Jainik Power Cables Limited made a disappointing debut on the NSE SME platform on June 17, 2025, with its shares listing at ₹82, reflecting a nearly 25% discount from its issue price of ₹110 per share. The listing performance came amid subdued investor enthusiasm despite the company’s recent entry into aluminum wire rod manufacturing.

IPO Details and Subscription

Jainik Power Cables had launched a fresh issue IPO worth ₹51.30 crore, comprising 46.63 lakh equity shares, with a price band of ₹100 to ₹110 per share. The issue was open between June 10 and June 12, 2025, and managed to secure a subscription of 1.29 times on the final day, indicating only modest demand.

The IPO was aimed at raising capital for the following:

• ₹23.5 crore for working capital requirements

• ₹10.99 crore to set up a new plant

• ₹5 crore for repayment of existing loans

• Balance for general corporate purposes and issue-related expenses

Business Overview

Jainik Power Cables began its manufacturing operations in 2023, after over a decade of trading in aluminum rods. The company is ISO-certified and follows strict Environmental, Health, and Safety (EHS) standards.

Its manufacturing facility is located in Sonipat, Haryana, and it is authorized by the Haryana State Pollution Control Board. Quality is ensured through spectrometer-based purity checks, and it serves clients across Delhi, Haryana, Rajasthan, Uttar Pradesh, and Uttarakhand.

Despite its limited history in manufacturing, Jainik Power has shown strong revenue and EBITDA growth, though it still faces risks related to its recent entry into the sector.

Aluminium Industry Context

India is a key player in the global aluminium market, supported by its vast bauxite reserves. Aluminium is used extensively in construction, electrical, automotive, and packaging sectors. India's per capita aluminium consumption is still low at 2.5 kg, versus the global average of 11 kg, highlighting the scope for growth.

Driven by projects such as Make in India, rural electrification, housing initiatives, and Smart Cities, aluminium demand is expected to rise sharply. Global consumption crossed 88 million tonnes, and India contributes approximately 6.14% to global aluminium production.

Business Risks and Concerns

• Limited Experience: Only one year in manufacturing poses operational risks.

• Geographic Concentration: Operations are based solely in Sonipat, which raises regional risk concerns.

• Supply Chain and Pricing Volatility: No long-term contracts for raw materials like aluminium ingots, making the company vulnerable to market price fluctuations.

• Forecasting and Inventory Challenges: Mismanagement may impact profitability and cash flows.

• Manufacturing Complexity: Shift from trading to manufacturing introduces new operational challenges.

Industry and Market Trends

India is poised to see massive growth in aluminium usage across electric vehicles, renewable energy, infrastructure, and defense. Aluminium extrusion and architectural innovation are expanding rapidly, and recyclability is becoming a key market driver.

Globally, countries like China dominate the aluminium industry, but India is catching up, with an estimated aluminium consumption of 9.5 million tonnes by 2030. Domestic demand grew from 2.2 million tonnes in FY11 to 4 million tonnes in FY19, and is projected to grow at a CAGR of over 10%.

Jainik Power’s Strategic Initiatives

1. Capacity Expansion: To improve scale and reduce production costs.

2. Product Diversification: Plans to manufacture power cables, aerial bunch cables, and aluminum conductors.

3. Efficiency Drive: Use of eco-friendly practices like solar power to lower operating costs.

4. Customer Base Growth: Expansion through network building and diversified product offerings.

Despite its potential, Jainik Power Cables faces significant risks due to its recent shift to manufacturing, reliance on a single facility, and volatile raw material prices. The company's listing at a 25% discount reflects market caution, particularly around its limited track record and operational challenges. However, the company is operating in a high-growth industry, and with the right execution, it could capitalize on India’s rising demand for aluminium-based infrastructure and products.
Disclaimer:
This article is for educational and informational purposes only and does not constitute financial advice. Investment decisions should be based on individual risk tolerance and consultation with SEBI-registered advisors. Market conditions are volatile and subject to change. Neither the author nor the platform is responsible for losses arising from use of this information.

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