Transrail Lighting IPO: 10 key points to know from RHP before you subscribe to ₹839 crore issue | Stock Market News

Transrail Lighting IPO: The initial public offering (IPO) of Transrail Lighting is scheduled to kick off for subscription on Thursday, December 19, and will remain open till Monday, December 23. The company aims to raise ₹839 crore through this offering, which includes the issuance of 1.93 crore shares. This comprises a fresh issue of up to 0.93 crore shares, aggregating to ₹400 crore, and an offer for sale of 1.02 crore shares, amounting to ₹439 crore.

The IPO price band is set at ₹410 to ₹432 per share. 50% of the net offer will be reserved for qualified institutional buyers, while 15% for the non-institutional investors and 35% for the retail investors.

Retail investors can apply for a minimum of 34 shares in one lot and its multiples thereafter. At the upper end of the IPO price band, retail investors are required to make a minimum investment of ₹14,688 per lot.

Inga Ventures, Axis Capital, HDFC Bank, and IDBI Capital Market Services are the book-running lead managers of the Transrail Lighting IPO, while Link Intime India is the registrar for the issue.

Let us take a look at some of the key points mentioned in the Transrail Lighting IPO’s RHP:

Transrail Lighting IPO: 10 key things to know

About the Company: Transrail Lighting is one of the leading Indian engineering, procurement, and construction (“EPC”) companies with a primary focus on power transmission and distribution business and integrated manufacturing facilities for lattice structures, conductors, and monopoles.

As of September 30, 2023, the company has undertaken the EPC of 33,500 circuit kilometres (“CKM”) of transmission lines and 30,000 CKM of distribution lines, domestically and internationally. It provides EPC services in relation to substations up to 765 kilovolts (“kV”).

It has a presence in all the power transmission and distribution segments and majorly in high voltage (“HV”) and extra high voltage (“EHV”) segments.

Objective of the Issue: The company intends to use the net proceeds for funding incremental working capital requirements, capital expenditures (capex), and general corporate purposes.

Diversified Business Verticals: Apart from its core power transmission and distribution business, the company operates in other verticals such as civil construction, poles and lighting, and railways. The majority of revenue is generated from the power transmission and distribution segment, which contributed 78% to its topline in FY24. The other segments—civil construction, railways, and poles and lighting—accounted for 10.75%, 5.71%, and 5.56% of the revenue, respectively, during the same period.

Industry Outlook: India’s power transmission and distribution system has expanded significantly. The total length of domestic transmission lines increased from 413,407 CKM in FY19 to 471,341 CKM in FY23, and domestic distribution lines rose from 582,100 CKM in FY19 to 971,500 CKM in FY23.

To support the growing generation capacity, cumulative investments in the transmission sector are expected to reach approximately ₹2.30 trillion between FY24 and FY28.

End-to-End Capabilities: The company has steadily invested in backward integration by establishing manufacturing units for towers, conductors, and poles. This enables it to provide comprehensive solutions, including designing, manufacturing, procuring, testing, and supplying essential components for EPC projects and direct supplies.

These in-house capabilities cover a substantial portion of the EPC value chain in typical transmission line projects, reducing reliance on third-party suppliers.

Diversified Client Base: The company serves a wide range of clients in India, including central public sector undertakings under the Ministry of Power, state government-run utilities, and private power transmission and distribution companies. Additionally, the company has expanded globally, with its supply and services footprint spanning 58 countries.

Steady Growth in Financials: The company has demonstrated strong financial growth, reflected in rising revenues and increasing orders. Total revenue grew to ₹31,720.34 million in FY23 from ₹21,921.73 million in FY21, at a CAGR of 20%. Profit for the year also increased to ₹1,075.68 million in FY23 from ₹981.81 million in FY21, reflecting a CAGR of 5%.

Strengthening Global Presence: The company plans to strengthen its leadership in the EPC sector by building on its expertise in the power transmission and distribution space, both in India and globally. Its focus is on expanding into allied infrastructure sectors, growing the market for advanced HTLS conductors, and increasing its international business footprint.

Additionally, the company aims to enhance its pole and lighting product portfolio to capture new growth opportunities.

Dependence on Government Tenders: The company’s business relies heavily on tenders issued by government authorities, public sector undertakings, and utilities, which account for over 80% of its revenue.

Any delays in the release of these tenders or a lack of tenders from government entities could significantly impact its business and financial performance.

Listing and Allotment Details: The allotment for the Transrail Lighting IPO is expected to be finalised on Tuesday, December 24. The shares are scheduled to be listed on both the NSE and BSE, with a tentative listing date of December 27, 2024.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.