HPL Makes Weak Debut Sliding 7% on the first day
Posted: Oct 04, 2016
HPL Electric & Power started trading today after it got listed at Rs 190, 6% below its issue price of Rs 202 per share, on the NSE. HPL Electric & Power is the electrical equipment manufacturer.
At 10:01 am, the stock was trading at Rs 192, after striking a low of Rs 188, post its listing. It has touched a high of Rs 198 so far. A combined 3.06 million shares changed hands on the counter on the NSE and BSE.
Currently, it is trading at Rs. 188.40, down by 0.84% while Nifty gains 0.28%.
The Rs 360-crore IPO of HPL Electric & Power, oversubscribed 8 times to its issue size. The institutional investor part of the IPO was subscribed 5.77 times; high net worth individual category category was subscribed 22 times, while retail investor section was subscribed 3.31 times. The public issue was opened for subscription through September 22-26. Proceeds of the issue will be utilized for settlement of loans, funding working capital requirements and other general corporate purposes. HPL Electric makes metering solutions, switchgears, lighting equipment and wires and cables, among others.
HPL’s shares are being floated at a post-issue P/E multiple of 24 to 26 times, after consolidating the business of Himachal Energy. Himachal Energy was merged with the company this May. After combining the recently-acquired Himachal Energy into HPL’s finances, gross revenue and operating profit have increased at a CAGR of 12 per cent and 11 per cent, respectively, over the past five years. The net profit for the year FY16 stood at Rs. 48.6 crore with the net profit margin at 4.1 per cent.
HPL’s post-issue debt is said to be around Rs. 452 crore after accounting for repayment from the issue proceeds. According to India Ratings and Research, credit ratings allocated for long-term borrowing and working capital for the financial year ending 2016 stands at A-. With almost 100 per cent of the electronic components imported in the lighting division from Taiwan, South Korea and China, the threat of margin erosion due to rupee depreciation is high.
The company was incorporated in the year 1992 under the companies’ act 1956. In the year 1998, the company commenced the production electronic or static meters at its Gurgaon Facility. In 2011, the company began the production and manufacture of switchgears at their Kundli Facility. In the 2015, the company turned public and commenced the production of LED Products. HPL has never looked back ever since.
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