Rajesh Power Services Limited (RPSL) is offering an exciting investment opportunity with its Initial Public Offering (IPO) in 2024. The IPO opens for subscription from November 25, 2024, and closes on November 27, 2024. Investors looking to participate can expect to see their allotment status on November 28, 2024, with shares being listed on the BSE SME on December 2, 2024. The IPO consists of a fresh issue of 27.90 lakh shares worth ₹93.47 crores and an offer for sale of 20 lakh shares totaling ₹67 crores. The share price band is set at ₹319 to ₹335 per equity share, with a minimum lot size of 400 shares. Retail investors can participate with a minimum investment of ₹1,34,000, while High-Net-Worth Individuals (HNIs) must apply for at least two lots, costing ₹2,68,000.

Rajesh Power Services operates in the power sector, specializing in providing Engineering, Procurement, and Construction (EPC) services to both renewable and non-renewable power projects. With over 40 years of experience in the industry, the company offers turnkey solutions including installation of Extra High Voltage (EHV) cables, transmission lines, substations, and underground power distribution systems. Additionally, RPSL provides operations and maintenance services for solar plants and EHV substations.

IPO Objectives and Utilization of Funds

The proceeds from the IPO’s fresh issue will be utilized primarily for capital expenditure and working capital requirements. The breakdown is as follows:

• ₹2,510.93 Lakhs for capital expenditure:
  • ₹1,794.82 Lakhs for purchasing cable identification, testing, and fault location equipment.
  • ₹416.11 Lakhs to set up a 1,300 KW DC Solar Power Plant.
  • ₹300.00 Lakhs for in-house development of green hydrogen expertise and electrolysers.
• ₹3,000 Lakhs will be allocated to meet the additional working capital requirement.
• The remaining funds will be used for general corporate purposes.

The company has been showing strong financial growth, with revenue for FY24 pegged at ₹31,785.09 Lakhs. The company’s Restated EBITDA for FY24 stands at ₹4,404.68 Lakhs, showcasing its profitability. The Restated Profit After Tax (PAT) for FY24 is ₹2,802.29 Lakhs, reinforcing its solid financial foundation. As of the most recent financial statements, the company’s Return on Capital Employed (ROCE) stands at a strong 29.99%, and the Return on Equity (RoE) is 36.41%, highlighting a healthy return on investments.

The Current active IPO is Rajesh Power Services, C2C Advanced System, Enviro Infra Engineers and Lomosaic India.

IPO Subscription Status and Grey Market Premium (GMP)

As of November 26, 2024, the IPO has been subscribed 2.60 times, indicating strong demand from investors. The Grey Market Premium (GMP) for the IPO is currently ₹65, or a 20% premium based on the upper price band of ₹335 per share. While the GMP provides some indication of market sentiment, it should be noted that grey market trading is unofficial and speculative in nature, so no real price discovery happens before the official listing.

Rajesh Power Services IPO's Anchor Investors have already raised ₹44.77 Crores from investors at the price of ₹335 per share, further strengthening the demand for the IPO. The anchor investors are allotted 13,36,400 equity shares in this segment. The market capitalization of the company at the IPO price of ₹335 per share will be approximately ₹603.25 Crore, making it a substantial listing on the BSE SME platform.

Should You Invest in Rajesh Power Services IPO?

The IPO’s P/E ratio stands at 19.59x pre-issue and 21.53x post-issue, which suggests the issue is fairly priced. Given the company’s strong financial track record, experience in the power sector, and growth potential, this IPO might appeal to investors seeking exposure to the power sector, especially in the renewable energy space.

However, for investors seeking short-term listing gains, it is essential to consider the market sentiment and the GMP before making a decision. Based on the company's financials, the IPO seems well-priced for long-term investors, although some might consider waiting for the listing to determine the market's true reaction.

The Upcoming IPOs in this week and coming weeks are Rajputana Biodiesel, Apex Ecotech, Abha Power and Steel, Agarwal Toughened, Ganesh Infraworld, Rosmerta Digital, Avanse Financial and Nisus Finance.

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