Lakshya Powertech IPO sees robust demand on day 1, bought 56 times; GMP spikes sharply

Lakshya Powertech IPO

Lakshya Powertech's initial public offering has seen overwhelming response from investors - especially retail and non-institutional investors - on the first day of bidding, October 16. Investors have bought 11.32 crore equity shares so far, 55.81 times over the offer size of 20.28 lakh equity shares, the subscription data on the NSE showed.

The engineering consultancy and contracting company, which specialises in mechanical and electrical services, targets to raise Rs 49.91 crore through its IPO that comprises an entirely fresh issue of 27.72 lakh equity shares. The price band for the issue, which closes on October 18, has been fixed at Rs 171-180 per share.

Half of the public issue size (fresh issue less the market maker and employees' portion) has been reserved for qualified institutional investors (QIBs), 35 percent for retail investors, and the remainder 15 percent for non-institutional investors.

Retail investors bought 97.6 times the portion set aside for them, followed by non-institutional investors whose reserved portion was subscribed 65.9 times. Qualified institutional buyers seem to be less aggressive compared to other investors, bidding 1.34 times the allotted quota.

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Incorporated in 2012, the Telangana-based company specialises in engineering, procurement, construction, and commissioning (EPCC) services, catering to projects from the oil and gas, power, industrial, and renewable energy sectors. Additionally, it also offers operation and maintenance services.

Lakshya Powertech has executed more than 138 projects so far with major completed projects amounting to Rs 268.43 crore. As of August 2024, it has 45 major ongoing projects worth Rs 431.99 crore.

Lakshya Powertech that competes with listed peers like Asian Energy Services, and Engineers India will utilise Rs 4.5 crore out of net IPO proceeds for repaying debt, Rs 30 crore for working capital requirements, and the remainder funds for general corporate purposes. It had total debt of Rs 29.17 crore as of August 2024.

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The company had recorded strong financial performance in the past years with net profit for the year ended March 2024 increasing sharply by 478.3 percent on-year to Rs 15.7 crore and revenue climbing 179.3 percent to Rs 148.1 crore compared to previous fiscal. In the five-month period ended August 2024, net profit stood at Rs 5.97 crore on revenue of Rs 57.8 crore.

GYR Capital Advisors is the sole book running lead manager to the issue.

Meanwhile, the grey market premium for Lakshya Powertech IPO shares has consistently been increasing, quoting at more than 90 percent premium over the upper price band, up from 55 percent last week, market observers said.