Day 2 of Electro Force (India) Limited IPO: The issue is fully subscribed due to strong retail interest. GMP is rising

Electro Force (India) Limited's IPO opens for subscription on Tuesday, December 19 and closes on Thursday, December 21. The price range for the IPO of Electro Force (India) Limited has been set at ₹93 each. The lot size of the Electro Force IPO is 1,200 shares. Investors can bid for at least 1,200 shares and multiples thereof.

Electro Force (India) Limited designs and manufactures metal/plastic contact parts and electrical components for the electronics, lighting, switchgear and allied industries in India.

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Using metal stamping, injection molding and insert molding processes, Electro Force designs and produces stamping components and plastic components for electrical MCBs (miniature circuit breakers), 63A electrical manual transfer switches, electrical MCCBs and RCBs, and brushless DC motors for automation, aerospace and medical and defense, electrical Motor starters, electrical ballasts and electrical switches.

As stated in the Red Herring Prospectus (RHP), the company's industry peers (with a P/E ratio of 20.22) are Centum Electronics Limited (with a P/E ratio of 191.78) and RIR Power Electronics Limited (with a P/E ratio of 100.74). ).

Between the financial year ended March 31, 2023 and March 31, 2022, Electro Force (India) Limited recorded a decline in revenue of -12.04% and a decline in profit after tax (PAT) of -7.48%.

Electro Force (India) Limited IPO details

Electro Force's IPO, which is worth it ₹80.68 crore, consists of fresh issue of 6,00,000 shares worth ₹55.80 crore and an Offer-for-Sale (OFS) component comprising 2,674,800 shares of face value ₹10, aggregated up to ₹24.88 crore, according to RHP.

The Company plans to use the net proceeds from the offering to fund its pursuit of inorganic growth, general corporate purposes and additional working capital needs.

The registrar of Electro Force India's IPO is Skyline Financial Services Private Ltd and the book running lead manager is First Overseas Capital Limited. Arham Shares is the market maker for Electro Force India IPO.

“The Principal Objects and Ancillary and Ancillary Objects Clause to the Principal Objects set forth in the Memorandum of Association enable us to (i) continue our existing business activities; and (ii) carry out the activities proposed to be financed from the net proceeds. In addition, our company expects to benefit from the listing of the shares, including enhancing our visibility and brand image among our existing and potential customers, as well as creating a public market for our shares in India,” the company said in its letter to RHP.

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IPO Subscription Status of Electro Force (India) Limited

The subscription status for Electro Force's IPO is 1.29 times on the second day so far. The issue received positive response from retail investors whose share was subscribed 2.23 times and non-institutional buyers whose share was subscribed 34%, according to data on chittorgarh.com.

According to chittorgarh.com, the company has received offers for 1,05,96,000 shares against 82,39,200 shares on offer at 1:41 pm IST.

Subscription status for Electro Force's IPO was 93% on day one.

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Electro Force (India) Limited IPO GMP today

Electro Force (India) Limited IPO GMP today or gray market premium is +14, higher than +10 in the previous session. This suggests that Electro Force (India) Limited share price was trading at a premium of ₹14 on the gray market, according to investorgain.com.

Taking into account the upper end of the IPO price range and the current premium in the gray market, the estimated listing price of the stock of Electro Force (India) Limited has been provided ₹107 per piece, which is 15.05% higher than the IPO price of ₹93.

“Gray market premium” indicates investors’ willingness to pay more than the issue price.

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Review of Electro Force India Limited

“The company operates in a highly competitive and fragmented segment. Fluctuating trends in sales and profits were noted during the reporting periods. Based on FY24 annualized super profits, the issue appears to be fully priced in. The sustainability of these margins in the future is a major concern. There is no harm in skipping this sensitive IPO,” said Dilip Davda, Editor, Chittorgarh.

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Disclaimer: The above views and recommendations are those of individual analysts, experts and brokerage firms, not Mint. We recommend investors consult certified experts before making an investment decision.

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