Transrail Lighting IPO Day 3 Highlights: Issue booked 81.93, GMP rises

Transrail Lighting IPO was subscribed 81.93 times till 5:00 pm on the third day of bidding. It received bids for 112.37 crore equity shares as compared to 1.37 crore shares on the offer.

The retail portion of the public issue was subscribed 22.52 times while the Non Institutional Investors’ (NII) category received 78.3 times bids. However, the Qualified Institutional Buyers (QIB) quota was booked 197.41 times and the Employees category 4.35 times.

“The company is an Indian EPC contractor mainly focusing on Power Transmission and Distribution, and also manufactures related products. The company has also diversified into rail infra and civil construction activities. The company posted steady growth in its top and bottom lines from FY22 to FY24. It had order book worth Rs. 10213 cr. as of June 30, 2024. Based on recent financial performance, the issue appears reasonably priced. Investors may park funds for medium to long term,” said Dilip Davda of Chittorgarh.com assigning an ‘apply’ rating to the IPO.

The company's shares in the grey market was trading at a premium of ₹182. This indicates an estimated listing price of ₹614, up 42.13 percent from the IPO price of ₹432. The GMP rose from ₹180 in the previous session (December 22).

However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.

Transrail Lighting IPO was subscribed 58.03 times till 3:24 pm on the third day of bidding. It received bids for 79.58 crore equity shares as compared to 1.37 crore shares on the offer.

The retail portion of the public issue was subscribed 19.32 times while the Non Institutional Investors’ (NII) category received 73.31 times bids. However, the Qualified Institutional Buyers (QIB) quota was booked 120.45 times and the Employees category 3.75 times.

Transrail Lighting is one of the leading Indian Engineering, Procurement and Construction (EPC) companies with a primary focus on the power transmission and distribution business and integrated manufacturing facilities for lattice structures, conductors, and monopoles.

It has a footprint in more than 58 countries.

As of June 30, 2024, the order book stood at ₹10,213 crore. Of this, 64% comprises international orders (High margin), while the remaining 36% are domestic orders. The order book to sales ratio for FY24 is 2.5x, ensuring healthy revenue visibility over the medium term.

The company's shares in the grey market continued trading at a premium of ₹180. This indicates an estimated listing price of ₹612, up 41.67 percent from the IPO price of ₹432. The GMP was same in the previous session (December 22).

However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.

Transrail Lighting IPO was subscribed 22.88 times till 1:34 am on the third day of bidding. It received bids for 31.38 crore equity shares as compared to 1.37 crore shares on the offer.

The retail portion of the public issue was subscribed 14.96 times while the Non Institutional Investors’ (NII) category received 45.7 times bids. However, the Qualified Institutional Buyers (QIB) quota was booked 21.89 times and the Employees category 3.05 times.

Canara Bank Securities assigned a 'subscribe' rating to the IPO of Transrail Lighting, highlighting the company’s attractive valuation, which is comparatively lower than its industry peers. The brokerage noted that Transrail Lighting boasts strong financial metrics and emphasized its strategic initiatives in innovation, capacity expansion, and global diversification. These factors, according to Canara Bank Securities, position the company for sustainable long-term growth.

The company's shares in the grey market continued trading at a premium of ₹180. This indicates an estimated listing price of ₹612, up 41.67 percent from the IPO price of ₹432. The GMP was same in the previous session (December 22).

However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.

Transrail Lighting has raised ₹246 crore from anchor investors ahead of its IPO. Key participants in the anchor round included ICICI Prudential Mutual Fund and Tata Mutual Fund. Additionally, prominent investors such as Winro Commercial (India) Ltd, Bengal Finance and Investments, SBI General Insurance Company, and LIC Mutual Fund were among the top anchor investors supporting the issue.

SBI Securities recommended a 'subscribe for long-term' rating for Transrail Lighting's IPO, highlighting the company's robust valuation metrics and financial performance. The brokerage noted that Transrail Lighting is valued at FY24 P/E and EV/EBITDA multiples of 24.9 times and 12.1 times, respectively, reflecting its strong market positioning and growth prospects.

According to SBI Securities, the company boasts a proven financial track record, underpinned by a substantial unexecuted order book worth ₹10,213 crore as of June 2024. This order book represents 2.5 times the company's FY24 revenues, ensuring healthy revenue visibility in the medium term.

The brokerage believes that Transrail Lighting's strong fundamentals and revenue potential make it a compelling investment for long-term investors.

Transrail Lighting IPO was subscribed 7,94 times till 10:40 am on the third day of bidding. It received bids for 10.89 crore equity shares as compared to 1.37 crore shares on the offer.

