IPO listed on 27 Dec'24
Transrail Lighting Ltd
Minimum Investment
₹ 14,688 / 34 shares
Grey market premium
₹ 165 (38% premium)
Issue price
₹ 432
Listing price
₹ 590
Listing gains
158 (37%)
Listing on
Dec 27, 2024
Our Verdict:
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- Transrail Lighting Ltd (Transrail) has demonstrated robust growth in both revenue and profits in recent years, maintaining strong return ratios.
- From a valuation perspective, the IPO is attractively priced at a P/E ratio of 22x based on FY24 earnings. Additionally, the grey market premium for the IPO also suggests a good listing on the bourses.
- This IPO is well-suited for long-term investors seeking exposure in the power transmission and distribution sector.
About the company
Founded in
8 Feb'08
Managing director
Randeep Narang
- Transrail is an Engineering, Procurement, and Construction (EPC) company with a core focus on the power transmission and distribution sector. It also has integrated manufacturing capabilities for lattice structures, conductors, and monopoles.
- Since its inception, Transrail has successfully completed over 200 projects in the power transmission and distribution sector, serving clients in both India and internationally. The company has a robust presence in 58 countries, including but not limited to Bangladesh, Kenya, Tanzania, Niger, Nigeria, Mali, Cameroon, Finland, Poland, and Nicaragua, where it handles turnkey EPC and supply projects.
STRENGTHS
- Impressive Financial Growth: Transrail has exhibited significant growth, with operational revenue, EBITDA, and net profit seeing substantial compounded annual growth rates (CAGRs) of 32%, 52%, and 90%, respectively, from FY22 to FY24.
- Improving Profitability Margins: Over the past years, Transrail’s profitability margins have seen consistent improvement, with the EBITDA margin rising from 8.75% to 11.71% and the net profit margin increasing from 2.75% to 5.65% between FY22 and FY24.
- Solid Return Metrics: Transrail demonstrates outstanding return ratios, with a Return on Net Worth of 22% and a Return on Capital Employed (ROCE) of 24% as of FY24, significantly surpassing its industry peers.
- Robust Order Book: As of June 30, 2024, Transrail’s order book stood at Rs 10,213 crore, with expected revenue of approximately 55% - 60% from ongoing projects in the forthcoming twelve months.
RISK FACTORS
- Client Concentration: The top 10 customers account for 67% of the operating revenue for the quarter ending June 30, 2024. Losing any major customer or significant contract could severely affect the firm’s business, financial stability, and performance.
- Dependence on Government Tenders: Transrail's operations heavily rely on tenders from government authorities, public sector undertakings, and utilities, which constituted ~82% of its average operating revenue over the last three fiscal years. Delays or the absence of such tenders could significantly impact the firm’s operations and financial results.
- Acquisition Risks: Together with its promoter, Ajanma Holdings, Transrail plans to acquire part of the business from Gammon Engineers and Contractors Pvt Ltd (GECPL), which is under lender-led restructuring. Any negative developments in the restructuring could adversely impact this acquisition and the firm’s prospects.
- Legal Disputes: Transrail and its associated entities are involved in legal proceedings totalling Rs 236 crore. An unfavourable resolution could have a substantial adverse effect on the firm’s business, operational outcomes, and financial condition.
- Contingent Liabilities: Transrail faces substantial contingent liabilities, amounting to Rs 253 crore as of June 30, 2024. Should these liabilities materialize, they could adversely affect the firm’s operational results, financial standing, and cash flows.
Issue details
Issue type
Mainstream
Issue size
₹ 838.91 crore
Fresh Issue
₹ 400 crore
OFS
₹ 438.91 crore
Price range
₹ 413 - 432
Lot size
34 shares
Issue Objective
Transrail plans to allocate the net proceeds from the new issue towards:
- Augmenting its working capital;
- Financing its capital expenditures; and
- General corporate purposes.
Dates
Bidding open
19 Dec'24
Bidding close
23 Dec'24
Allotment date
24 Dec'24
Refund date
26 Dec'24
Listing
27 Dec'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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