Supreme Power Equipment LTD IPO-Review, Valuation & GMP

Supreme Power Equipment IPO  - Complete Overview

SUPREME POWER EQUIPMENT LIMITED, formerly known as SUPREME POWER EQUIPMENTS, was initially established in 1994 as a partnership firm, focusing on meeting transformer requirements for the Local Electric Utility – TAMILNADU ELECTRICITY BOARD, up to the capacity of 500KVA.

In 1996, a new management, comprising two dynamic engineering graduates, took over the company while retaining the partnership firm structure. This transition marked a significant upgrade in various aspects, including design, factory infrastructure, testing bay, and marketing of transformers. 

The company expanded its capacity to manufacture transformers up to 5000 KVA, 33KV Class. Under the new management, the company successfully ventured into the WINDMILL SEGMENT, introducing innovative designs to meet stringent technical specifications.  The company has developed expertise in manufacturing transformers for windmill projects, ensuring resilience to frequent switching, voltage variances, and efficient power delivery from the wind mill generator to the grid.

Supreme Power Equipment IPO Overview

The Supreme Power Equipment IPO date is slated to be open for subscription from December 21, 2023, to December 26, 2023. This NSE SME IPO follows a Book Built Issue IPO.

Supreme Power Equipment IPO price is fixed at Rs. 61 to Rs. 65 per share. The upcoming NSE SME IPO will be listed on December 29, 2023.

The total issue size of this IPO amounts to Rs. 46.67 CR. Within this total issue, 35% is issued to retail investors, and 15% is issued to other investors.

 

Supreme Power Equipment IPO timetable (Tentative)

Events	Date
IPO Opening Date	21 December 2023
IPO Closing Date	26 December 2023
IPO Allotment Date	27 December 2023
Refund initiation	28 December 2023
IPO Listing Date	29 December 2023

 

 

Supreme Power Equipment IPO Details

IPO opening & closing date	21 December to 26 December 2023
Face value	Rs. 10 per share
Issue Price	Rs. 61 to Rs. 65 per share
Lot Size	2000 Shares
Price of 1 lot	Rs. 1,30,000
Total Issue Size	7,180,000 shares (aggregating up to Rs. 46.67 CR)
Offer for sale	shares (aggregating up to Rs. Cr)
Fresh issue	7,180,000 shares (aggregating up to Rs. 46.67 CR)
Listing at	NSE SME
Issue Type	Book Built Issue IPO
Registrar	Purva Sharegistry India Pvt Ltd

 

Supreme Power Equipment IPO Lot Details

Application	Lot	Shares
Minimum Lot Investment (Retail)	1 Lot	2,000
Maximum Lot Investment (Retail)	1 Lot	2,000
Minimum Lot Investment (HNI)	2 Lot	4,000

Supreme Power Equipment IPO Reservation

QIB Shares Offered	50%
Retail Shares Offered	35%
Other Shares Offered	15%

Company Financial

(Amount in Lakhs)

Period	Jul 31  FY 23	Mar 31  FY 23
Total Assets	9,187.16	6,901.04
Total Revenue	3,927.61	9,990.85
PAT	503.16	1,107.88
Net worth	2,298.26	1,805.69
Reserve & Surplus	1,902.46	1,409.89
Total Borrowings	2,153.82	1,999.74

 

 Product  Wise Revenue  Bifurcation    

Supreme Power Equipment prioritises Distribution and Power Transformers, with growing emphasis on Windmill and Solar Transformers.

( in % age)

Particulars	Jul 31 FY 23	Mar 31  FY 23	Mar 31  FY 22
Distribution Transformer and Energy-Efficient Transformer	45.17%	54.54%	92.30%
Power Transformers	53.09%	39.71%	1.68%
Windmill Transformers	-	0.27%	-
Solar Transformers	1.74%	5.06%	6.02%
Generator Transformers	-	-	-
Furnace Transformers	-	0.41%	-
Total	100.00%	100.00%	100.00%

GEOGRAPHICAL-WISE REVENUE BIFURCATION      

Supreme Power Equipment primarily derives revenue from India (99.79% to 100.00%), with minimal global contributions from Singapore (0.10%) and Nigeria (0.11% to 0.12%).   

( % age) 

Particulars	Jul 31 FY 23	Mar 31  FY 23	Mar 31  FY 22
India	99.88%	99.79%	100.00%
Singapore	-	0.10%	-
Nigeria	0.12%	0.11%	-
UAE	-	-	-
Total	100.00%	100.00%	100.00%

 

Revenue By operations

Supreme Power Equipment's revenue predominantly comes from core operations, accounting for 97.26% to 99.78% across fiscal periods. 

