HPL Electric & Power Ltd IPO Message Board (Page 20)

it will blast on listing 240

kiyaa bhav chal raha hee hpl ka

price is very high,,,,,, avoid it

HAHAHA

ITS A JOKE . WITH ALMOST NO GROWTH ITS ASKING THAT HIGH P/E AND VALUATION

SHOULD HIT LOWER CIRCUITS.

Don''t apply to this IPO

36 cr ke issue me hamse kya lega ....khair mujhe ummed hai ye issue shayd negative perception ka opposite jayega

It''s not 36 crores only.. Issue size is 361 crores.. It should be corrected i think..

u r right issue size is 361 cr ......

Why issue price always be Rs. 175 - Rs. 202 Per Equity Share.
What is exact issue price? This question is for all IPO''s. Why issue price will always be in range?

Its like selling an asset which you own at a negotiable price.

For eg. You want to sell an asset whose market value is Rs 100 lacs, now you don''t know whether buyers will be willing to give you Rs 100 lacs or no. So, you provide a range i.e. 95-100, now there are 3 buyers of which one is willing to buy at 95, another at 98, and third one at 100. Here, you will reject applications of first two buyers and sell your property to the third buyer.

If no buyer is willing to pay you Rs 100 lacs, then you will be forced to sell it at Rs 98 lacs or don''t sell at all and close the sale process

AVOID THIS IPO

Avoid hpl batter player in market such as Veto switch &gear

SP Tulsian taken on HPL
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New issue (IPO) Analysis:
Lacks Power

HPL Electric and Power is entering the primary market on Thursday 22nd September, 2016, to raise Rs. 361 crore, via a fresh issue of equity shares of Rs. 10 each, in the price band of Rs. 175-202 per share. Based on the price discovered, company will issue 2.06 crore to 1.79 crore equity shares at the lower and upper end of the price band, which represents 30.8% and 27.8% of the post issue paid up equity share capital respectively. Issue closes on Monday 26th September.

HPL Electric and Power manufactures low voltage electric equipment such as metering solutions, switchgears, lighting equipment, wires and cables, through its 7 manufacturing facilities in Haryana and Himachal Pradesh. Marketing products under ‘HPL’ brand, company has a pan-India distribution network of 2,400 dealers catering to 15,000 retailers. About 50% of revenue is accounted by metering solutions, while lighting equipment makes up for 23%, with rest comprising of switchgears (14%) and wires and cables (13%).

Company’s FY16 consolidated revenue grew 7% YoY to Rs. 1,116 crore, while EBITDA rose 12% to Rs. 146 crore, thanks to cheaper material costs, leading to EBITDA margin of 13%. Finance cost, at Rs. 78 crore, is quite high, having risen 12% YoY. Despite higher EBITDA margin, tax rate increased in FY16, keeping the net margin unchanged at 3.3%. Its PAT for FY16 stood at Rs. 37 crore, translating into EPS of Rs. 7.89, on equity of Rs. 46.43 crore, post 3:2 bonus issue made in Nov 2015.

As of 31st March 2016, company’s networth stood at Rs. 354 crore. It had total outstanding debt of Rs. 580 crore, as on 31-3-16, and cash equivalents of Rs. 52 crore, leading to a high debt/equity ratio of 1.5:1, on a consolidated basis, although this will contract to 0.6:1 post expansion of equity post fresh issue and debt repayment of Rs. 130 crore, from the IPO proceeds. Out of the balance fresh issue proceeds, Rs. 180 crore would be used for working capital requirements.

The working capital position of the company is quite precarious, due to elongated credit periods extended to power utilities. Its debtors are very slow moving, with outstanding receivables of Rs. 512 crore (31-3-16) representing 5.5 months of sale. Inventory of Rs. 317 crore (31-3-16) is also on the higher side, representing 3.4 months of sale. Its current working capital cycle extends up to 5 months, and given ~45% revenue share from power utilities, possibility of improvement in working capital cycle are only slim.

