Rajesh Power Services IPO: Opens on November 25 – Check Details

Rajesh Power Services IPO

Rajesh Power Services IPO: Rs 160 Crore Public Offering Opens on November 25 – Price Band, Key Details & More

The upcoming Initial Public Offering (IPO) of Rajesh Power Services, a Gujarat-based player in the renewable and non-renewable energy sectors, is set to open for subscription on November 25, 2024.

The company is looking to raise a total of Rs 160 crore through this public issue, which is set against a backdrop of ongoing market volatility.

Despite this, the IPO will mark the sixth listing in the SME segment of the market this month, indicating continued investor interest in smaller public offerings.

The price band for the offering has been fixed between Rs 320 and Rs 335 per share, with retail investors having the opportunity to subscribe until November 27, 2024.

Additionally, anchor investors will be allowed to subscribe to the offer a few days prior, on November 22, 2024.

Rajesh Power Services IPO: Detailed Breakdown of the Offering

Rajesh Power Services plans to offer a combination of newly issued shares and a secondary sale of shares under its IPO. Here’s a breakdown of the offering:

1. Fresh Issue of Shares:
   • The company will issue 27.9 lakh fresh equity shares, raising a total of Rs 93.47 crore.
2. Offer for Sale (OFS):
   • In addition to the fresh issue, 20 lakh shares worth Rs 67 crore will be sold by the promoters of the company, namely the Panchal and Patel families, in the Offer for Sale (OFS) component. These shares will be sold at the same price band as the newly issued shares.

This dual structure will allow Rajesh Power Services to raise capital while also providing an exit opportunity for its promoters.

The offering will be divided into three investor categories:

• 50% of the offer size will be reserved for Qualified Institutional Buyers (QIBs).
• 15% will be allocated to Non-Institutional Investors (NIIs).
• The remaining 35% will be reserved for Retail Investors.

Retail investors can bid for a minimum of 400 shares, and their bids must be made in multiples of 400 thereafter. At the upper end of the price band, the minimum investment for retail investors is Rs 1.34 lakh.

How Will Rajesh Power Services Use the IPO Funds?

The funds raised through the IPO will be utilized for several strategic initiatives aimed at expanding the company’s business and operations:

1. Capex and Equipment Purchase:
   • Approximately Rs 25.1 crore will be used for the procurement of specialized cable identification, testing, and fault location equipment. These tools are crucial for the company’s continued expansion in the renewable energy sector, particularly for solar power projects, where advanced diagnostics and cable management play a significant role.
2. Setting Up a Solar Power Plant:
   • Rajesh Power Services intends to use Rs 25 crore of the funds to set up a 1300KW DC solar power plant. This is in line with the company’s commitment to furthering its green energy initiatives and capitalizing on the growing demand for renewable energy in India.
3. Green Hydrogen Production:
   • Part of the proceeds, about Rs 10 crore, will be invested in the in-house development of technical expertise for the production of green hydrogen. The company plans to manufacture key equipment, such as electrolysers, to support the green hydrogen economy. This move aligns with global trends toward cleaner energy solutions and strengthens the company’s position in the renewable energy space.
4. Working Capital and Corporate Expansion:
   • The company will allocate around Rs 30 crore to boost its working capital requirements, helping to finance day-to-day operations and facilitate growth. The remainder of the funds will be used for general corporate purposes, including research and development, infrastructure development, and other operational expenses.

About Rajesh Power Services

Founded in Gujarat, Rajesh Power Services is primarily engaged in the execution, operation, and maintenance of turnkey projects in the power sector

The company provides consultancy services and has extensive experience working with both renewable and non-renewable energy utility companies.

Rajesh Power Services has successfully positioned itself as a key player in the energy sector, specializing in the execution of large-scale power projects, including solar, thermal, and hydropower projects.

As of March 2024, the company boasts an impressive order book of Rs 2,358.2 crore, which will be completed over the next three financial years.

This healthy order pipeline highlights the company’s strong market presence and the growing demand for its services in the energy infrastructure sector.

Rajesh Power Services faces competition from other prominent companies in the sector, including Advait Infratech, K C Energy & Infra, and Viviana Power Tech.

In the past few years, Rajesh Power has focused on expanding its footprint in the renewable energy sector, particularly in solar power.

This strategic shift is expected to support long-term growth, especially as India’s energy landscape continues to transition toward cleaner sources of power.

Rajesh Power Services Financial Performance

The company has demonstrated strong growth in its financials over the last few years, signaling its increasing market share and operational efficiency:

• In the fiscal year ending March 2024, Rajesh Power Services reported a net profit of Rs 26.02 crore, marking a sharp increase from Rs 6.75 crore in the previous fiscal year (FY 2023).
• Revenue also grew significantly, rising from Rs 207.2 crore in FY 2023 to Rs 285 crore in FY 2024.
• The company reported standalone profit of Rs 27.7 crore on Rs 313.06 crore in revenue during the six-month period ending September 2024. This highlights the company’s continued growth trajectory, particularly in the first half of FY 2025.

Rajesh Power Services’ strong financials are supported by its diverse order book, the increasing adoption of renewable energy projects, and its strategic focus on expanding its service offerings in both the solar power and green hydrogen sectors.

The IPO: Key Considerations for Investors

Rajesh Power Services’ IPO presents an exciting opportunity for investors looking to gain exposure to India’s growing renewable energy and power infrastructure sector.

However, like any investment, it is important for potential investors to consider both the opportunities and risks involved:

1. Growth Potential: The company’s strong order book, expansion into green hydrogen, and increasing market demand for renewable energy projects make it well-positioned for future growth.
2. Competition: The power sector is competitive, with several established players, which could affect Rajesh Power’s market share and profitability.
3. Financial Health: While the company has shown solid financial performance, potential investors should monitor the execution of its planned capex and working capital utilization, which will impact its future profitability.

IPO Management and Registrars

• Book Running Lead Manager: Isk Advisors
• Registrar to the Offer: Bigshare Services

Investors interested in subscribing to the Rajesh Power Services IPO should carefully review the company’s Red Herring Prospectus (RHP) for more detailed information about its business operations, financials, and IPO details.

Consulting a financial advisor is recommended to assess the suitability of this investment in line with individual financial goals.