Chamunda Electricals, a company specializing in providing electrical substation testing and commissioning services, as well as solar power generation park operations, is set to launch its IPO with a fresh issue of 29.19 Lakh shares, amounting to ₹ 14.60 Crores. The IPO opens for subscription on February 4, 2025, and closes on February 6, 2025, with the allotment expected to be finalized on February 7, 2025, and listing scheduled for February 11, 2025 on the NSE SME.

The price band for this issue is set between ₹ 47 and ₹ 50 per equity share, offering investors an opportunity to become part of a company with solid growth prospects in the power and energy sector. The market capitalization of Chamunda Electricals at an IPO price of ₹ 50 per share will be ₹ 55.02 Crores. The lot size for retail investors is 3,000 shares, requiring a minimum investment of ₹ 1,50,000, while high-net-worth individuals (HNIs) are expected to invest in two lots, amounting to ₹ 3,00,000.

The IPO has attracted attention, especially with a Grey Market Premium (GMP) of ₹ 8, translating to a potential 16% listing gain. The company has raised ₹ 4.11 Crores from Anchor Investors at the upper price band of ₹ 50 per share, showing strong backing for the IPO.

The proceeds from the IPO will be used to fund several important objectives, including capital expenditure for new testing equipment (₹ 120.51 Lakhs), working capital requirements (₹ 550 Lakhs), repayment of term loans and cash credit (₹ 285.07 Lakhs), general corporate purposes, and issue expenses. The allocation of funds for these purposes is expected to fuel the company's expansion plans and strengthen its position in the growing power sector.

In terms of financial performance, Chamunda Electricals has shown consistent growth, with revenues increasing from ₹ 1,132.25 Lakh in FY 2022 to ₹ 2,006.69 Lakh in FY 2023. The company posted a Profit After Tax (PAT) of ₹ 281.48 Lakh for FY 2024, up from ₹ 243.63 Lakh in FY 2023. Its EBITDA margin also saw improvement, indicating strong operational efficiency.

With a pre-issue EPS of ₹ 3.69 and a post-issue EPS of ₹ 2.21 for FY24, the company is fairly priced with a pre-issue P/E ratio of 13.55x and a post-issue P/E ratio of 22.58x. The return on equity (ROE) of 52.43% and return on net worth (RoNW) of 41.54% reflect the company's solid financial performance and its potential for future growth.

Given these factors, the IPO is recommended for risky investors looking for listing gains. However, it’s important to note that investors should carefully consider their risk appetite, as there is inherent market volatility associated with IPO investments.

The Upcoming IPOs in this week and coming weeks are Chamunda Electricals, Ken Enterprises, Amwill Healthcare, Readymix Construction, Eleganz Interiors.

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