Atlanta Electricals IPO review

•    The company is one of the leading manufacturers of power, auto and inverter duty transformers in India.
•    It is set to tap the rising demand with its recent acquisition and expanded capacities.
•    It has an order book worth Rs. 1642.96 cr. as of March 31, 2025.
•    Based on its recent financial data, the IPO appears aggressively priced.
•    Well-informed investors may park funds for long term.

ABOUT COMPANY:
Atlanta Electricals Ltd. (AEL) is one of the leading manufacturers of power, auto and inverter duty transformers in India, terms of production volume as of Fiscal 2025 (Source: CRISIL Report). They were among the few companies in India, manufacturing transformers up to and including 200 Mega Volt-Amp (“MVA”) capacity and with 220 kilovolts (“kV”) voltage (Source: CRISIL Report) prior to the acquisition of BTW-Atlanta Transformers India Private Limited and the commissioning of its Vadod Unit. Following these developments, it has enhanced manufacturing capabilities and are now able to produce transformers with a rated capacity of up to 500 MVA and with 765 kV. Over a short period, it has witnessed significant growth in terms of revenue from Rs. 873.88 cr. to Rs. 1244.18 cr. from FY23 to FY25, at a CAGR of 19.32%.

The Indian power sector is poised for significant growth, driven by strong demand from high-growth end markets such as data centres and EV charging networks (Source: CRISIL Report). As these industries expand, they will place additional pressure on grid capacity and resiliency, necessitating the deployment of new, modern transformers (Source: CRISIL Report). Furthermore, the Indian Railways’ shift towards high-speed trains has created a surge in demand for transformers operating between 66 kV and 133 kV voltage levels. (Source: CRISIL Report) India’s renewable energy sector is experiencing unprecedented growth, driven by the government’s commitment to reducing carbon emissions and increasing the share of clean energy in the power mix (Source: CRISIL Report). The target of achieving 500 GW of non-fossil fuel-based capacity by 2030 has catalyzed large-scale investments in solar, wind, and hybrid energy projects. As renewable energy adoption expands to remote and challenging terrains, there is also growing demand for compact, lightweight, and robust transformer solutions (Source: CRISIL Report). 

In alignment with India’s renewable energy goals, AEL recently embraced the green energy transition in 2021 by securing a major order for the supply of eight 80 MVA, 220/33 kV power transformers for Ultra Mega Solar Park in Andhra Pradesh. With a pan India presence and operations spanning over 30 years in the transformer manufacturing industry, it supplies a wide range of transformers starting from 5 MVA/11 kV up to 200 MVA/220 kV. As of March 31, 2025, it has a customer base in 19 states and three union territories, across India, with a supply of 4,400 transformers, aggregating to 94,000 MVA to various state and national electricity grids, private sector players and prominent renewable energy generation projects and construction companies.

Its Order Book, as of March 31, 2025, amounted to Rs. 1642.96 cr. It has five manufacturing facilities and operate four fully operational manufacturing facilities, two located at Anand, Gujarat, one at Bengaluru, Karnataka and the Vadod Unit which has commenced commercial production in July, 2025 is located in Vadod, Gujarat. As of March 31, 2025, it has a diversified customer base of 208 customers, which include Gujarat Energy Transmission Corporation Limited (GETCO), Adani Green Energy Limited, TATA Power and SMS India. As of March 31, 2025, it had 311 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of equity shares issue of 9115935 equity shares worth Rs. 687.34 cr. (at the upper cap). The company has announced a price band of Rs. 718– Rs. 754 per equity shares of Rs. 2 each. The IPO comprises of fresh equity issue worth Rs. 400 cr. (approx. 5305040 shares (at the upper cap), and an Offer for Sale (OFS) of 3810895 equity shares (worth Rs. 287.34 cr. at the upper cap). The issue opens for subscription on September 22, 2025, and will close on September 24, 2025. The minimum application to be made is for 19 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 11.86% of the post-IPO paid-up equity capital. From the net proceeds of fresh equity shares issue, it will utilize Rs. 79.12 cr. for repayment/prepayment of certain borrowings, Rs. 210.00 cr. for working capital, and the rest for general corporate purposes.

The company has reserved equity shares worth Rs. 5 cr. (approx. 66313 shares at the upper cap) for its eligible employees, and offering them a discount of Rs. 70 per share. From the rest, it has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.

The joint Book Running Lead Managers (BRLMs) to this issue are Motilal Oswal Investment Advisors Ltd., and Axis Capital Ltd., while MUFG Intime India Pvt. Ltd., is the registrar to the issue. Motilal Oswal Financial Services Ltd. is a syndicate member.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 4.40 – Rs. 10 per share (based on Re. 2 FV), between December 2008, and August 2025. It has also issued bonus shares in the ratio of 2 for 1 in September 1994, 3 for 2 in July 2008. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL, Rs. 1.97, Rs. 2.09, Rs. 2.22, Rs. 2.31, Rs. 2.46, Rs. 3.67, Rs. 7.50, Rs. 13.20, and Rs. 13.29 per share. 

Post-IPO, its current paid-up equity capital of Rs. 14.32 cr. will stand enhanced to Rs. 15.38 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 5797.49 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit, of Rs. 876.66 cr. / Rs. 87.54 cr. (FY23), Rs. 872.05 cr. / Rs. 63.36 cr. (FY24), and Rs. 1250.49 cr. / Rs. 118.65 cr. (FY25). While it posted almost static top line for FY23 and FY24, its net profit declined for FY24. For FY25, it posted growth in its top and bottom lines.

According to the management, its acquisition and ongoing expansion prompted accounting adjustments and one time provisioning that affected its bottom line for FY24 and lower top line due to disruption of production schedule. Now that all things are in place, the company is poised for fast forward mode and the trends are already reflected in FY25 working. Its plans to add high margin, high-capacity transformers augur well considering rising demand for the same.

For the last three fiscals, the company has posted an average EPS of Rs. 13.28 and an average RoNW of 35.06%. The issue is priced at a P/BV of 15.43 based on its NAV of Rs. 48.88 as of March 31, 2025, and at a P/BV of 7.73 based on its post-IPO NAV of Rs. 97.52 per share (at the upper cap).

If we attribute FY25 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 48.87. Based on FY24 earnings, the P/E stands at 91.50. Thus, the issue appears aggressively priced. 

The company has shown PAT margins of 10.01% (FY23), 7.32% (FY24), 9.54% (FY25), and RoCE margins of 57.99%, 42.38%, 39.43%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in January 2025, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Voltamp Transformers, Transformers & Rectifies, Danish Power as their listed peers. They are currently trading at a P/E of 23.0, 60.3, and 29.7 (as of September 18, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
The two BRLMs associated with the offer have handled 63 pubic issues in the past three fiscals, out of which 13 issues closed below the offer price on the listing date.