As an investor, it can be very challenging to decide whether the Powerica IPO is a good or bad investment. Not anymore, as in this blog, we will provide you with all the necessary details related to the Powerica IPO to help you decide whether you should Apply or Not. Read on to know the IPO risks, strengths, valuation, financial details, and expert opinion to make your investment decision better.
Strengths:
- Powerica had a strong foothold in the Generator set market since 1984 by offering a wide range of DG across LHP, MHP, and HHP capacities ranging from 7.5 kVA to 3,750 kVA.
- The firm has maintained a strong and healthy relationship with experienced companies like Cummins, Hyundai, GE Vernova, and Vestas to improve its business.
- With a large and diversified client base, Powerica serves a wide range of sectors, including commercial, infrastructure, manufacturing, agriculture, IT & data centres, government & defense, and the rental segment.
- The company has 30+ years of experience in the generator set industry, with expertise in marketing and manufacturing.
- A balanced business of generator sets and wind power supports a stable and long-term growth.
Weaknesses:
- The firm generates 80.50% of revenue from Diesel Generator sets, so any problems affecting this part of the segment can negatively impact the business and cash flow.
- Heavily dependent on Cummins for engines and alternators, and on Hyundai for the MSLG set suppliers, so any supply disruption can negatively impact the business and its operations.
- The company, its promoters, and its directors are involved in a civil legal dispute. If the court does not pass the order in the companyās favor, it can affect the business and value of Equity shares.
- Powerica is exposed to credit risk from customers, and we saw an increase in the trade receivables component, which can negatively affect the business and its cash flow.
Powerica IPO Review
| Reviewer | Recommendation |
| IPO Watch | May Apply |
| Axis Capital | Not Rated |
| Equivision | Avoid |
| Swastika Investmart Ltd | Neutral |
Promoters & Track Records, if any
- Bharat Oberoi, born on February 22, 1971, aged 55, is one of the Promoters and also the Chairman and Managing Director of the Company. He holds 5,51,828 equity shares, representing 0.51% of the paid-up Equity share capital.
- Renu Naresh Oberoi, born on December 20, 1973, aged 52 years, is one of the Promoters and is also the Whole-time Director of the Company. She holds 1,85,348 Equity shares, representing 0.17% of paid-up Equity share capital.
- Jai Ram Oberoi, born on September 9, 1994, aged 31 years, is one of the Promoters and is also the Whole-time Director of the Company. He holds 4,000 Equity shares.
- Naresh Oberoi Family Trust holds 3,80,00,000 equity shares, representing 34.92% paid-up equity share capital.
- Bharat Oberoi Family Trust holds 5,22,10,200 of Equity shares, representing 47.98% of paid-up equity share capital.
- Kabir and Kimaya Family Private Trust holds 1,75,36,428 of Equity shares, representing 16.11% of paid-up equity share capital.
Peer Comparison with the Company
| Name of the Company | Face Value(ā¹) | EPS basic (ā¹) | EPS Diluted(ā¹) | RONW (%) | P/E Ratio | NAV(ā¹) |
| Powerica Limited | 5 | 15.26 | 15.26 | 15.37 % | 24.45 | 99.76 |
| Listed Peers | ||||||
| Cummins India Limited | 2 | 72.15 | 72.15 | 26.45% | 64.13 | 272.78 |
| Kirloskar Oil Engines Limited | 2 | 33.71 | 33.60 | 15.85% | 43.24 | 212.60 |
| NTPC Green Energy Limited | 10 | 0.67 | 0.67 | 2.58% | 129.40 | 21.88 |
| Acme Solar Holdings Limited | 2 | 4.55 | 4.53 | 5.59% | 50.74 | 74.54 |
| Adani Green Energy Limited | 10 | 8.37 | 8.37 | 11.90% | 101.53 | 76.62 |
Industry Peer Group P/E ratio
The industry P/E ratio ranges from 43.24 to 129.40, with an average of 77.81, where NTPC Green Energy Limited has the highest P/E and Kirloskar Oil Engines Limited has the lowest.
Expansion
- Proceeds of ā¹525 crore will be used towards Prepayment/repayment of old borrowings taken by the company.
- Lastly, the remaining funds will be utilized towards general corporate purposes.
Powerica IPO ā Should You Apply or Not?
Powerica Limited, a specialist in manufacturing main and backup diesel generator sets (DG sets), is launching its IPO on March 24th. It is a leading OEM for Cummins India Limited, maintaining a strong relationship with them for over 40 years. Along with generator sets, the company is also engaged in the renewable energy and wind power Business as an independent power producer, which includes developing and operating wind power projects.
Talking about its financials, in FY25, the firm generated a revenue of ā¹2,710.93 crore, compared to ā¹2,356.77 crore in FY23, showcasing steady growth. However, profit after tax (PAT) declined to ā¹175.83 crore in FY25 from ā¹226.11 crore in FY24. While ROE and ROCE are also declining, this indicates that the financials are stable, but not growth-oriented. Moreover, its borrowings are increasing YOY. Also, the company is planning to use ā¹525 crore in debt repayment, and not towards the companyās growth.
Letās come to its valuations, on the upper price band, the Powerica IPO is valued at a PE of 24.45x, which, when compared to the industry average PE, indicates that the IPO is fairly priced or undervalued. As of March 23, the Powerica IPO GMP is 6, indicating a listing gain of around 1- 2%.
With a diversified client base, a stable financial track record, a strong & experienced management team, and if GMP and subscription numbers stay in support, we can apply for this IPO in the short term. While dependency on Cummins for raw materials, a highly competitive industry, and a decline in return ratios are some risks investors must analyze before investing.
Please note:
Investors are advised to make their own decisions and apply entirely at their own risk. This article is written using information from the companyās RHP (Red Herring Prospectus) data and online sources. If you have any queries, kindly contact the IPO Watch Team.
