HPL Electric IPO off to a Slow Start

The initial public offering of HPL Electric and Power began with a poor numbers recorded just 6 per cent subscription on the first day of the bidding process.Data from both BSE and NSE suggested that retail investors have bid for 12 per cent of the total quota limit of 72.20 lakhs shares till 5 pm on the commencement date. The QIB quota was yet to receive any bid. NIIs bade for around 7,910 shares.The revenue of the Company grew at a slow pace of 3.4 per cent CAGR in the last two years, due to slower growth in the business-to-business category. Given the financials as well as the return ratios, its valuation discount to peers is justified, the experts suggested. That said that brokerages have a neutral to positive view of the initial public offering, expecting improvement in earnings going forward.All in all, a total of 1.44 crores shares are on the block in the price band of Rs 175 to 202 apiece. The third or the final day of the issue is on Monday, 23rd September 2016.The IPO of HPL Electric and Power hit the market a day after ICICI Prudential Life Insurance successfully raised Rs 6,057 crores through a similar issue.On Wednesday the Company allocated 53,61,385 equity shares to 13 anchor investors at Rs 202 per share, aggregating to Rs 108.30 crores. Investors can bid for a minimum of 70 shares and thereafter in multiples of 70.Brokerage houses said while the issue is available at a discount to peers such as Havells, V-Guard and Finoles Cables, the quantum of discount is unwarranted. They expects room for upside in the stock and has recommended a ‘subscribe’ rating on the issue.The company is in the manufacturing business of a wide range of electric equipment, including lighting equipment, wires and cables, metering solutions as well as switchgears.HPL Electric and Power boasts of holding the largest market share for electricity energy meters in the country in financial year of 2015, and had the fifth largest market share for LED lamps during that period.It has seven manufacturing facilities in the states of Haryana and Himachal Pradesh. HPL Electric supplies switchgears, lighting equipment and wires and cables, primarily through 2,400 authorized dealers from warehouses located in 21 states and Union Territories. The dealers or distributors further sell products to over 15,000 retailers in India, the company added.For more information about HPL IPO please refer "All you need to know about HPL IPO".

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