Chamunda Electricals Ltd. is an emerging name in India’s electrical infrastructure sector, and it is all set to launch its Initial Public Offering (IPO). Investors are keen to evaluate the company’s financials, growth potential, and associated risks before subscribing to the offering. In this blog, we will explore Chamunda Electricals’ business model, financial health, sector overview, and IPO details to provide a comprehensive investment analysis.
Company Overview
Chamunda Electricals Ltd. mainly provides electrical contracting, infrastructure development, and supply chain management to power distribution networks. The company offers operation and maintenance of substations up to 66 KV, testing and commissioning of substations up to 220 KV, and solar power generation. Focusing completely on quality and efficiency, the company has undertaken numerous projects for government agencies and private organizations and delivered reliable and efficient power solutions.
The company has also diversified into renewable energy with a 1.5 MW solar power generation park in Gujarat under a long-term purchase agreement with Uttar Gujarat Vij Company Limited (UGVCL). This is in line with the trend of India moving towards sustainable energy solutions. Chamunda Electricals has earned the reputation of executing projects on time and with strict adherence to safety and quality standards.
Sector Overview
The electrical infrastructure sector in India is growing rapidly due to increased urbanization, government initiatives like ‘Power for All,’ and a shift towards renewable energy. The power transmission and distribution industry is expected to grow significantly, driven by investments in upgrading aging infrastructure and integrating renewable energy sources. The government introduced several schemes: the Revamped Distribution Sector Scheme (RDSS) and the Integrated Power Development Scheme (IPDS), which provide opportunities to companies like Chamunda Electricals to participate in large-scale projects.
Increasing demand for solar energy solutions also offers a strong tailwind to companies operating in this space. The Indian government’s goal of reaching 500 GW of non-fossil fuel energy capacity by 2030 is another opportunity that further boosts opportunities for electrical infrastructure companies with expertise in renewable energy solutions.
Promoters and Their Experience
The company is headed by its promoters, Mr. Natvarbhai Karsanbhai Rathod and Mr. Chirag N. Patel. Both of them have decades of experience in the industry and have been responsible for the expansion of the company’s operations and obtaining government contracts. Their leadership ensures steady business growth and an emphasis on operational efficiency.
Objectives of the IPO
- Fund working capital requirements.
- Repay outstanding borrowings to reduce interest costs.
- Expand operations and invest in new projects.
- Strengthen market presence through technological advancements.
Financials of the Company
Revenue & Profit After Tax (PAT) (₹ Crores)
| Particulars | FY 2023-24 | FY 2022-23 | FY 2021-22 |
|---|---|---|---|
| Revenue from Operations | 19.95 | 13.94 | 11.23 |
| Growth in Revenue (%) | 43.08% | 24.12% | – |
| Total Income | 20.07 | 14.01 | 11.32 |
| EBITDA | 4.72 | 1.78 | 0.47 |
| EBITDA Margin (%) | 23.50% | 12.73% | 4.11% |
| Profit After Tax (PAT) | 2.46 | 0.31 | (0.51) |
| PAT Margin (%) | 12.34% | 2.24% | (4.57%) |
Key Financial Ratios
| Ratio | FY 2023-24 | FY 2022-23 | FY 2021-22 |
| Return on Net Worth (%) | 41.79% | 9.10% | (16.46%) |
| Return on Equity (%) | 52.83% | 9.54% | (15.21%) |
| Return on Capital Employed (%) | 36.73% | 12.04% | (5.49%) |
| Debt-to-Equity Ratio | 0.78 | 1.08 | 1.49 |
| Current Ratio | 1.20 | 1.02 | 0.70 |
| Trade Receivable Turnover Ratio | 9.41 | 13.17 | 13.34 |
| Trade Payables Turnover Ratio | 27.09 | 14.26 | 1.98 |
| Debt-Service Coverage Ratio | 0.94 | 0.43 | 0.09 |
Inferences Based on Financials & Ratios
- Revenue Growth: The company has shown a good revenue growth of 43.08% in FY 2023-24, which reflects increased project execution.
- Profitability Improvement: EBITDA and PAT margins have improved significantly, which indicates better cost management and higher operational efficiency.
