission and distribution. - Diverse Product Portfolio:
Integrated manufacturing capabilities for lattice structures, conductors, and monopoles. - Growth Potential:
Supported by substantial government investments in power infrastructure. - Global Expansion:
Strategic focus on strengthening its substation and underground cabling businesses, and targeting regions with growing energy infrastructure needs.
Risks
- Sector Dependency:
Heavily reliant on the power transmission and distribution sector. - Execution Challenges:
Large unexecuted order book may pose risks in terms of project delays or cost overruns. - Competitive Landscape:
Faces stiff competition from domestic and global players.
Analyst Recommendations
Reliance Securities:
- Rating: Subscribe
- Reason: Strong order book, experienced management, and consistent financial performance.
Choice Broking:
- Rating: Subscribe
- Reason: Ranked 4th in power transmission EPCs in FY24; positive growth outlook.
SBI Securities:
- Rating: Subscribe for long-term
- Reason: Unexecuted order book of ₹10,213 crore provides healthy revenue visibility.
Canara Bank Securities:
- Rating: Subscribe
- Reason: Fair valuation and strong financial metrics position the company for long-term growth.
StoxBox:
- Rating: Subscribe for long-term
- Reason: Strategic investments in the power T&D sector offer significant growth opportunities.
IPO Insights
| Parameter | Details |
|---|---|
| IPO Size | ₹838.91 crore |
| Price Band | ₹410-432 per share |
| Minimum Lot Size | 34 shares |
| Reservation | QIB: 50%, NII: 15%, Retail: 35% |
| Unexecuted Order Book | ₹10,213 crore |
| Lead Managers | Inga Ventures, Axis Capital, HDFC Bank |
| Registrar | Link Intime India |
Should You Apply?
The Transrail Lighting IPO offers a promising investment opportunity for long-term investors. Its strong financial track record, robust order book, and growth potential in the power infrastructure sector make it a compelling choice. However, sector dependency and execution risks must be considered.
If you have a long-term investment horizon, subscribing to this IPO could be a strategic addition to your portfolio.
FAQs
1. What is the price band for Transrail Lighting IPO?
The price band is ₹410-432 per share.
2. What is the minimum investment required?
Investors must apply for a minimum of 34 shares, amounting to approximately ₹14,688 at the upper price band.
3. Is this IPO suitable for short-term gains?
While the IPO offers growth potential, it is better suited for long-term investors due to its strategic plans and robust order book.
4. What are the risks associated with this IPO?
Key risks include sector dependency, execution challenges, and competition.
5. How does Transrail Lighting compare to peers?
The company is fairly valued with a lower EV/EBITDA ratio and higher book-to-bill ratio, making it competitive.
6. What is the unexecuted order book of Transrail Lighting?
As of June 2024, the unexecuted order book stands at ₹10,213 crore.
7. How will the IPO proceeds be utilized?
The proceeds will be used for working capital, capital expenditure, and general corporate purposes.
8. When will the shares be listed?
The shares are expected to be listed on December 27, 2024, on both BSE and NSE.
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