Mangal Electrical IPO review

•    The company specializes in processing transformer components , primarily in CRGO segment.
•    It marked growth in its top lines for the reported periods.
•    It suffered a setback in bottom lines for FY24, following escalation of costs for carried over supplies.
•    Based on its recent financial data, the IPO appears aggressively priced.
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Mangal Electrical Industries Ltd. (MEIL) specializes in processing transformer components, including transformer laminations, CRGO slit coils, amorphous cores, coil and core assemblies, wound and toroidal cores, and oil-immersed circuit breakers. The company also trades CRGO and CRNO coils, as well as amorphous ribbons. Additionally, it manufactures transformers and customized products for the power infrastructure industry. Its transformer range spans from single-phase 5 KVA to three-phase 10 MVA units. MEIL also offers EPC services for setting up electrical substations, serving the power sector. It has five production facilities in Rajasthan with an aggregate production capacity for (i) 16,200 MT for CRGO, (ii) 10,22,500 KVA for transformers and (iii) 75,000 units for ICB and (iv) 2,400 MT for Amorphous units per annum.

The Company is both NABL and PGCIL lab approved underscoring its adherence to stringent quality standards. It has also procured PGCIL approval for processing of transformers/ reactors from up to 132 kV to up to 400 kV class and are also an ISO 9001:2015 and ISO 14001:2015 certified with a global customer base. The Company has also obtained NTPC approval for CRGO processing. Further, it also possesses Brockhaus Messtechnik, a Germany based machinery, used for process and quality control checks which enables it to achieve high-efficiency level outputs. Its customer mix primarily include governmental and municipal utilities such as Ajmer Vidyut Vitran Nigam Limited and Jaipur Vidyut Vitran Nigam Limited and private sector energy producers such as Voltamp Transformers Limited and Western Electrotrans Private Limited. 

It has presence across India. As for the last three Fiscals 2025, 2024 and 2023, it has exported transformer components to Netherlands, United Arab Emirates, Oman, United States of America, Italy and Nepal. As of June 30, 2025, it had 89 employees on its payroll and additional 120 contract workers in various department. However, there appears to be some mismatch in its employees’ strength as it differs the total employees’ number as 761 (page.no. 234 of the offer documents. Clarification is needed from the management on this.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO for 7130124 equity shares (worth Rs. 400 cr. at the upper cap). The company has announced a price band of Rs. 533 – Rs. 561 per equity shares of Rs. 10 each. The issue opens for subscription on August 20, 2025, and will close on August 22, 2025. The minimum application to be made is for 26 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 25.81% of the post-IPO paid up equity capital. From the net proceeds of the fresh issue, the company will utilize Rs. 101.27 cr. for repayment/prepayment of certain borrowings, Rs. 87.86 cr. for capex for expansion of its unit IV, Rs. 122.00 cr. for working capital, and the rest for general corporate purposes.

The sole Book Running Lead Manager (BRLM) to this issue is Systematix Corporate Services Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Systematix Shares & Stocks (India) Ltd. is a syndicate member.

The company has issued/converted initial equity shares at par value. The average cost of acquisition of shares by the promoters is Rs. 10.00 per share. 

Post-IPO, its current paid-up equity capital of Rs. 20.50 cr.  will stand enhanced to Rs. 27.63 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 1550.05 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 357.81 cr. / Rs. 24.74 cr. (FY23), Rs. 452.13 cr. / Rs. 20.95 cr. (FY24), and Rs. 551.39 cr. / Rs. 47.31 cr. (FY25). The company marked growth in its top lines for the reported periods, but posted a setback in bottom lines for FY24.

For the last three fiscals, the company has posted an average EPS of Rs. 16.96 and an average RoNW of 28.81%. The issue is priced at a P/BV of 7.09 based on its NAV of Rs. 79.10 as of March 31, 2025, and at a P/BV of 2.76 based on its post-IPO NAV of Rs. 203.46 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 32.77. Based on FY24 earnings, the P/E stands at 74.01. The issue appears aggressively priced.

The company has posted PAT margins of 6.98% (FY23), 4.66% (FY24), 8.61% (FY25), and RoCE margins of 23.24%, 19.92%, 25.38%, 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, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Vilas Transcore, and Jay Bee Laminates, as their listed peers. They are trading at a P/E of 37.7, and 20.0 (as of August 14, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
The BRLM associated with this offer has handled 3 issues in the last three fiscals, out of which 1 issue closed below the issue price on listing date.