Transrail Lighting Limited IPO, which opened for subscription from December 19 to December 23. Exploring the company’s financial health, its grey market premium (GMP), and whether this IPO deserves your investment. If you’re considering other IPOs.
IPO Details and Timeline
- Dates: Open from December 19 to December 23, so you only have a short application window.
- Issue Size: ₹1600 crores, comprising:
- Fresh Issue: ₹400 crores (allocated for loan repayment and business expansion).
- Offer for Sale (OFS): ₹450 crores (proceeds go to existing shareholders).
- Price Band: ₹410–₹432 per share.
- Retail Quota: 35%, significantly higher than other IPOs with a 10% retail allocation.
The GMP (grey market premium) stands at ₹45–₹50, suggesting a profit potential of up to ₹1 lakh for High Net-worth Investors (HNI). Despite a volatile market, its GMP has remained stable, outperforming other recent IPOs like Sanatan Textiles and Venti Hospitals.
Financial Highlights
Trans Rail Lighting Limited has shown robust financial growth.
- Revenue Growth: Over 30% year-on-year.
- Net profit: increased significantly from ₹116 crores to ₹160 crores last year.
However, recent quarterly performance has raised concerns:
- Q1 FY2024 Revenue: ₹929 crores compared to ₹4130 crores in FY2023.
- Net Profit for Q1 FY2024: ₹51 crores, suggesting a potential annualized decline of 15–20%.
Despite these fluctuations, the company operates with a low market cap, offering opportunities for substantial growth.
Transrail Lighting Limited IPO: Business Overview
Founded in 2008, Trans Rail Lighting Limited specializes in:
- Engineering, Procurement, and Construction (EPC) of transmission and distribution lines.
- Civil Infrastructure: bridges, tunnels, elevated roads, cooling towers.
- Lighting Segment: Supply, installation, and testing services.
- Railway Infrastructure: Overhead electrification, signaling, and track linking.
The company operates globally, with significant projects completed in 58 countries, including Bangladesh, Kenya, Finland, and Nigeria. Its diverse portfolio and strong client base make it a reliable player in its sector.
Order Book and Market Potential
- Current Order Book: ₹10,213 crores, primarily from the power transmission and distribution sector.
- The power sector shows a CAGR growth of 45%, while infrastructure and railways exhibit growth rates of 55% and 1.5x, respectively.
Transrail Lighting Limited IPO: Strengths
- Diversified Portfolio: Involvement in multiple sectors reduces dependency on a single stream of revenue.
- Strong Order Book: Demonstrates demand and project stability.
- Retail Investor-Friendly: With a 35% retail quota, this IPO offers better allotment chances.
- Low valuation: At a PE of 22, it’s well-positioned against industry averages of 55.
Transrail Lighting Limited IPO: Weakness
- Revenue Volatility: Quarterly revenue declines could indicate challenges in sustaining growth.
- Legal Challenges: Past and ongoing legal proceedings related to its parent company, Gammon India, and subsidiaries could impact its reputation.
- Global Operations Risk: Currency fluctuations and foreign policies can affect overseas projects.
Transrail Lighting Limited IPO: Subscription Analysis
As of the second day:
- HNI Category: Subscribed 2x, expected to grow to 4x by the closing date.
- Retail Category: Already subscribed 6x, with the potential to reach 12x–15x.
- Small HNI Category: Over 10x subscription, projected to hit 20x.
Comparatively, other IPOs like Mata Machinery show higher subscription numbers, but their GMP and retail quotas are less favorable than Trans Rail Lighting Limited.
Transrail Lighting Limited IPO: Investment Strategy
Retail Investors:
Apply for 1 lot (34 shares) with an investment of ₹1,688. Investing more than 1 lot may hold your funds unnecessarily.
HNI Investors:
- Small HNI: Apply for 14 lots (₹25,632).
- Big HNI: Apply for 69 lots (₹10,472).
Summary: Transrail Lighting Limited IPO
Trans Rail Lighting Limited offers a promising investment opportunity, especially for retail and HNI investors looking for better allotment chances. Its strong financials, stable GMP, and diverse business model make it an attractive choice amidst the current IPO rush. However, be mindful of its potential risks, including revenue volatility and legal concerns.
Disclaimer: This article is for informational purposes only. Always consult a financial advisor before making investment decisions.