The retail portion of the public issue was subscribed 9.14 times while the Non Institutional Investors’ (NII) category received 14.82 times bids. However, the Qualified Institutional Buyers (QIB) quota was booked 1.38 times and the Employees category 1.96 times.

Reliance Securities has recommended a "Subscribe" rating for Transrail Lighting's issue, highlighting the company's four-decade track record in delivering comprehensive turnkey solutions in the power transmission and distribution market. The firm emphasized Transrail's successful execution of over 200 projects and its portfolio of key outperforming initiatives.

Reliance Securities noted that the company boasts a healthy order book comprising both international and domestic clients, supported by experienced promoters and a capable management team. Coupled with consistent financial performance, this positions Transrail Lighting for sustained growth in the coming years, justifying the subscription recommendation.

The company's shares in the grey market continued trading at a premium of ₹180. This indicates an estimated listing price of ₹612, up 41.67 percent from the IPO price of ₹432. The GMP was same in the previous session (December 22).

However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.

The company's financial performance has shown robust growth, with revenue rising from ₹2,350 crore in FY22 to ₹4,077 crore in FY24, reflecting an impressive CAGR of 31.7 percent. This growth was accompanied by enhanced margins and profitability, as the PAT surged at a remarkable CAGR of 90.8 percent during the same period.

Transrail Lighting IPO was subscribed 5.42 times till the second day of bidding. It received bids for 7.43 crore equity shares as compared to 1.37 crore shares on the offer.

The retail portion of the public issue was subscribed 7.13 times while the Non Institutional Investors’ (NII) category received 7.42 times bids. However, the Qualified Institutional Buyers (QIB) quota was booked 1.38 times and the Employees category 1.53 times.

Transrail Lighting IPO was subscribed 5.31 times by the end of the second day of subscription. The portion reserved for retail investors was booked 6.90 times, the portion reserved for NIIs was booked 7.23 times, and the portion reserved for QIBs was booked 1.38 times on the second day. The GMP rose to ₹186 with an estimated losting price of ₹618, according to investorgain.com

The initial public offer of Transrail Lighting IPO has been subscribed 4.18 times on the second day of subscription today, at 14:39 IST, as per BSE data.

The initial share sale received bid for 5,81,96,508 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 5.78 times subscription while the quota for non-institutional investors got subscribed 5.17 times. The qualified institutional buyers (QIBs) part is booked 86%. The employee portion is subscribed 1.23 times.

The company is actively expanding its international footprint, targeting markets in West and East Africa, SAARC, and Southeast Asia, alongside exploring opportunities in Latin America, the Middle East, and North Africa. According to the CRISIL Report, the global T&D market is experiencing significant growth fueled by rising electricity demand, renewable integration, and technological advancements.

• China plans to invest $1 trillion in transmission lines by 2025.

• India aims to invest $200 billion in transmission infrastructure by 2027.

• In Kenya, a public-private partnership with Power Grid Corporation of India is building a 237 km transmission line, valued at $298 million.

The company reported strong financial growth between FY22 and FY24, with a CAGR of 32.5% in revenue, 51.8% in EBITDA, and 89.8% in PAT. The company is valued at a P/E ratio of 22.1x on the upper price band based on FY24 earnings, which is lower than the average P/E of the industry. Given its strong position in the market, the company is poised to capitalize on emerging market opportunities. Therefore, we recommend a “SUBSCRIBE” rating for the issue from a medium to long-term perspective.

Since its inception, the company has completed over 200 power transmission and distribution projects. The company has a presence in 58 countries, including Bangladesh, Kenya, Tanzania, Niger, Nigeria, Mali, Cameroon, Finland, Poland, and Nicaragua, with turnkey EPCs and supply projects.

As of June 30, 2024, the company has completed the EPC of 34,654 CKM of transmission lines and 30,000 CKM of distribution lines, both domestically and internationally.

The initial public offer of Transrail Lighting IPO has been subscribed 3.82 times on the second day of subscription today, at 13:27 IST, as per BSE data.

The initial share sale received bid for 5,31,43,734 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 5.26 times subscription while the quota for non-institutional investors got subscribed 4.66 times. The qualified institutional buyers (QIBs) part is booked 86%. The employee portion is subscribed 1.14 times.

Power T&D, Civil, Railways, and Poles & lighting.

•  Funding incremental working capital requirements of the company; 
• Funding capital expenditure of the company; and
• General corporate purposes

The initial public offer of Transrail Lighting IPO has been subscribed 3.35 times on the second day of subscription today, at 12:12 IST, as per BSE data.