- Leverage Position: The Debt-to-Equity ratio has reduced from 1.49 in FY 2021-22 to 0.78 in FY 2023-24, which suggests a healthier balance sheet.
- Liquidity & Efficiency: The current ratio has improved; however, the trade receivables turnover is declining, meaning there could be a cash flow issue.
IPO Details
| IPO Name | Chamunda Electricals |
| IPO Start Date | February 4, 2025 |
| IPO End Date | February 6, 2025 |
| Price Band | ₹47 to ₹50 per share |
| Lot Size | 3000 shares per lot |
| Issue Type | Fresh Issue |
| Issue Size | 14.60 crores |
| Basis of Allotment | February 7, 2025 |
| Listing Date | February 11, 2025 |
| Retail Investors Min lot & Amount | 1 lot & ₹1,50,000 |
| Retail Investors Max lot & Amount | 1 lot & ₹1,50,000 |
| HNI Min lot & Amount | 2 lots & ₹3,00,000 |
Risks Associated with the IPO
- High Govt. Contract Dependency: Changes in policies may impact the inflow of revenues.
- High Working Capital Intensity: The company has significant receivables that may be challenging for cash flows.
- Intense Competition: The sector is highly competitive with many established players.
- Macroeconomic Variables: Interest and inflation rates could impact profitability.
Conclusion – Chamunda Electricals IPO
An interesting investment opportunity has been presented in the form of Chamunda Electricals IPO, given its impressive financial performance and growth trajectory coupled with sectoral tailwinds. However, investors need to weigh the risk of government dependency and liquidity management. For investors seeking long-term value in the electrical infrastructure space, this IPO could be worth paying attention to.
FAQs on Chamunda Electricals IPO
1. What is Chamunda Electricals Ltd.?
Chamunda Electricals Ltd. is an electrical contracting and infrastructure development company that specializes in power distribution networks, substation maintenance, and renewable energy solutions.
2. When does the Chamunda Electricals IPO open and close?
IPO Start Date: February 4, 2025
IPO End Date: February 6, 2025
3. What is the price band for Chamunda Electricals IPO?
The IPO price band is set between ₹47 and ₹50 per share.
4. What is the lot size and minimum investment required?
Retail Investors: Minimum & Maximum 1 lot (3,000 shares) costing ₹1,50,000
HNI Investors: Minimum 2 lots (6,000 shares) costing ₹3,00,000
5. What is the total issue size of the IPO?
The total issue size is ₹14.60 crores through a fresh issue of shares.
6. When is the basis of allotment and listing date of Chamunda Electricals IPO?
Basis of Allotment: February 7, 2025
Listing Date: February 11, 2025
7. Where will the shares of Chamunda Electricals be listed?
The shares are expected to be listed on the NSE and BSE.
8. What are the key financial highlights of Chamunda Electricals?
Revenue (FY 2023-24): ₹19.95 crores
Profit After Tax (PAT) (FY 2023-24): ₹2.46 crores
EBITDA Margin: 23.50%
Debt-to-Equity Ratio: 0.78
9. What are the risks associated with the Chamunda Electricals IPO?
High dependency on government contracts
Working capital intensity due to high receivables
Competitive industry landscape
Macroeconomic risks such as inflation and interest rate changes
10. Should I invest in Chamunda Electricals IPO?
Chamunda Electricals Ltd. has strong financials, a growing market presence, and promising sectoral tailwinds. However, investors should evaluate the risks and their investment objectives before making a decision.
11. What is the GMP of Chamunda Electricals IPO?
The GMP of Chamunda Electricals IPO is Rs 13. With an upper price band of Rs 50, the estimated listing price is Rs. 63 (50 + 13).
12. What are the subscription details of Chamunda Electricals IPO?
On the first day of opening, the IPO of Chamunda Electricals IPO has been subscribed 15.45 times overall. In the retail category, the subscription is 24.28 times, 6.02 times in QIB, and 7.4 times in the NII category.
13. How to check the allotment status for Chamunda Electricals IPO?
The allotment status can be checked on the official website of the registrar Kfin Technologies Limited.
Related Information
For related information on current and upcoming IPOs, check the following link.