Danish Power Limited IPO: Steps to check allotment status & expected listing gain
Team Finance Saathi
28/Oct/2024
What's covered under the Article:
- Danish Power IPO opens on October 22, with a price band of ₹360-₹380, targeting ₹197.90 Crores.
- The IPO has a subscription rate of 117.10 times, indicating strong investor interest.
- Given the company's promising metrics, we recommend risky investors to consider applying for this IPO.
Danish Power Limited is a prominent manufacturer and exporter of power equipment in India, recognized for its commitment to quality and innovation. The company aims to establish a legacy by anticipating future challenges while ensuring that it meets the evolving needs of its customers and the industry. This article presents a detailed overview of the Danish Power IPO, set to open for subscription from October 22 to October 24, 2024, aiming to raise ₹197.90 Crores through a fresh issue of 52.08 lakh shares.
The share price band for the Danish Power IPO is established between ₹360 to ₹380 per equity share, with a minimum lot size of 300 shares. Retail investors need to invest a minimum of ₹1,14,000, while High-Net-Worth Individuals (HNIs) must invest at least ₹2,28,000 for 600 shares. HEM SECURITIES LIMITED acts as the book-running lead manager, while Link Intime India Private Limited serves as the registrar for the issue. Additionally, Hem Finlease Private Limited will function as the market maker for this IPO.
As of October 24, 2024, the Grey Market Premium (GMP) for the Danish Power IPO is estimated at ₹120, reflecting positive sentiment among investors. It is crucial to understand that the GMP is influenced by the demand and supply dynamics of shares in an unregulated market and should not be solely relied upon for making investment decisions.
Subscription Status and Anchor Investors
On its final subscription day, the Danish Power IPO showcased remarkable investor interest, achieving a subscription rate of 117.10 times. The company also raised ₹55.63 Crores from anchor investors at a price of ₹380 per share, allocating 14,64,000 equity shares to them. The presence of anchor investors can be a strong indicator of institutional confidence in the company.
Allotment and Use of Proceeds
The allotment for the Danish Power IPO is expected to be finalized on October 25, 2024, with shares likely to be listed on the NSE SME around October 29, 2024. The proceeds from the fresh issue will be utilized for several strategic purposes, including:
- Funding capital expenditure for expanding the manufacturing facility: ₹3,699.47 Lakhs.
- Meeting working capital requirements: ₹8,500.00 Lakhs.
- Repayment of certain borrowings: ₹2,000.00 Lakhs.
- General corporate purposes.
Financial Performance
Examining the company's financial performance is critical for assessing its investment potential. For the fiscal year 2024, Danish Power reported revenues of ₹33,463.84 Lakhs, an EBITDA of ₹5,371.14 Lakhs, and a profit after tax of ₹3,807.27 Lakhs. The company is issuing shares at a pre-issue EPS of ₹26.29 and a post-issue EPS of ₹19.33. The pre-issue P/E ratio stands at 14.45x, while the post-issue P/E ratio is 19.65x, compared to an industry average of 48.14x. Additionally, the company’s Return on Capital Employed (ROCE) for FY24 is 56.98%, and its Return on Equity (RoE) is 60.35%, suggesting that the IPO is reasonably priced.
The growth trajectory of Danish Power is closely tied to the vision of its promoter, Mr. Dinesh Talwar, who possesses 39 years of industry experience. The company’s Managing Director, Shivam Talwar, holds a Bachelor's degree in Electrical & Electronic Engineering and has 17 years of experience in the transformer manufacturing sector.
Investment Recommendation
Given the impressive financial performance, significant subscription interest, and the potential listing gains reflected by a 31% Grey Market Premium, we recommend risky investors consider applying for the Danish Power Limited IPO for the prospect of listing gains. However, it's essential for investors to conduct thorough research and consider their risk appetite before making any investment decisions.
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This article aims to provide comprehensive insights into the Danish Power IPO, empowering investors to make informed decisions based on the current market landscape and the company’s performance metrics.