Transrail Lighting: Key Details, Financials, Peers, Key Risks, GMP — All You Need To Know

Transrail Lighting Ltd. will enter the Indian primary market on Thursday, looking to raise nearly Rs 838.91 crore through its initial public offering. The EPC company, active in power transmission and distribution business, will offer fresh shares, along with a promoter — Ajanma Holdings Pvt. —offloading shares through the maiden public offer.

The company has already carried out a pre-IPO placement worth Rs 50 crore to Volrado Venture Partners Fund IV Gamma, Shyamsundar B. Asawa, Saurabh Sanjay Agrawal, and Divyam Sanjay Agrawal, at a price of Rs 484 per share.

• Issue Opens: Dec. 19

• Issue Closes: Dec. 23

• Anchor Book Open: Dec. 18

• Price Band: Rs 410 to Rs 432

• Fresh Issue: Shares worth Rs 400 crore

• Offer For Sale: Rs 438.91 crore (at cap price)

• Employee Reserved Portion: Shares worth Rs 19 crore

• Total Offer Size: Rs 838.91 crore

• Minimum Bid Quantity: 34 shares

The Mumbai-based company will garner Rs 400 crore from the fresh issue, while the Rs 438.91 crore will go to the selling promoter. The net proceeds from the fresh issue, excluding the Rs 50 crore pre-IPO placement, will be used to fund incremental working capital requirements and further capital expenditure.

The company will utilise Rs 250 crore raised from the net proceeds and pre-IPO placement towards its working capital requirements, of which Rs 217.02 crore will be deployed by fiscal ending March 2025.

Another Rs 90.73 crore has been reserved for capex spends, all which will be invested in the current financial year.

The company clocked revenue from operations at Rs 896.90 crore at the end of quarter ended June 2024, while net profit stood at Rs 51.74 crore. Earnings per share for the period stood at Rs 4.17.

Cash and cash equivalents on the company's books stood at Rs 88.33 crore.

Transrail Lighting is an engineering, procurement and construction company, primarily focussed on transmission and distribution business. It also runs integrated manufacturing facilities for lattice structures, conductors, and monopoles. The company offers solutions to global players in the sector on a turnkey basis.

In its four decades, Transrail has completed 200 projects and it currently present in 58 countries including Bangladesh, Kenya, Tanzania, Niger, Nigeria, Mali, Cameroon, Finland, Poland, Nicaragua, etc., including turnkey EPCs or supply projects.

As of June 2024, the company has undertaken EPC projects spanning 34,654 circuit kilometers transmission lines and 30,000 CKM distribution lines.

The Indian market accounted for Rs 449.46 crore of its revenue in the June quarter, while the remaining Rs 447.44 crore came from abroad.

Transrail's unexecuted order book, as of June 2024 stood at 10,213.07 crore, after almost doubled to Rs 10,100.47 crore in March 2024 from Rs 5,907.59 crore two years ago.

Going forward, the EPC transmission and distribution company intends to execute the following strategies to strengthen its position as an infrastructure turnkey solutions provider:

• Leverage technical expertise, specialised domain knowledge and experience to expand core competencies.

• Expand EPC portfolio into other allied and ancillary infrastructure sectors.

• Focus on expanding the market for its conductors, and leverage new-age high temperature low sag conductors.

• Strengthen foothold in nations of West Africa, East Africa, SAARC and Southeast Asia, Latin America, Middle East and North African regions, and explore prospects in Australia.

• Enhance pole and lighting business in various product categories.

An Indian listing will make Transrail a peer to listed transmission and distribution players including KEC International Ltd., Kalpataru Projects International Ltd., Skipper Ltd., and Patel Engineering Ltd.

• Transrail is subject to risks from project cancellations or modifications, which can affect business, future prospects and financial conditions, among other things.

• As a turnkey EPC solutions provider, the company works on projects with long execution periods and time overruns, which can in turn affect estimated costs and revenue estimates. It has faced time and cost overruns in certain international projects.

• The company is heavily dependent on government and PSU tenders for business, with such projects accounting for 69.6% in last June fiscal quarter. It has raised 82.66%, 82.35% and 81.04% of its revenue from government projects.

• Since almost half of its business originate in foreign regions, the company runs a foreign currency risk.

• As of September 2024, the company has total outstanding indebtness of Rs 5,768.93 crore.

• The company has an outstanding FIR against it, filed by Central Bureau of Investigation, Anti-Corruption Bureau, Lucknow for its Gomti River Project.

The grey market premium for the Transrail Lighting IPO stood at Rs 136 as of 3:57 p.m. on Wednesday. This puts the estimated listing price at Rs 568, which is 31.48% higher than the upper price limit of Rs 432.

Investors should note that GMP are speculative and are not backed by exchanges.

Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisors and read red herring prospectus thoroughly before placing bids.