December 18, 2024
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Transrail Lighting IPO Review * by Paresh Gordhandas, CA & Research Analyst.
Transrail Lighting is one of the leading Indian engineering, procurement and construction (“EPC”) companies with primary focus on power transmission and distribution business and integrated manufacturing facilities for lattice structures, conductors, and monopoles. It has a track record of four decades in providing comprehensive solutions on a turnkey basis globally and have been a trusted and longstanding partner in the power transmission and distribution sector.
Its position in the power transmission and distribution sector is extremely strong owing to the fact that
it has footprint in 58 countries like Bangladesh, Kenya, Tanzania, Niger, Nigeria, Mali, Cameroon, Finland, Poland, Nicaragua etc. including turnkey EPCs or supply projects.
The sector in which the company operates has strong growth potential. To service a large generation installed base, the estimated investment in the transmission sector is expected to cumulatively reach approximately Rs.2.30 trillion for Financial Year 2024-2028. Investments in distribution sector will be led primarily by spending under revamped distribution sector scheme, bolstered by smart metering investments, leading to cumulative investment in distribution to the tune of approximately Rs.3.00-3.50 trillion over the next five years.
The net size of the IPO is Rs. 587.24 crore, which is relatively moderate. The HNI portion, valued at Rs. 125.81 crore, holds significant potential for oversubscription. The shares are priced at a PE multiple of 22.05, which is quite attractive, especially when compared to peer companies such as KEC International, which has a PE multiple of 91.95, and Skippers India, with a PE multiple of 75.97.
From a fundamental perspective, the IPO appears well-priced with strong potential for both listing gains and long-term returns, especially given its competitive PE ratio relative to its peers.
From a grey market perspective, the IPO is currently commanding a premium of Rs. 120 over the offer price of Rs. 432, indicating strong investor interest and the likelihood of favorable listing gains. The combination of a reasonable PE multiple and grey market premium further supports its potential for positive returns post-listing
Transrail Lighting IPO Review
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