Prostram Info IPO review (Apply)

•    The company is engaged in supply of energy storage equipment and power conditioning equipments along with related services.
•    The company marked growth in its top and bottom lines for the reported periods.
•    The sudden boost in its bottom lines from FY23 onward is on account of its ability to provide all related services under one roof. 
•    Based on its financial data, the IPO appears fully priced. 
•    Investors may lap it up for long term.

ABOUT COMPANY:
Prostarm Info Systems Ltd. (PISL) – is engaged in designing, manufacturing, assembling, sale, service and supply of Energy Storage Equipment and Power Conditioning Equipment (“Power Solution Products”) in India. Its manufactured Power Solution Products comprise of UPS system, inverter system, lift inverter system, solar hybrid inverter systems, lithium-ion battery packs, servo-controlled voltage stabilizers (“SCVS”), isolation transformers and other power solution products. The company offers both customized and standard products and solutions, manufactured and assembled at in-house facilities and also through third party contract manufacturers. 

In addition to its core manufactured products, the company also deals in sales and supplies of third-party power solution products such as batteries, reverse logistics/end-of-life products and other assets such as IT Assets, solar panel and allied products. PISL also undertakes rooftop solar photovoltaic power plant projects across India on EPC basis. Its comprehensive range of value-added services include installation, rental, after-sales services (including warranty and post-warranty services), Annual Maintenance Contracts (“AMC”) which supplements Power Solution Products, catering to a wide spectrum of customers and their requirements. It specializes in power electronics solutions, offering reliable and affordable products to businesses across various sectors and have built a reputation for delivering dependable UPS systems that ensure continuous power availability in critical sectors like banking, finance, and healthcare. (Source: CARE Report). 

Over the years, it has leveraged expertise, processes and infrastructure to cater to diverse end-use industries such as healthcare, aviation, research, BFSI, railways, defense, security, education, renewable energy, information technology and oil & gas. As on date, PISL is an empaneled vendor for Airports Authority of India; West Bengal Public Health Engineering Department; West Bengal Electronic Industry Development Corporation Limited; Telangana State Technology Services Limited; Railtel Corporation of India Limited; and NTPC Vidyut Vyapar and Nigam Limited. The company markets its products under own brand “Prostarm”. It is presently catering wide range of power solution products to diverse clientele including the government, private institutions and corporate customers. Its extensive capabilities to meet customers' requirements are bolstered by pan-India sales and service network. As of March 31, 2025, it had 442 employees (including 19 contract workers) on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 16000000 fresh equity shares issue worth Rs. 168.00 cr. (at the upper cap). The company has announced a price band of Rs. 95 – Rs. 105 per equity shares of Rs. 5 each. The issue opens for subscription on May 27, 2025, and will close on May 29, 2025. The minimum application to be made is for 142 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 27.18% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 17.96 cr. for repayment/prepayment of certain borrowings, Rs. 72.50 cr. for working capital, 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 sole Book Running Lead Manager (BRLM) to this issue is Choice Capital Advisors Pvt. Ltd., while KFin Technologies Ltd. is the registrar to the issue. Choice Equity Broking Pvt. Ltd., is a syndicate member.

The company has issued/converted initial equity shares at par value. It has also issued bonus shares in the ratio of 3 for 1 in August 2020, and 372 for 100 in March 2023. The average cost of acquisition of shares by the promoters is Rs. 0.01, Rs. 0.33, and Rs. 1.19 per share. 

Post-IPO, its current paid-up equity capital of Rs. 42.88 cr. will stand enhanced to Rs. 58.88 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 618.18 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. 172.05 cr. / Rs. 10.87 cr. (FY22), Rs. 232.35 cr. / Rs. 193.46 cr. (FY23), and Rs. 259.23 cr. / Rs. 22.80 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 22.11 cr. on a total income of Rs. 270.27.76 cr.

 Thus, while its top line has marked growth, its bottom line marked boosted margins from FY23 onwards.

For the last three fiscals, the company has posted an average EPS of Rs. 4.72 and an average RoNW of 34.50%. The issue is priced at a P/BV of 4.20 based on its NAV of Rs. 25.01 as of March 31, 2024, and at a P/BV of 2.45 based on its post-IPO NAV of Rs. 42.85 per share (at the upper cap). However, this data is missing its NAV as of December 31, 2024, which is a big surprise.

If we attribute FY25 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 20.96. Based on FY24 earnings, the P/E stands at 27.13. Thus, the issue appears fully priced. The company is operating in a highly competitive and fragmented segment.

The company reported PAT margins of 6.35% (FY22), 8.40% (FY23), 8.84% (FY24), 8.23% (9M-FY25), and RoCE margins of 41.27%, 41.45%, 32.41%, 22.95% for the referred periods, respectively. 

According to the management, the company has emerged as the most preferred partner for power related solutions, as it is able to provide all such services under one-roof. Its good order book indicates likely scenario going forward. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It has already adopted a dividend policy in March 2023, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Servotech Renewable Power, and Sungarner Energies, as their listed peers. They are trading at a P/E of 83.2, and 44.7 (as of May 22, 2025). However, they are not truly comparable on an apple-to-apple basis. There is an error in the name of listed peer, as we did not find Servotech Power, but found Servotech Renewable Power and have taken their P/E data.   These peers compare appears as an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 6th mandate from Choice Capital in the last three fiscals, including the ongoing one. From the last 5 listings, all listed with premium ranging from 0.05% to 90% on the date of listing.