Shivalic Power Control Limited IPO

Shivalic Power Control IPO DRHP in place: To issue 64,32,000 Equity shares

Shivalic Power Control Limited IPO

A prominent player in the power control and automation industry, is set to launch its Initial Public Offering (IPO). This IPO marks a significant milestone for the company and presents an attractive opportunity for investors. This document provides a comprehensive overview of the IPO, the company’s background, financial performance, and the investment potential. Shivalic Power Control IPO is to open on June 24. Shivalic Power Control is a Mainline IPO to raise ₹64.32 crores via IPO. The Shivalic Power Control IPO price band is fixed ₹95 to ₹100 with a market lot of 1200 Shares. Shivalic Power Control Limited is an ISO-certified LT and HT electric panel manufacturer with an operating history of 20 years. They are a technology-driven company with a strong focus on quality, design, and product development, which has allowed them to develop products suited to their customers’ requirements.

Company Background:

Shivalic Power Control Limited specializes in designing, manufacturing, and supplying a range of power control and automation products. The company has built a reputation for innovation, quality, and customer satisfaction. With a robust portfolio of products and services, Shivalic Power Control has established a strong foothold in both domestic and international markets.

ISSUE DETAILS/CAPITAL HISTORY: 

The company is coming out with its maiden book building route IPO of 6432000 equity shares of Rs. 10 each to mobilize Rs. 64.32 cr. at the upper cap. It has announced a price band of Rs. 95 – Rs. 100 per share. The issue opens for subscription on June 24, 2024, and will close on June 26, 2024. The minimum application to be made is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.67% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 30.03 cr. for working capital, Rs. 7.64 cr. for capex on new machineries and construction of new assembly line, Rs. 5.75 cr. for inorganic growth, and the rest for general corporate purposes.   

The issue is solely managed by Corporate Capital Ventures Pvt. Ltd., and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. SS Corporate Securities Ltd. is the market maker for the company.  

Having issued initial equity shares at par value, the company issued further equity shares in the price range of Rs.50 to Rs. 500 per share between May 2008 and March 2024. It has also issued bonus shares in the ratio of 16 for 1 in February 2024. The average cost of acquisition of shares by the promoters is Rs. 2.28, and Rs. 3.09 per share.    

DIVIDEND POLICY: 

The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects.   

COMPARISON WITH LISTED PEERS: As per the offer document, the company has shown Saakshi Medtech, and Marine Electricals as their listed peers. They are trading at a P/E of 33.8 and 75.8 (as of June 14, 2024). However, they are not comparable on an apple-to-apple basis.  

MERCHANT BANKERS TRACK RECORD: This is the 16th mandate from Corporate Capital in the last four fiscals (including the ongoing one), out of the last 10 listings, all opened with a premiums ranging from 38.46% to 245.24% on the date of listing. 

Objects of the Issue: 

• To meet the working capital requirements of the company.
• To meet the capital expenditure of the company.
• Funding for procurement of new machinery. Civil construction of the warehouse by shedding the roof.
• To meet out the inorganic growth through unidentified acquisition for the Company General Corporate Expenses
  
  

Shivalic Power Control IPO FAQs 

Highlights of the Shivalic Power Controls IPO

Here are some of the highlights of the Shivalic Power Controls IPO on the SME segment of the National Stock Exchange (NSE). 

•    The issue opens for subscription on 24th June 2024 and closes for subscription on 26th June 2024; both days inclusive.

•    The stock of the company has a face value of ₹10 per share and it is a book built issue. The book building price band for the IPO has been set in the range of ₹95 per share to ₹100 per share. Being a book built IPO, the final price discovery will happen in the above price band only.

•    The IPO of Shivalic Power Controls Ltd has only a fresh issue component and no offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership and  hence is not EPS or equity dilutive.

•    As part of the fresh issue portion of the IPO, Shivalic Power Controls Ltd will issue a total of 64,32,000 shares (64.32 lakh shares), which at the upper band IPO price of ₹100 per share aggregates to fresh fund raising of ₹64.32 crore.

