Lakshya Powertech IPO Day 1: Subscription Surges 43 Times, GMP Rises Significantly

Lakshya Powertech’s Initial Public Offering (IPO) opened to a robust demand on its first day, October 16, with an overall subscription rate reaching 43 times the issue size. Investors, particularly retail and non-institutional, displayed remarkable enthusiasm for the engineering consultancy and contracting company's shares. According to data from the National Stock Exchange (NSE), a total of 8.77 crore shares were bid for, significantly outpacing the 20.28 lakh shares on offer.

The Telangana-based company, which specializes in mechanical and electrical services, is aiming to raise ₹49.91 crore through this IPO. It plans to issue 27.72 lakh fresh equity shares as part of this offer. The price band has been set at ₹171-₹180 per share, with the issue set to close on October 18. Investors have shown tremendous interest, particularly retail participants, whose portion of the offering was subscribed 77.3 times. Non-institutional investors (NII) also showed strong demand, with a 46.8x subscription. Meanwhile, qualified institutional buyers (QIBs) were relatively cautious, subscribing to just 1.34 times the shares allotted to them.

Lakshya Powertech operates in a niche market, providing engineering, procurement, construction, and commissioning (EPCC) services across a variety of sectors, including oil and gas, power, and renewable energy. Established in 2012, the company has built a solid reputation with over 138 completed projects, valued at ₹268.43 crore. As of August 2024, it has 45 ongoing projects worth ₹431.99 crore in progress.

The company plans to utilize ₹4.5 crore from the IPO proceeds to repay its existing debt, while ₹30 crore will be allocated for working capital requirements. The remaining funds will be used for general corporate purposes. As of August 2024, Lakshya Powertech's total debt stood at ₹29.17 crore. This IPO will help the company solidify its financial footing and continue expanding its operations in key sectors.

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Financially, Lakshya Powertech has demonstrated impressive growth. For the fiscal year ending in March 2024, the company reported a staggering 478.3% increase in net profit, reaching ₹15.7 crore. Revenue also saw a sharp rise, increasing by 179.3% year-on-year to ₹148.1 crore. In the five months ending in August 2024, the company continued its upward trend, posting a net profit of ₹5.97 crore on revenues of ₹57.8 crore.

In terms of market sentiment, the grey market premium (GMP) for Lakshya Powertech's shares has surged, reflecting strong investor confidence. The GMP, which stood at a 55% premium last week, has now spiked to over 90% above the upper price band, suggesting high demand even before the official listing.

Lakshya Powertech's performance has caught the attention of market observers, with many noting its strong project pipeline and strategic position in the energy and industrial sectors. The company competes with industry peers like Asian Energy Services and Engineers India, but its focused approach and diversified portfolio have helped it carve out a distinct place in the market.

The Lakshya Powertech IPO is managed by GYR Capital Advisors, the sole book running lead manager. As the subscription window remains open for another two days, all eyes are on how the remaining investor categories, particularly institutional buyers, will respond to this opportunity.

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With the proceeds from the IPO set to strengthen the company's balance sheet and fuel its growth initiatives, Lakshya Powertech appears well-positioned for future success. Investors are betting on the company’s continued performance in key markets like oil and gas, renewable energy, and power, and the strong initial demand signals potential long-term growth.