The initial share sale received bid for 4,66,67,346 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 4.67 times subscription while the quota for non-institutional investors got subscribed 3.93 times. The qualified institutional buyers (QIBs) part is booked 78%. The employee portion is subscribed 1.04 times. 

The substantial investments in the power T&D sector will provide TLL with ample opportunities to expand its market presence, secure new projects, and achieve economies of scale. The company reported strong financial growth between FY22 and FY24, with a CAGR of 32.5% in revenue, 51.8% in EBITDA, and 89.8% in PAT. The company is valued at a P/E ratio of 22.1x on the upper price band based on FY24 earnings, which is lower than the average P/E of the industry. Given its strong position in the market, the company is poised to capitalize on emerging market opportunities. Therefore, we recommend a “SUBSCRIBE” rating for the issue from a medium to long-term perspective.

• The company has an outstanding FIR filed by the Central Bureau of Investigation (CBI), Anti-Corruption Bureau, Lucknow, Uttar Pradesh, regarding the Gomti River Project.
• Since Transrail Lighting Ltd.'s project management and turnkey EPC contracts have long execution periods and are prone to time overruns, the estimated project costs and revenue projections may differ from the actual costs incurred and revenues generated.

The firm has four fully backward integrated manufacturing facilities having capacity to manufacture key components of towers, conductors and poles to reduce dependence on third party suppliers with facilities equipped with advanced CNC machines, various allied ancillary machines to undertake major repair and maintenance of EPC equipment ensuring reduced downtime for operations. The company has regularly expanded its facilities with improving production and capacity utilization of more than 85%.

The initial public offer of Transrail Lighting IPO has been subscribed 2.79 times on the second day of subscription today, at 10:48 IST, as per BSE data.

The initial share sale received bid for 3,88,45,646 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 3.85 times subscription while the quota for non-institutional investors got subscribed 3.20 times. The qualified institutional buyers (QIBs) part is booked 78%. The employee portion is subscribed 87%.

We expect significant growth in the T&D market by increasing electricity demand, government initiatives, strong thrust on sustainability and rising adoption of smart grid technologies, transmission system plan for integration of over 500 GW RE capacity by 2030. With a healthy orderbook of international and domestic clients, experienced promoters with strong management team and consistent financial performance, the growth momentum would continue in the coming years. Hence, we recommend a Subscribe to the issue.

The company's financials have seen an increase in revenue from Rs.2350 Crs in FY22 to Rs.4077 Crs in FY24, which grew by a CAGR of 31.7% with improvement in margins and profitability as PAT has grown at a CAGR of 90.8% for the same period.

The power transmission and distribution system across India has expanded extensively. The total length of domestic transmission lines rose from 413,407 CKM in Financial Year ended March 31, 2019 to 485,544 CKM in Financial Year ended March 31, 2024. Further, India has the second-largest road network in the world, spanning 6.30 million KM. Large highways/expressways are the key demand drivers for the high mast lighting in India.

• Strong and diversified Order Book
•  Established manufacturing facilities in four locations
• Proven track record of growth and established presence in the power transmission and distribution sector through effective implementation and execution skills.

Transrail Lighting IPO GMP today is +185. This indicates Transrail Lighting share price was trading at a premium of ₹185 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Transrail Lighting share price is indicated at ₹617 apiece, which is 42.82% higher than the IPO price of ₹432.

Based on the grey market activities from the last 10 sessions, the current GMP ( ₹185) indicates a potential decline. The minimum GMP recorded is ₹0, while the maximum stands at ₹185, as per the experts at investorgain.com.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

The initial public offer of Transrail Lighting IPO has been subscribed 2.07 times on the first day of subscription today, as per BSE data.

The initial share sale received bid for 2,88,64,742 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 2.87 times subscription while the quota for non-institutional investors got subscribed 2.10 times. The qualified institutional buyers (QIBs) part is booked 78%. The employee portion is subscribed 64%.

The initial public offer of Transrail Lighting IPO has been subscribed 1.71 times on the first day of subscription today, at 16:18 IST, as per BSE data.

The initial share sale received bid for 2,37,37,066 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 2.65 times subscription while the quota for non-institutional investors got subscribed 1.67 times. The qualified institutional buyers (QIBs) part is booked 16%. The employee portion is subscribed 56%.

• The power transmission and distribution system across India has significantly expanded. The total length of domestic transmission lines increased from 413,407 CKM in the financial year ending March 31, 2019, to 485,544 CKM in the financial year ending March 31, 2024.
• Internationally, the lack of electricity access in the African region has spurred public and private investments in new transmission and distribution networks.

