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Deven Choksey Research Report
Transrail Lighting Ltd. will launch its initial public offering on December 19 and the offer closes for subscription on Dec. 23. An EPC company which specializes in the power transmission and distribution business has fixed the price band in the range of Rs 410 to Rs 432 per share.
The minimum order lot for bidding is 34 shares, and then in multiples thereof.
The Rs 838.91-crore IPO comprises of a fresh issue of shares worth Rs 400 crore and an offer-for-sale of 1.01 crore equity shares worth Rs 438.91 crore.
The shares will be listed on both the National Stock Exchange and the BSE on Dec. 27.
Objects of the Offer
Funding incremental working capital requirements.
Funding capital expenditure.
General corporate purposes.
Outlook and Valuation:
Transrail Lightings stands out with a robust order book of Rs 1,02,130 million, 91% of it is concentrated in the transmission and distribution segment.
Overall, the company is providing strong revenue visibility in the near to medium-term. Over 60% of the current order book is contributed by international projects. The company’s extensive in-house manufacturing capabilities for towers, poles and cables offer a competitive edge, ensuring better control over quality and costs.
For FY24, company delivered a healthy Ebitda margin of 12% and a net profit margin of 7%, leading to strong return ratios, with ROE at 24% and ROCE at 29%, reflecting operational efficiency and effective capital deployment.
Valuation multiples of 25x P/E and 13x EV/Ebitda appear reasonable, considering the higher-thanusual margins reported in FY24. The robust order book for sustained growth, outweighs concerns over concentration risks and execution challenges. Given these factors, we assign a Subscribe rating.
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