Jainik Power NSE SME IPO review (May apply)

•    The company that was in trading activities for aluminium rods has now entered manufacturing of rods and wires.
•    It posted sudden growth in its top and bottom lines from manufacturing activities.
•    It is expanding its capacities to meet rising demand.
•    Based on its recent financials, the issue appears aggressively priced.
•    It is a north region centric player increasing its market share.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Jainik Power & Cables Ltd. (JPCL) which was in trading of aluminium rods is now in manufacturing aluminium wire rods from the year 2023. The Company is a manufacturer and supplier of aluminium wire rods with quality practices and compliant with the Environmental, Health, and Safety (EHS) in the manufacturing industry as certified with the ISO Certificates held by the Company. The company has a Quality Assurance Department which ensures testing through spectrometers for purity checks and detects even hidden impurities.

Its manufacturing facility located in Sonipat, Haryana. It supplies products across various states, mainly in states of Delhi, Haryana, Rajasthan, Uttar Pradesh, Uttarakhand. As of May 05, 2025, it had 71 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 4663200 equity shares of Rs. 10 each to mobilize Rs. 51.30 cr. at the upper cap. It has announced a price band of Rs. 100 – Rs. 110 per share. The issue opens for subscription on June 10, 2025, and will close on June 12, 2025. The minimum number of shares to be applied is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 32.50% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 23.50 cr. for working capital, Rs. 10.99 cr. for setting up of new plant, Rs. 5.00 cr. for repayment of certain loans, and the rest for general corporate purposes. 

The company has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.

The IPO is solely lead managed by Fast Track Finsec Pvt. Ltd., and Skyline Financial Services Pvt. Ltd., is the registrar to the issue. Rikhav Securities Ltd., is the market maker.

The company has issued/converted initial equity shares at par value, and issued further equity capital in the price range of Rs. 30 – Rs. 55 per share between November 2011 and July 2024. It has also issued bonus shares in the ratio of 68 for 5 in June 2024. The average cost of acquisition of shares by the promoters is Rs. 1.95, Rs. 6.14, Rs. 8.661 and Rs. 10.32 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 9.68 cr. will stand enhanced to Rs. 14.35 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 157.82 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 67.49 cr. / Rs. 0.15 cr. (FY23), Rs. 339.23 cr. / Rs. 5.02 cr. (FY24), and Rs. 352.38 cr. / Rs. 9.24 cr. (FY25). Boosted top and bottom lines from FY24 onwards raise eyebrows, but also indicates likely future trends with more benefits from expansion that is underway.

For the last three fiscals, the company has reported an average EPS of Rs. 7.035 and an average RoNW of 60.60%. The issue is priced at a P/BV of 4.14 based on its NAV of Rs. 26.59 as of March 31, 2025, but the offer documents are missing its post-IPO NAV data. As per the information given by Lead Manager, its NAV post-IPO is Rs. 52.89 per share at the upper cap and its P/BV will be 2.08 based on this.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 17.08. Based on FY24 earnings, the P/E stands at 31.43. The issue relatively appears aggressively priced.

For the reported periods, the company has posted PAT margins of 0.22% (FY23), 1.48% (FY24), 2.63%, (FY25), and RoCE margins of 14.88%, 52.30%, 55.92% respectively for the referred periods.  

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Hind Aluminium, and Arfin India, as their listed peers. They are trading at a P/E of 6.02, and 50.8 (as of June 06, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 15th mandate from Fast Track Finsec in the last seven fiscals including the ongoing one.  From the last 14 listings, 3 listed at discount, and the rest listed with a premium ranging from 0.83% to 201.20% on the listing date.