The company’s growth potential is enhanced by the increasing demand for energy-efficient and sustainable lighting solutions, as well as opportunities in smart technologies. Additionally, Transrail's plans for geographic expansion and product innovation align with favorable market conditions in the growing infrastructure sector. These factors make Transrail Lighting an appealing investment, though potential risks from competition and economic fluctuations should be considered.

The expansion of India's power transmission and distribution system has been driven by robust generation capacity addition and government initiatives aimed at achieving 100% rural electrification. Significant investments in the sector are expected over FY24-29F, with the Indian power transmission and distribution EPC market projected to touch approximately US$20.5-21bn by FY29F. This growth will be fuelled by rising electricity demand, government initiatives, strong focus on sustainability, and the rising adoption of smart grid technologies.

The initial public offer of Transrail Lighting IPO has been subscribed 1.60 times  on the first day of subscription today, at 15:36 IST, as per BSE data.

The initial share sale received bid for 2,22,21,550 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 2.49 times subscription while the quota for non-institutional investors got subscribed 1.52 times. The qualified institutional buyers (QIBs) part is booked 16%. The employee portion is subscribed 54%.

As per the red herring prospectus (RHP), the company's listed peers are KEC International Ltd (with a P/E of 91.95), Kalpataru Projects International Ltd (with a P/E of 36.72), Skipper Ltd (with a P/E of 75.97), Patel Engineering Ltd (with a P/E of 15.57), and Bajel Projects Ltd (with a P/E of 702.97).

1. Transmission and Distribution EPC
2. Civil Construction
3.  Poles and Lighting
4. Railway Services

Transrail Lighting Ltd. (TLL) is a prominent EPC firm that holds a market share of approximately 8-10% in the EPC industry, focusing on power transmission and distribution. The company boasts a robust order book, providing clear revenue prospects and consistent top-line growth, backed by a diverse portfolio of international and domestic clients. 

TLL's strategic move into emerging markets and new territories aims to attain economies of scale and foster global growth. The company’s comprehensive approach to EPC projects, leveraging advanced design and engineering software, guarantees superior execution. Additionally, intentions to expand into related infrastructure sectors and the solar EPC market will enhance its market presence and solidify its standing within the infrastructure field.

The initial public offer of Transrail Lighting IPO has been subscribed 1.01 times on the first day of subscription today, at 13:24 IST, as per BSE data.

The initial share sale received bid for 1,40,16,772 1.01 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 1.65 times subscription while the quota for non-institutional investors got subscribed 88%. The qualified institutional buyers (QIBs) part is yet to be booked. The employee portion is subscribed 40%.

The govt. has planned around Rs. 9.2 tn of investments in the T&D sector over the period 2025-2032. Transmission sector is estimated to attract Rs.3 tn. owing to the New Electrification Policy. Transmission network is expected to expand 4.85 lakh CKM (2024) to 6.48 lakh CKM (2032) along with transformation capacity: 1,251 GVA to 2,342 GVA. Further, 335 GW transmission planned to evacuate 280 GW of RE by 2030. The distribution Sector is expecting investments of ₹3-4 tn. driven by RDSS to enhance electricity access and ensure 24x7 power supply.

•  Incremental financingworking capital requirements of the company. 
• Funding capital expenditure of the company; and
• General corporate purposes

• Strong order book coupled with strategic expansion ensures revenue visibility
• Integrated service approach and strategic initiatives enhance EPC capabilities

On the valuation front, Transrail trades at ~25x FY25F EPS vs. KEC International’s 47x, Skipper’s 41x and Kalpataru Projects International’s 28x. Transrail has a strong order book (Rs102bn) & healthy order pipeline. We recommend subscribing to the IPO, given the opportunities in power T&D business, healthy order book, higher return ratios compared to peers and reasonable valuation.

Transrail’s order book stands at ~Rs102bn, with a book-to-bill ratio of 2.5x and a healthy mix of international (64%) and domestic (36%) clients, demonstrating consistent growth over the years. Transrail typically takes export orders that are either funded by multilateral agencies such as the World Bank and the African Development Bank or backed by letters of credit, which mitigates payment default risks. 

The initial public offer of Transrail Lighting IPO has been subscribed 41% on the first day of subscription today, at 11:09 IST, as per BSE data.

The initial share sale received bid for 57,52,426 shares against 1,39,16,742 shares on offer, according to BSE.

The portion for retail investors received 72% subscription while the quota for non-institutional investors got subscribed 27%. The qualified institutional buyers (QIBs) part is yet to be booked. The employee portion is subscribed 20%.