Mumbai: Electrical transformer component manufacturer Mangal Electrical Industries’ Rs.400 crore IPO opens today, even as analysts have pitched this as a favourable buy on the back of a strong demand and a consistent growth in revenues.
According to its website, the Jaipur-based company manufactures various types of CGRO coils and assemblies for transformers, besides taking up Engineering, Procurement and Construction (EPC) transformer substation projects.
Prior to the IPO, the company had already raised Rs.120 crore from an institutional funding round where Finavenue Capital Trust, Sundaram Alternative Investment Trust, Societe Generale, and Swyom India Alpha Fund invested in the company, according to a circular released to the BSE’s website.
The company’s shares are trading at a GMP of Rs.21 or 4%, an indicator that the IPO is expected to have a good response.
Opening today, August 20, this IPO consists of a fresh issue of 52 lakh shares with a price band of Rs.533- Rs.561 per share. The minimum bid quantity is 26 shares, with the minimum investment amount of Rs.14,586 per lot.
The company aims to use the proceeds for repaying its debt, investing in expanding its current facility in Rajasthan and funding its various working capital requirements.
Analysts have recommended subscribing to the issue, considering the better P/E ratio of 24.3x as against the industry average of 26x, indicating reasonable valuations.
“We recommend subscribing for long-term gains, though margins remain vulnerable to raw material price volatility, as seen in FY24 when costs rose by 21 per cent,” an analyst report by Canara Bank Securities said.
Another report from brokerage firm Ventura Securities has agreed to this, noting Mangal Electricals’ consistent focus on increasing production and improving capacity utilisation, besides expanding its geographical footprint.
“Its strategic focus on quality, technological investments, and strong customer relationships provides a solid foundation for continued growth, particularly with the increasing demand in the power infrastructure and renewable energy sectors,” the brokerage said in its report.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
