Shivalic Power Control IPO: Fully Subscribed Within Hours, GMP Rises

Shivalic Power Control IPO :The initial public offering (IPO) of electric panels maker Shivalic Power Control Ltd has garnered significant attention from investors, achieving full subscription within hours of its opening on June 24, 2024. By 11:39 am on the first day of bidding, the ₹64.32-crore IPO received 1.92 times subscription, with bids for 82,00,800 shares against the 42,67,200 shares on offer

Subscription Details

• Non-Institutional Investors: Subscribed 1.02 times.
• Retail Individual Investors (RIIs): Subscribed 3.41 times.
• Overall Subscription: 1.92 times by midday on the first day.

Key Dates for Shivalic Power Control IPO

• IPO Closing Date: June 26, 2024.
• Allotment Finalization: June 27, 2024.
• Listing Date: July 1, 2024, on NSE SME.

IPO Price and Lot Size

• Price Band: ₹95 to ₹100 per share.
• Lot Size: Minimum 1,200 equity shares.
• Minimum Investment: ₹1,20,000 for retail investors (1,200 shares x ₹100 per share).

Grey Market Premium (GMP)

• Current GMP: ₹155, indicating a 155% expected listing gain over the issue price. The GMP reflects market sentiment and investor readiness to pay more than the issue price.

Company Overview

Founded in 2004, Shivalic Power Control Ltd specializes in manufacturing a variety of electric panels, including PCC Panels, IMCC Panels, Smart Panels, MCC Panels, DG synchronization panels, Outdoor panels, HT Panels up to 33KV, VFD Panels, Power Distribution Boards, Bus Duct, and LT & HT APFC Panels. The company is authorized by industry giants like L&T, Siemens, Schneider Electric, and TDK to manufacture fully type-tested panels as per international standards.

Financial Performance

• Revenue Growth: 44.03% increase between FY 2022 and FY 2023.
• Profit After Tax (PAT): 309.78% increase in the same period.

Use of Proceeds

The net proceeds from the IPO will be used for:

• Working capital requirements.
• Capital expenditures, including procurement of new machinery and construction of a new assembly line.
• Inorganic growth through acquisitions.
• General corporate purposes.

Strengths

1. Strong Financial Growth: The company has shown impressive growth in revenue and profit margins. Its return on equity (ROE) stands at 28.33%, and return on capital employed (ROCE) is 19.20%.
2. Established Market Presence: With over 20 years in the industry, Shivalic Power Control has a strong foothold in manufacturing LT and HT electric panels, serving various sectors including FMCG, Metal, Cement, and Automobile industries​ ​.
3. Quality Assurance: The company sources materials from renowned suppliers like L&T, Siemens, ABB, ensuring high product quality. It also holds several ISO certifications​ ​.

Weaknesses

1. Capacity Utilization: The capacity utilization has remained under 40%, suggesting inefficiencies in production optimization​​.
2. High Debt Levels: The company’s debt-to-equity ratio is 1.09, which indicates significant borrowing that could pose financial risks​ ​.
3. Client Concentration: The top ten clients contribute a substantial portion of the company’s revenue. Any loss of business from these clients could adversely affect revenues and profitability​ ​.

Analyst Views

1. Positive Sentiment: Analysts recommend the IPO for long-term rewards, citing strong financial growth and market position. The company’s recent financial performance, though impressive, raises some concerns about its sustainability.
2. Fully Priced IPO: The IPO is seen as fully priced, discounting near-term positives. The valuation reflects the company’s recent growth but also suggests limited short-term upside potential.
3. GMP and Listing Gains: The strong grey market premium indicates high investor confidence and potential for significant listing gains.

In conclusion, Shivalic Power Control’s IPO has received strong investor interest, reflecting confidence in the company’s growth prospects and financial health. Potential investors should weigh both the strengths and risks before making investment decisions.

Disclaimer: The opinions and suggestions presented above are solely those of the contributing analysts or brokerage firms, rather than those of Dawkco News. We recommend that investors consult with qualified professionals before taking any investment actions.