(amount in Lakhs)

Particulars	July 31 FY 23	Mar 31  FY 23	Mar 31  FY 22
Revenue from operations	97.26%	96.96%	99.78%
Other Operating Income	2.74%	3.04%	0.22%
Total Revenue from operations	100.00%	100.00%	100.00%

 

 

The objective of the Issue

The company intends to use the net proceeds for the following objectives.

• To meet the Capital Expenditure.

• To meet the Working Capital requirements of the Company.

• To meet the General Corporate Purposes.

• To meet the Issue Expenses.

 

Promoters and Management of Supreme Power Equipment IPO

1. Mr. Vee Rajmohan.

2. Mr. K V Pradeep Kumar.

Pre-issue Promoter Shareholding	79.37%
Post-issue Promoter Shareholding	57.54%

 

Supreme Power Equipment IPO Lead Managers:

• Narnolia Financial Services Ltd

 

Peers of Supreme Power Equipment IPO

Supreme Power Equipment's IPO at a P/E ratio of 10.69x appears undervalued compared to peers. 

Name of the company	Face value (Rs. per share)	P/ E	EPS (Basic) (Rs.)
Supreme Power Equipment Limited	10	10.69	6.08
TD Power System Limited	02	46.41	5.70
Transformers & Rectifiers (India) Limited	01	58.79	2.80
Indo Tech Transformers Limited	10	18.14	24.20
VoltAmp Transformers Limited	10	22.01	197.63

 

Evaluation

The IPO is priced in the range of Rs 61 to Rs. 65  per share.

Evaluation of P/E Ratio

- Considering the FY23 EPS of Rs 6.08 from the last year, the resulting P/E ratio is 10.69x.

- Taking into account the weighted EPS of Rs 3.01 for the last three years, the P/E ratio amounts to 21.60x.

Comparative Analysis with Listed Peers

- Transformers & Rectifiers (India) Limited has a P/E ratio of 58.79x (the highest).

- Indo Tech Transformers Limited has a P/E ratio of 18.14x (the lowest).

- The industry's average P/E is 38.47x.

As a result, the IPO price range with a P/E ratio of 10.69x to 21.60x is deemed significantly undervalued when compared to the industry average of 38.47.

 

Dividend Policy

The company hasn't paid dividends in past fiscal years. Whether we can pay them in the future depends on factors like profits, past dividend trends, capital needs, legal restrictions, and other relevant considerations evaluated by our Board.

 

IPO's Strengths

1.Contracts and Government Revenue: The company secures government tenders, generating a significant share of revenue from ties with public sector undertakings and diverse customer categories.

2.Engineering Excellence: Our transformer manufacturing prioritises engineering excellence, providing customer-centric solutions that minimise losses and contribute to current market success.

3.Capable Technical Team: Efficient transformer refurbishing and manufacturing are driven by our skilled technical team, ensuring total quality management through a dedicated Research & Development centre.

4.Quality Assurance Commitment: Rigorous quality assurance programs, including material inspections, demonstrate our commitment to consistently meeting design and manufacturing standards.

5.Strategic Marketing Approach: Under strong leadership, our sales and marketing team strategically pitches for prime projects, ensuring continued client association and fulfilling our organisation's future-state vision.

6.Comprehensive Product Portfolio: Our product portfolio spans Power Transformation, Generator Transformer, and more, covering both refurbishing and manufacturing segments to meet diverse market needs.

7.Well-Equipped Manufacturing: Their  manufacturing facilities, spread over 17,876 sq. feet, are well-equipped, ensuring qualitative production. 

 

 

 

IPO's Weaknesses

1.Legal Proceedings Alert: Their Promoters and Directors are entangled in ongoing legal proceedings and claims tied to criminal matters connected with their operations.

2.Legal Challenges: Ongoing legal proceedings involving Promoters/Directors may result in penalties, impacting business outcomes.

3.Capital Expenditure Risks: Set-up process risks, cost overruns, and regulatory changes could impact budget and timelines.

4.License Procurement Challenges: Dependence on timely licences for new factory setup poses operational and financial risks.

5.Raw Material Procurement Risks: Lack of long-term contracts with suppliers may disrupt operations due to raw material unavailability.

6.Negative Cash Flows Impact: Negative cash flows from operating, investing, and financing activities may impact growth.

7.Geographical Revenue Concentration: Majority of revenue from Tamil Nadu; economic instability and local competition pose risks.

IPO GMP Today

The Last GMP of Supreme Power Equipment IPO was Rs.30.

Conclusion

Supreme Power Equipment Limited's IPO, priced at Rs. 61 to Rs. 65 per share, aims to raise Rs. 46.67 crore. With a subscription period from December 21 to December 26, 2023, and listing on December 29, 2023, the company shows financial growth and is considered undervalued with a P/E ratio of 10.69x to 21.60x. Strengths include government contracts, engineering excellence, and a comprehensive product portfolio. However, legal proceedings and concentration risks pose challenges.

 

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

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