Danish Power IPO: A Promising Investment Opportunity in the Transformer Manufacturing Sector
Danish Power Limited, a company with nearly four decades of experience in transformer manufacturing, is set to launch its IPO on October 22, 2024, offering investors a unique opportunity to tap into a dynamic sector with significant growth potential. With a total issue size of ₹197.90 crores, this IPO consists entirely of fresh equity shares, marking a critical milestone in the company’s expansion plans.
Danish Power IPO Details and Investment Insights
The Danish Power IPO is structured as a book-built issue, with a price band set between ₹360 to ₹380 per share. Investors can subscribe to a minimum lot size of 300 shares, which translates to an initial investment of ₹114,000 for retail investors. High-net-worth individuals (HNIs) can apply for a minimum of two lots, with an investment of ₹228,000.
The IPO is expected to be listed on the NSE SME exchange on October 29, 2024, providing early investors an opportunity to participate in the company’s public journey. Hem Securities Limited is the lead manager for this offering, while Link Intime India Private Ltd will oversee the allotment and refunds process.
The subscription window will open on October 22, 2024, and close on October 24, 2024. The basis of allotment is anticipated by October 25, 2024, with shares expected to be credited to demat accounts on October 28, 2024.
A Glimpse into Danish Power Limited
Founded in 1985, Danish Power Limited is known for its diverse portfolio of transformers and related products, including those designed for renewable energy projects such as solar and wind power. The company manufactures inverter duty transformers (up to 20 MVA) for solar power plants, distribution transformers (up to 5 MVA), and power transformers (up to 63 MVA). It also offers control relay panels and substation automation services, solidifying its presence in the energy sector.
Operating two state-of-the-art manufacturing facilities in Jaipur, Danish Power is ISO-certified for quality, environmental, and occupational safety standards. The company’s client roster features industry giants like Tata Power Solar, Waaree Renewable Technologies, ABB India, and Torrent Power, reflecting its strong market credibility.
Danish Power Limited Financial Performance: A Steady Growth Trajectory
Danish Power has demonstrated robust financial performance in recent years. As of March 31, 2024, the company reported assets worth ₹15,977.95 lakhs, with revenue reaching ₹33,463.84 lakhs. Its profit after tax stood at ₹3,807.27 lakhs, signaling a strong profitability track record. The company’s pre-IPO EPS was ₹26.29, with a post-IPO EPS projected at ₹19.33. The P/E ratio post-IPO is estimated at 19.65x, indicating a moderate valuation compared to industry peers.
In comparison to its financials as of March 2023, Danish Power’s growth is evident. The company’s revenue almost doubled from ₹18,943.79 lakhs in 2023 to ₹33,463.84 lakhs in 2024, while profit surged from ₹857.09 lakhs to ₹3,807.27 lakhs. This consistent upward trend demonstrates the company’s ability to capitalize on the growing demand for renewable energy infrastructure and traditional power equipment.
Key Competitive Strengths
Danish Power’s growth is underpinned by several competitive advantages:
- Diverse Product Portfolio: Catering to industries ranging from renewable energy to power utilities, Danish Power’s products serve a wide range of applications, including solar and wind farms.
- Modern Manufacturing Facilities: Equipped with advanced technology, the company’s two plants ensure efficient and timely production, meeting stringent quality standards.
- Strong Client Relationships: Long-term contracts with prominent energy sector companies have reinforced Danish Power’s market presence.
- Experienced Management Team: With decades of expertise, the management team has successfully steered the company through evolving market trends.
IPO Objectives: Fueling Future Growth
The proceeds from the Danish Power IPO will be utilized primarily for capital expenditure to expand the company’s manufacturing capabilities. Plans include constructing a new factory shed and adding additional plant and machinery. A portion of the funds will also be directed toward working capital requirements and repayment of certain borrowings.
This strategic expansion is expected to position Danish Power to meet the growing demand for transformers and related equipment, especially in the renewable energy sector, where government initiatives and global trends are driving significant growth.
Reservation and Allotment
In terms of allotment, 50% of the issue will be reserved for Qualified Institutional Buyers (QIBs), 35% for retail investors, and 15% for Non-Institutional Investors (NIIs), providing ample opportunity for various investor categories to participate.
Conclusion: Should You Invest?
Danish Power Limited’s IPO presents an intriguing opportunity for investors looking to gain exposure to the energy and transformer manufacturing sector. With a strong track record of growth, a diversified product portfolio, and clear plans for expansion, the company is well-positioned to capitalize on the increasing demand for energy infrastructure, particularly in the renewable energy space.
For investors seeking long-term growth potential in a critical industry, the Danish Power IPO could be a rewarding addition to their portfolio. However, as with all investments, it is essential to consider market risks and the company’s future performance prospects before making a decision.