Transrail Lighting IPO: The mainboard initial public offering (IPO) of Transrail Lighting Limited was subscribed 5.31 times by the end of the second day of subscription. The public issue of the engineering and construction major focused on power distribution will close for bidding on Monday, December 23. The issue has received strong response from investors so far and the latest indicative share price shows a strong listing at a premium in the grey market.
Transrail Lighting IPO has reserved not more than 50 per cent of the shares in the public issue for qualified institutional buyers (QIB), not less than 15 per cent for non-institutional Institutional Investors (NII), and not less than 35 per cemt of the offer is reserved for retail investors. The employee reservation portion has been reserved equity shares aggregating up to ₹190 million.
Transrail Lighting IPO concluded the second day of bidding with a subscription of 5.31 times. The share allocated for retail individual investors received a subscription rate of 6.90 times, while the NIIs' category was subscribed 7.23 times. The allocation for QIBs saw a subscription level of 1.38 times. At the highest point of the price range, the IPO has been valued at ₹839 crore, resulting in a market capitalization of approximately ₹5,600 crore.
According to domestic brokerage Bajaj Broking, the valuation of Transrail Lighting IPO appears attractive due to its solid financial health, strong market position, and promising growth prospects. The company has demonstrated consistent revenue growth, profitability, and positive cash flow, which contribute to its financial stability.
Its involvement in infrastructure and lighting projects, particularly with government contracts, provides a reliable revenue stream. The company’s growth potential is enhanced by the increasing demand for energy-efficient and sustainable lighting solutions, as well as opportunities in smart technologies.
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“Transrail's plans for geographic expansion and product innovation align with favorable market conditions in the growing infrastructure sector. These factors make Transrail Lighting an appealing investment, though potential risks from competition and economic fluctuations should be considered. We recommend to subscribe the IPO with a long-term perspective,” said Bajaj Broking.
Transrail Lighting IPO GMP today or Transrail Lighting grey market premium is +180. This indicates Transrail Lighting share price were trading at a premium of ₹180 in the grey market, according to investorgain.com.
Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Transrail Lighting share price was indicated at ₹612 apiece, which is 41.67 per cent higher than the IPO price of ₹432.
Based on the grey market activities observed over the past seven sessions, the IPO GMP shows an upward trend today, indicating a strong listing. The minimum GMP recorded is Re 0, while the maximum is ₹185, as per experts from investorgain.com.
Transrail Lighting IPO includes a new equity issuance of ₹400 crore along with an offer-for-sale (OFS) of 1.01 crore shares by the promoter Ajanma Holdings. Hence, Transrail Lighting IPO is a book built issue of ₹838.91 crore. The issue is a combination of fresh issue of 0.93 crore shares aggregating to ₹400.00 crore and OFS of 1.02 crore shares aggregating to ₹438.91 crore.
The price band has been fixed in the range of ₹410 to ₹432 per equity share of the face value of ₹2. The Transrail Lighting IPO date of subscription will close on Monday, December 23. At the top end of the price range, the OFS is estimated at ₹439 crore, bringing the total size of the issue to roughly ₹839 crore and positioning the company's market capitalization at about ₹5,800 crore.
The funds raised from the new issue will be used to address additional working capital needs, finance capital expenditures, and assist with general corporate activities. Inga Ventures Pvt Ltd, Axis Capital Limited, HDFC Bank Limited, and IDBI Capital Market Services Limited are the lead managers responsible for running the books for Transrail Lighting IPO, whereas Link Intime India Private Ltd serves as the registrar for this offering.
The floor price and the cap price are 205 times and 216 times the face value of the equity shares, respectively. The price to earnings ratio based on diluted EPS for fiscal 2024 at the upper end of the price band is 22.05 times as compared to the average industry peer group PE ratio of 55.05 times. The Transrail Lighting IPO lot size is 65 equity shares and in multiples of 34 equity shares thereafter.
Tentatively, Transrail Lighting IPO basis of allotment of shares will be finalised on Tuesday, December 24, and the company will initiate refunds on Thursday, December 26, while the shares will be credited to the demat account of allottees on the same day following refund. Transrail Lighting share price is likely to be listed on BSE and NSE on Friday, December 27.
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Transrail Lighting is an EPC (engineering, procurement, and construction) company based in India. The company mainly specializes in the power transmission and distribution sector, as well as in integrated manufacturing of lattice structures, conductors, and monopoles.
With a history spanning four decades, the firm offers comprehensive turnkey solutions in the global power transmission and distribution industry and has built a reputation as a reliable partner over the years. The promoters of the company include Ajanma Holdings Private Limited, Digambar Chunnilal Bagde, and Sanjay Kumar Verma.
The company operates in 58 countries, including Bangladesh, Kenya, Tanzania, Niger, Nigeria, Mali, Cameroon, Finland, Poland, and Nicaragua, providing either turnkey EPC services or supply projects. As of June 30, 2024, Transrail Lighting has completed the EPC of 34,654 circuit kilometers (CKM) of transmission lines and 30,000 CKM of distribution lines, both domestically and internationally. The firm offers EPC services for substations up to 765 kilovolts.
The company has demonstrated significant financial growth. Its net profit surged to ₹233.2 crore in FY24, more than doubling from ₹107.6 crore in FY23, while revenue increased by 29.3 per cent to ₹4,076.5 crore, up from ₹3,152.2 crore in the prior year. For the quarter that ended in June 2024, Transrail reported a net profit of ₹51.7 crore with revenue reaching ₹915.8 crore.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.
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