Upcoming IPO: Transrail Lighting to Launch on December 19 with Price Band Set at ₹410-432 per Share

Transrail Lighting IPO: Key Details and Insights

Transrail Lighting Limited is set to make its debut in the capital markets with an Initial Public Offering (IPO) that has garnered significant attention. The company has fixed its IPO price band between ₹410 and ₹432 per equity share, with a face value of ₹2. The subscription period for this IPO is scheduled from Thursday, December 19, to Monday, December 23, 2023, with the allocation to anchor investors taking place a day prior, on December 18.

Pricing and Valuation Metrics

The price band reflects a floor price of 205 times and a cap price of 216 times the face value of the equity shares. At the upper end of the price band, the price-to-earnings (P/E) ratio based on diluted earnings per share (EPS) for fiscal 2024 stands at 22.05 times. This is notably lower than the average P/E ratio of its industry peers, which is approximately 55.05 times. The lot size for the IPO is set at 65 equity shares, with subsequent bids in multiples of 34 shares.

Share Allocation Structure

Transrail Lighting has structured its share allocation to cater to various investor categories. The IPO reserves not more than 50% of the shares for qualified institutional buyers (QIB), at least 15% for non-institutional investors (NII), and a minimum of 35% for retail investors. Additionally, there is an employee reservation portion amounting to ₹190 million, aimed at incentivizing the workforce.

Timeline for Allotment and Listing

The basis of allotment for the Transrail Lighting IPO is expected to be finalized on Tuesday, December 24, 2023. Refunds will be initiated on Thursday, December 26, with shares credited to the demat accounts of allottees on the same day. The shares are anticipated to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Friday, December 27.

Company Overview

Transrail Lighting is an established EPC (engineering, procurement, and construction) company specializing in the power transmission and distribution sector. With a legacy spanning over four decades, the company has built a reputation for delivering comprehensive turnkey solutions in the global power transmission and distribution industry. Its portfolio includes integrated manufacturing of lattice structures, conductors, and monopoles.

The company has a significant international footprint, operating in 58 countries, including Bangladesh, Kenya, and Nigeria. As of June 30, 2024, Transrail Lighting has successfully completed the EPC of 34,654 circuit kilometers (CKM) of transmission lines and 30,000 CKM of distribution lines, showcasing its capability in handling large-scale projects.

Financial Performance

Transrail Lighting has demonstrated robust financial growth, with its net profit soaring to ₹233.2 crore in FY24, more than doubling from ₹107.6 crore in FY23. Revenue also saw a substantial increase of 29.3%, reaching ₹4,076.5 crore, up from ₹3,152.2 crore the previous year. For the quarter ending June 2024, the company reported a net profit of ₹51.7 crore, with revenue hitting ₹915.8 crore.

Market Position and Competitors

According to the red herring prospectus (RHP), Transrail Lighting’s listed peers include KEC International Ltd, Kalpataru Projects International Ltd, Skipper Ltd, Patel Engineering Ltd, and Bajel Projects Ltd. The P/E ratios of these competitors vary significantly, with KEC International at 91.95 and Patel Engineering at 15.57, indicating a competitive landscape in the EPC sector.

IPO Structure and Use of Proceeds

The Transrail Lighting IPO comprises a new equity issuance of ₹400 crore, alongside an offer-for-sale (OFS) of 1.01 crore shares by the promoter, Ajanma Holdings. At the upper end of the price range, the OFS is estimated at ₹439 crore, bringing the total issue size to approximately ₹839 crore, which positions the company’s market capitalization at around ₹5,800 crore. The funds raised will be utilized for working capital needs, capital expenditures, and general corporate purposes.

Conclusion

The Transrail Lighting IPO presents a compelling opportunity for investors looking to tap into the growing power transmission and distribution sector. With a strong financial track record, a solid operational foundation, and a well-structured IPO, the company is poised for significant growth in the coming years. As always, potential investors are advised to conduct thorough research and consult with financial experts before making investment decisions.

For further updates and insights, stay tuned to reliable financial news sources and market analysis platforms.