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Upcoming IPO – HPL Electric and Power Limited

HomeCompanyUpcoming IPO – HPL Electric and Power Limited

IPO Size = Rs. 450 Crore

Launch date = Second half of 2016

View: Will be updated once the bid issue opens.

HPL Electric and Power Limited (“HPL”) is a well established multiproduct equipment company. HPL’s product range is divided in four sets: Metering Solutions, Switchgears, Lighting Equipment and Wires & Cables. 

Strengths

  1. Market leader for electricity energy meters in India for FY15 with 20% market share followed by Genus with 19% market share. HPL is also the oldest manufacturer of LV Switchgears in India with over 50% market share in FY 2015.
  2. Besides 6 state of the art manufacturing units, HPL has 2 R&D centers in Gurgaon and Kundli. The expenditure incurred on research and development accounts to Rs 6.129 Cr i.e. 0.61% of total expenses for FY15.
  3. International Sales and Distribution: HPL also exports its products in countries across South-east Asia, Middle East, Europe and Africa. The export sales accounted for Rs 30.29 Cr, Rs 29.47 Cr, and Rs 22.37 Cr for FY15, FY14 and FY13, respectively, contributing to 2.61%, 2.63% and 2.22% of gross consolidated revenue for same respective fiscal years.
  4. High potential and growth prospects: Taking in account, that HPL is established brand with large product portfolio and its robust manufacturing facilities, there is huge growth potential. Future revenue potential is augmented by:
    1. Government’s “Make in India” and “Power For All” campaigns
    2. Increase in demand for power; and
    3. Increasing GDP of India

Weakness

  1. HPL faces tough competition from existing listed players like Crompton Greaves and Havells India. These multinationals have greater competitive edge with larger brand recognition and can cause upheavals in business using their larger financial and marketing resources.
  2. The Company’s business has long capital cycles and significant working capital due to dealing with third party authorized dealers. Any disruption or dispute with dealers, which ultimately has access to all 12000 company’s retailers, could have negative impact on the distribution end.
  3. Negative cash flows from Investing and Financial activities during last 5 fiscal years on consolidated basis.
  4. High Borrowings and Litigation: The Company has cumulative debt of Rs. 95.38 Cr. The Company debt-equity stood at 0.30. Also, HPL is facing various tax proceedings, direct and indirect, pending against it and its subsidiary and joint ventures.

HPL Electric Financials for last 5 Fiscal years (*in Rs Cr)

 

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

Revenue*

567.50

718.86

907.54

1012.28

1049.83

Expenses*

494.07

551.64

793.52

901.87

919.90

Operating Profit*

73.43

167.22

114.02

110.41

129.93

Net Profit*

37.25

28.38

31.41

28.37

34.62

Interest*

20.99

41.28

61.71

59.04

69.93

Long Term Borrowings*

56.96

82.42

51.09

67.10

95.38

Debt to Equity Ratio

0.27

0.34

0.18

0.22

0.30

Interest Coverage Ratio

3.50

4.05

1.85

1.87

1.85

Average Debt to Equity Ratio (FY 2011-FY 2015) = 0.26

Average Interest Coverage Ratio (FY 2011-FY 2015) = 2.62


Authored by Abhimanyu Hans

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One Response to “Upcoming IPO – HPL Electric and Power Limited”

By Chirag Sura - 29 September 2016

when it open in market.

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