What you must know about Akanksha Power and Infrastructure IPO?

Akanksha Power and Infrastructure Ltd was incorporated in 2008 to provide sustainable power solutions. The company manufactures electrical panels, instrument transformers, and vacuum contactors, for use by power transmission and distribution utilities. The company has also recently entered into the business of turnkey construction of High Tension (HT) and Low Tension (LT) electrical infrastructure including 33/11 KV Substations and Distribution Substations, etc. Its Vacuum Contactors are designed to operate reliably even in harsh environments. Akanksha Power and Infrastructure Ltd has 2 manufacturing units located situated in Nashik, Maharashtra. It caters to the traditional thermal power sector and also sprucing up to cater to the fast emerging alternative power or the renewable power segment too.

Key terms of the Akanksha Power and Infrastructure IPO (SME)

Here are some of the highlights of the Akanksha Power and Infrastructure IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 29th September 2023 and closes for subscription on 04th October 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and it is a Book Built issue. The issue price band for the IPO has been set in the range of ₹40 to ₹45 per share. The final price will be discovered through the process of book building.
   
• The IPO of Akanksha Power and Infrastructure Ltd has only a fresh issue component and no offer for sale (OFS) component in the IPO. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh issue portion of the IPO, Akanksha Power and Infrastructure Ltd will issue a total of 49,95,000 shares (49.95 lakh shares). At the upper band of the IPO price of ₹45 per share, the total value of the fresh issue portion aggregates to ₹22.48 crore.
   
• Since there is no offer for sale portion, the fresh issue will also be the total size of the issue. As a result, the total issue size of Akanksha Power and Infrastructure Ltd will also entail the issue and sale of 49,95,000 shares (49.95 lakh shares). At the upper band of the IPO price of ₹45 per share, the total size of the IPO of Akanksha Power and Infrastructure Ltd will be₹22.48 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 2,52,000 shares. The market maker for the issue is yet to be announced and they will provide two-way quotes to ensure liquidity on the counter post listing and low basis costs.
   
• The company has been promoted by Bipin Mohapatra and Chaitali Das Mohapatra. The promoter holding in the company currently stands at 83.28%. However, post the fresh issue of shares, the promoter equity holding share will get diluted to 60.81%.
   
• The fresh issue funds will be used by the company for funding of capex, funding the working capital gaps and for general corporate purposes. Part of the monies will also go towards the issue costs.
   
• While Narnolia Financial Services Ltd will be the lead manager to the issue, Link Intime India Private Ltd will be the registrar to the issue. The market maker for the issue will be announced shortly.

IPO allocation and minimum lot size for investment

Out of the total shares on offer, the company has allocated 2,52,000 shares for the market maker for providing liquidity post listing and reducing basis risk. The net offer (net of market maker allocation) will be distributed between the QIBs, retail investors and the HNI / NII investors. The table below captures the gist of the IPO allocation to various categories.

Data Source: RHP filed with SEBI

The minimum lot size for the IPO investment will be 3,000 shares. Thus, retail investors can invest a minimum of ₹135,000 (3,000 x ₹45 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 6,000 shares and having a minimum lot value of ₹270,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Key dates to be aware of in the Akanksha Power and Infrastructure IPO (SME)

Akanksha Power and Infrastructure IPO opens on Friday, September 29th, 2023 and closes on Wednesday, October 04th, 2023. The Akanksha Power and Infrastructure IPO bid date is from September 29th, 2023 10.00 AM to October 04th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is October 04th, 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Akanksha Power and Infrastructure Ltd

The table below captures the key financials of Akanksha Power and Infrastructure Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The company has reported net margins of under 4% in the latest quarter. But that is not the point. The company has seen steady fall in revenue sand a steady fall in profits over the last 3 years. That is what makes the story less credible and investors will have to be cautious. Normally, investors expect growth in any IPO, both in terms of top line and bottom line and that is not the case hear. Hence, other ratios may not really matter too much.

The investors will have to be cautious about companies that are seeing consistent fall in revenues and profits. It would be better to see more visibility in the coming quarters to get a clear picture of how the financials pan out.