HPL Electric and Power IPO review (Subscribe)

Review By Dilip Davda on Sep 17, 2016

HPL Electric and Power Ltd (HPL) is an established electric equipment manufacturing company in India, manufacturing a diverse portfolio of electric equipment, including, metering solutions, switchgears, lighting equipment and wires and cables, catering to consumer and institutional customers in the electrical equipment industry. HPL had the largest market share in the market for electricity energy meters in India in fiscal 2015, with one of the widest portfolios of meters in India and the fifth largest market share for LED lamps during the corresponding period as per a Report of February 2016. Its manufacturing capabilities are supported by a large sales and distribution network with a pan-India presence. HPL currently manufactures and sells products under the umbrella brand ‘HPL’, which has been registered in India since 1975. As per February 2016 report, the company enjoys 20% markets share in electricity energy meters, 50% market share in on-load changeover switches, 5th largest LED manufacturer with 5% market share, 5% market share in Indian LV switchgears market in India. The company has 7 manufacturing facilities in North India with major focus on technology upgradation in two R&D centres with team of 97 engineers as on March 31, 2016.

The company supplies its products through a network of authorized dealers or distributors to institutional, non-institutional and corporate customers. The products include switchgears, lighting equipment and wires and cables that are sold primarily through the pan-India authorized dealer network, which comprised of over 2,400 authorized dealers or distributors as on March 31, 2016, from its warehouses located in 21 states and union territories in India that are managed by company’s carrying and forwarding agents. HPL’s authorized dealers or distributors further sell company’s products to over 15,000 retailers in India. In addition, it supplies products to Power Utilities, which primarily includes supply of meters under direct contractual arrangements to electricity boards and power distribution companies, as well as through project contractors. Further, it supplies its portfolio of products to developers of residential and commercial building projects, original equipment manufacturers (“OEMs”) and to industrial customers through a mix of direct sales and supply through authorized dealer network. Company’s sales and marketing activities are managed through over 90 branch offices and representative offices in India as on March 31, 2016.

To meet its loan repayment, working capital and general corpus fund requirements, the company is coming out with a maiden IPO of Rs. 361 crore. The issue is being made on book building process with a price band of Rs. 175-202. It opens for subscription on 22.09.16 and will close on 26.09.16. Minimum application is to be made for 70 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. BRLMs to the issue are SBI Capital Markets Ltd., ICICI Securities Ltd and IDFC Bank Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue. The company has issued shares at par from 1992 to 1993 and then in 2010. It also issued shares at a price of Rs. 49.89 to Rs. 162 per share between 1999 and 2012. The company has also issued bonus shares in the ratio of 5 for 1 in February 1998, 1 for 1 in Aug 1999 and 3 for 2 in November 2015. Post IPO its current paid up equity capital of Rs. 46.43 cr. will stand enhanced to Rs. 64.30 (considering that the company may issue approx 1.787 crore equity shares based on upper price band).

On performance front, for last four fiscals, HPL’s consolidated turnover/net profits were Rs. Rs. 915.73 cr. / Rs. 31.42 cr. (FY13), Rs.1016.04 cr. / Rs. 28.37 cr. (FY14), Rs. 1051.85 cr. Rs. 34.62 cr. (FY15) and Rs. 1121.25 cr. / Rs. 36.62 cr. (FY16). In FY14, it suffered a setback in bottom lines. Furthermore, for fiscal 2016, fiscal 2015 and fiscal 2014, the percentage of revenue from exports over the total revenue was 1.35%, 2.88% and 2.90% respectively. If we attribute latest earnings on the fully diluted equity post IPO then the asking price (at the higher price band) is at a P/E of 35 plus and at a P/BV of 2.63 (based on NAV of Rs. 76.52 as at 31.03.16) that makes it a pricy bet.

On BRLM’s front, three BRLMs associated with this IPO have handled 20 issues in the past three years out of which 5 issues closed below the issue price on listing date.

Conclusion: Although the company is established player in the electrical equipments sector, higher pricing is the major concern. Long term investors may consider small lot for investment in this IPO.


Conclusion / Investment Strategy

Although the company is established player in the electrical equipments sector, higher pricing is the major concern. Long term investors may consider small lot for investment in this IPO.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Sep 17, 2016

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

HPL Electric IPO FAQs

  1. 1. Why HPL Electric IPO?

    The initial public offer (IPO) of HPL Electric & Power Ltd offers an early investment opportunity in HPL Electric & Power Ltd. A stock market investor can buy HPL Electric IPO shares by applying in IPO before HPL Electric & Power Ltd shares get listed at the stock exchanges. An investor could invest in HPL Electric IPO for short term listing gain or a long term.

  2. 2. How is HPL Electric IPO?

    Read the HPL Electric IPO recommendations by the leading analyst and leading stock brokers.

    • Dilip Davda - Subscribe
    • Hem Securities - Subscribe
    • Prabhudas Lilladher Pvt Ltd - Subscribe
    • SPA Financial Advisor Ltd - Subscribe
  3. 3. HPL Electric IPO what should investors do?

    HPL Electric IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the HPL Electric IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is HPL Electric IPO good?

    Our recommendation for HPL Electric IPO is to subscribe.

  5. 5. Is HPL Electric IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the HPL Electric IPO.

  6. 6. When will HPL Electric IPO allotment status?

    The HPL Electric IPO allotment status will be available on or around Sep 29, 2016. The allotted shares will be credited in demat account by Oct 3, 2016. Visit HPL Electric IPO allotment status to check.

  7. 7. When will HPL Electric IPO list?

    The HPL Electric IPO will list on Tuesday, October 4, 2016, at BSE, NSE.








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