Parth Electricals NSE SME IPO review

•    The company is engaged in the manufacturing and providing power sector related equipments and services.
•    It has emerged as the most preferred partner with world renowned Schneider technology.
•    The company posted growth in its top and bottom lines for the reported periods.
•    Based on its recent financial data, the issue appears fully priced.
•    It has around Rs. 230 cr. orders on hand to be completed by 2026.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Parth Electricals & Engineering Ltd. (PEEL) is incorporated with a vision to be the preferred, well known, reliable, and quality supplier & service provider to customers in power sector and a mission to give people, the power for measuring, controlling and analysing the current and voltage with safety. It is the employer of choice offering team members opportunities for growth, advancement and rewarding careers in a safe working environment. In the initial years, the company was focused on providing services in the Power distribution and transmission sector by implementing solutions for the clients based on their requirements. During the process of implementation, it came across numerous challenges on the ground relating to design of the products, size of the products, challenges for civil work around the product and several others.

With this knowledge and understanding in 2009, the first manufacturing set up was implemented to manufacture MV panels by the company in Gujarat. Over the last two decades of its existence PEEL has evolved as a serious and significant player in the Power distribution sector mainly in the urban sector with specialization in Low Voltage equipment manufacture and has grown its service capabilities across the gamut of services required in this sector through constant upgradation and training of its people and processes. Services have been an integral part of the company and has been instrumental in the procurement of numerous prestigious clients and orders for the company.

PEEL is a technology-driven company with a focus on quality, design, and product development. It has also entered into technology transfer agreements with Schneider Electric Industries SAS to provide better services and products to customers. Schneider Electric Industries SAS is a global industrial technology company that provides expertise in electrification, automation, and digitization. Under these agreements, the company is authorized by Schneider Electric to manufacture, assemble, test, market and sell the product as per Schneider’s type tested design and transfer of technology. Schneider Electric Industries SAS (Licensor) shall provide Parth (Licensee) with all technical information required to manufacture Schneider Electric Industries SAS make RMU and CSS/PSS. The Company is also an outsourcing partner of Schneider Electric for manufacturing of MV panels.

During this journey of two decades, the Company has served more than 100+ clients in different industries such as Oil and Gas, Papers, Cement, Steel, FMCG, Automobile etc. Its clientele in this industry includes Aditya Birla, Ultratech Cement, L&T, RIL, Adani, Tata Power, Schneider Electric, BHEL, Tata Steel, Siemens, GFL, Jindal Steel & Power and many more. It has an order book of Rs. 123.20 crores as on July 14, 2025 to be executed in FY’26 as certified by Statutory Auditor vide their certificate dated July 14, 2025. As of March 31, 2025, it had 244 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2924800 equity shares of Rs. 10 each to mobilize Rs. 49.72 cr. at the upper cap. It has announced a price band of Rs. 160 – Rs. 170 per share. The issue opens for subscription on August 04 2025, and will close on August 06, 2025. The minimum number of shares to be applied is for 1600 shares and in multiples of 800 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 21.40% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 20 cr. for capex on GIS manufacturing facility in Gujarat, Rs. 19 cr. for capex on manufacturing facility in Odisha, Rs. 15 cr. for repayment of short-term borrowings, and the rest for general corporate purposes. The company did a pre-IPO placement of 725000 equity shares at a price of Rs. 170 per share in May 2025 and July 2025.

The company has reserved 68800 equity shares worth Rs. 1.17 cr. at the upper cap for its eligible employees, and offers them a discount of Rs. 8 per share. It has allocated 146400 equity shares (5.01%) for market maker, and from the rest, it has allocated not more than 50% for QIBs, not less than 35% for Retail Investors and not less than 15% for HNIs. 

The IPO is solely lead managed by Horizon Management Pvt. Ltd., and KFin Technologies Ltd., is the registrar to the issue. Shreni Shares Ltd. is a market maker, and Horizon Management Pvt. Ltd. is as a syndicate member. The issue is underwritten to the tune of 15.02% by Horizon Management and 84.98% by Khajanchi & Gandhi Stock Broking Pvt. Ltd.

The company has issued initial equity shares at par value, and further equity issue in the price range of Rs. 80 – Rs. 170 per share between July 2011, and July 2025. It has issued bonus equity shares in the ratio of 6 for 1 in April 2024. The average cost of acquisition of shares by the promoters is Rs. 1.43 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 10.74 cr. will stand enhanced to Rs. 13.67 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 232.36 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 65.70 cr. / Rs. 2.45 cr. (FY23), Rs. 87.17 cr. / Rs. 4.61 cr. (FY24), Rs. 176.20 cr. / Rs. 10.12 cr. (FY25). The company posted growth in its top and bottom lines for the reported periods and it also indicates the likely future trends for the segment.

For the last three fiscals, the company has reported an average EPS of Rs. 7.72 and an average RoNW of 27.32%. The issue is priced at a P/BV of 4.13 based on its NAV of Rs. 41.20 as of March 31, 2025, and at a P/BV of 2.57 based on its post-IPO NAV of Rs. 66.08 per share (at the upper cap). 

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 22.97. Based on FY24 earnings, the P/E stands at 50.45. Thus, the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 3.74% (FY23), 5.31% (FY24), 5.79%, (FY25), and RoCE margins of 19.63%, 24.50%, 23.38%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid 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.

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Supreme Power, Shivalic Power, and RMC Switchgears, as their listed peers. They are trading at a P/E of 27.2, 21.5, and 27.7 (as of July 30, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 18th mandate from Horizon Management in the last three fiscals including the ongoing one.  Out of the last 10 listings, 3 opened at discount, 3 at par, and the rest with premium ranging from 9.20% to 40% on the date of listing.