•    Since there is no OFS, the fresh issue size will also double as the overall issue. Therefore, the overall IPO size will also comprise of the issue of 64,32,000 shares (64.32 lakh shares) which at the upper band IPO price of ₹100 per share aggregates to overall IPO size of ₹64.32 crore.

•    Like every SME IPO, this issue also has a market making portion. The company has set aside a total of 3,36,000 shares as quota for market inventory. SS Corporate Securities  Ltd has already been appointed as the market makers to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs.

•    The company has been promoted by Amit Kanwar Jindal and Sapna Jindal. The promoter holding in the company currently stands at 96.63%. However, post the fresh issue of shares, promoter equity holding share will get diluted to 70.86%.

•    The fresh issue funds will be used by the company for capex and working capital expenses, procurement of machinery, civil construction of warehouse, and to bankroll some of the inorganic growth plans through the M&L route. A small part of the IPO proceeds has also be set aside for general corporate purposes.

Shivalic Power Controls IPO – Key Dates

Shivalic Power Controls IPO opens on Monday, 24th June 2024 and closes on Wednesday, 26th June 2024. The Shivalic Power Controls Ltd IPO bid date is from 24th June 2024 at 10.00 AM to 26th June 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 26th June 2024.

Event    Tentative Date
IPO Open Date    24th June 2024
IPO Clos Date    26th June 2024
Basis of Allotment    27th June 2024
Initiation of Refunds to non-allottees    28th June 2024
Credit of Shares to Demat     28th June 2024
Listing Date     01st July 2024

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on June 28th 2024, will be visible to investors under the ISIN Code – (INE0T7B01010). This allocation to the demat account is only applicable to the extent of the allocation of shares and if no allocations are made in the IPO, then no credit would be visible in the demat account.

Key Takeaways from the Financials (FY21 to FY23)

1. Revenue Growth:
   1. Shivalic Power Controls Ltd has exhibited significant revenue growth over the last three years. The net revenues increased from ₹52.22 crore in FY21 to ₹82.16 crore in FY23, representing a Compound Annual Growth Rate (CAGR) of approximately 25.6%.
   1. The most notable increase was in FY23, where revenues grew by 43.30% compared to the previous year. This substantial growth indicates robust demand for the company’s products and successful market expansion strategies.

• Profitability:
  • The company’s profitability has seen remarkable improvement. Profit after Tax (PAT) surged from ₹0.67 crore in FY21 to ₹7.16 crore in FY23.
  • Correspondingly, PAT margins have improved from a modest 1.29% in FY21 to an impressive 8.72% in FY23. This enhancement in margins reflects better cost management and higher operational efficiency.
• Equity and Assets:
  • Total equity of the company has grown steadily from ₹15.60 crore in FY21 to ₹24.51 crore in FY23, showcasing a solid equity base and financial health.
  • The total assets have also increased from ₹48.69 crore in FY21 to ₹58.27 crore in FY23, although there was a slight dip in FY22. The asset base reflects the company’s ongoing investments in its operational capabilities.
• Return Ratios:
  • Return on Equity (ROE) has seen a significant rise from 4.31% in FY21 to 29.23% in FY23. This indicates enhanced shareholder value and efficient utilization of equity.
  • Return on Assets (ROA) has improved from 1.38% in FY21 to 12.29% in FY23, signifying better asset utilization and overall performance.
• Asset Turnover Ratio:
  • The asset turnover ratio, which measures the efficiency of the company in using its assets to generate revenue, improved from 1.07 in FY21 to 1.41 in FY23. This increase indicates more effective use of assets to boost sales.
• Earnings per Share (EPS):
  • Earnings per share have increased from ₹0.39 in FY21 to ₹4.19 in FY23. This growth in EPS reflects the company’s enhanced profitability and is likely to be attractive to potential investors.

Conclusion:

The Akiko Global Services Limited IPO presents an opportunity for investors to be part of a company with a strong track record and a robust business model in the financial services sector. With the funds raised from the IPO, the company plans to enhance its technological infrastructure, expand its market presence, and meet its working capital requirements, paving the way for future growth and development.