The Mangal Electrical Industries IPO has been launched today. This Rs 400 crore issue will be open till August 22, and the price bank has been fixed between Rs 533-561 per share. It is primarily a book-build issue comprising of fresh issue of shares.
Should you be on this IPO? Here is a look at all the key factors that investors need to look into before subscribing to this issue –
Mangal Electrical Industries IPO: Key issue details
The Mangal Electrical Industries IPO comprises of fresh issue. It will be a fresh issue of 0.71 crore shares, and the overall issue size is Rs 400 crore. The higher end of the issue price band is Rs 561 per share. The lot size for an application has been fixed at 26. The minimum amount, as a result, that needs to be invested by retail investors is Rs 13,858 (the cost of 26 shares at the upper end of the price band). NIIs have to apply for a minimum lot of 14.
Mangal Electrical Industries IPO: Objective
The management has launched the IPO with a specific objective in mind. The proceeds of the IPO would be used for repayment/prepayment of borrowings by the company. The payment may be in full or in parts. There is no clear indication of that. Some of the proceeds will also be used for capital expenditure, including civil works for the company.
Some amount will also be used for funding of working capital requirements of the company and other general corporate purposes.
Mangal Electrical Industries IPO: GMP edging higher
Though this is the first day of the Mangal Electrical Industries IPO, the GMP is already edging higher. It is up to Rs 27 a share, which is merely 5% as of now. The grey market premium is an unofficial measure of investor interest and the value that they see in a specific issue.
Mangal Electrical Industries IPO: Business fundamentals
As per the DRHP, Mangal Electrical Industries is an integrated power infrastructure company. It is engaged in manufacturing transformers and processing transformer components such as CRGO slit coils, laminations, amorphous cores, and oil-immersed circuit breakers. It has 5 facilities in Rajasthan, and the company has certifications from NABL, PGCIL and NTPC.
The customer base is significantly diverse and caters to a wide base across government utilities, PSUs, private energy producers and international markets. The company is positioned as a key player in high-capacity transformer solutions. The company’s board plans to expand manufacturing capacity through technology and infrastructure upgrades. They are enhancing operational capacity by securing 765 kV class approval from PGCIL as well.
Mangal Electrical Industries IPO: Valuation
Anand Rathi has recommended ‘Long-term Subscribe’ on the issue. As per the brokerage house, at the upper price band, the company is valued at “FY25 P/E of 32.8x, with a post-issue market capitalisation of Rs 1,550 crore.”
Given the growth in India’s substation capacity in the past few years, driven by rising electricity demand, they see the company “creating a favourable environment for transformer manufacturing with consistent demand supporting production planning and operational efficiency.”
At current levels, they see the “IPO as fully priced.”