With effect from 9th May 2016, Himachal Energy, with annual sales of about Rs. 100 crore and net profit of Rs. 12 crore, became a 97.15% subsidiary of the company. Thus, company’s FY17 consolidated topline and bottomline will get enhanced proportionately.

At the upper end of the price band, HPL Electric will have a market cap of Rs. 1,300 crore and enterprise value (EV) of 1,700 crore. This translates into PE multiple of 25.6x for FY16 and 20.9x for FY17 (estimated EPS of about Rs. 9.7, including Himachal Energy), at the upper end of price band. On EV/EBITDA basis, multiple works out to 11.6x for FY16 and 9.5x for FY17.

Havells India, having over 7x sales as compared to HPL Electric and Power, at Rs. 7,600 crore, with better net margins, in high single digits, coupled with superior brand recall, net cash balance sheet and RoE of over 21% (vis-à-vis HPL’s 10.3% for FY16), is currently trading at FY17E PE multiple of nearly 40x and EV/EBITDA multiple of 24x.

Genus Power, offering a complete range of electricity meters, with annual topline of over Rs. 800 crore, and net margins of 9%+ (stronger than HPL), is currently ruling at EV/EBITDA multiple of 9x and PE multiple of 15x on estimated FY17 earnings. Other remotely listed peer players include Finolex Cables, market leader in wires and cables, ruling at PE of 19x and LED and CFL maker Surya Roshni, ruling at PE multiple of 17x, based on FY17 estimated earnings.

Thus, on a peer comparison, HPL Electric IPO is aggressively priced. Besides, its sub 4% net margins, low RoE and high working capital position do not bode well either. Moreover, the company operates in a highly competitive industry landscape, with many participants in the organized and unorganized sector as well as Chinese threat.

Due to weak fundamentals coupled with expensive valuations, the issue is a clear avoid.

Anyone, comments regarding issue?

Avoid high debt high valuation compare to peers low corporate governance recipe for disaster Avoid fair value not more then 130

According to the management’s clarification on pricing of the issue, they said that an associate company Himachal Energy has become its wholly owned subsidiary (p33 of RHP) from the current fiscal (i.e. FY17) and if we mirror the likely impact of it for FY16 then the restated consolidated turnover / net profit stands at Rs. 1194.00 crore / Rs. 48.63 crore (p297 of RHP). If this is attributed on enhanced equity post IPO then the asking price is at a P/E of 26 plus (based on upper price band).

Based on this restated parameters, the issue is worth considering for medium term as well.

thank u for the update

find it little worried such a big impact development was not shared in books of accounts was mention of RHP.... This development will put some value compare to super rich valuation however still rich from super rich valuation.
Hindu covered this issue i have posted the link. however debt is still a big issue and why this last minute change in structure. With majority of the business model is low margin government business with big lag time and also big kick back u have to remember this is india and u are dealing with state electricity board with a kick back a leaf will not move.

AVOID THIS ISSUE GIVEN CORPORATE GOVERNANCE AND DEBT IN BALANCE SHEET
http://www.thehindubusinessline.com/markets/stock-markets/hpl-electric-power-ipo-aftershocks-possible/article9124897.ece

HPL ipo priced above 35PE...better to avoid ( listing gain may possible...!!)HPL trying to catch market bullishness but that not possible for all ipos.will avoid it.No further discussion req.
..
Classified....

Prabhudas Lilladher says Subscribe to HPL Electric and Power - (HPL) is an established player in the electrical equipment industry with presence in Metering Solutions, Switchgears, Lighting Equipment and Wires & Cables. HPL is the largest player in energy meter (47% of sales in FY16) with 20% market share, fifth largest player in LED lamps with 5% market share and 5% market share in LV switchgear market. The company has invested ~Rs2.3bn in various capacities in the last four years. It has diverse basket of products, wide dealer network and strong geographical presence. The company manufactures and sells products under the umbrella brand ‘HPL’, which has been registered in India since 1975. HPL saw Sales/EBITDA/PAT CAGR of 12%/14%/7%, respectively, over FY12‐16. HPL is also looking at stepping‐up its advertising spend significantly which should help improve brand visibility and create pull for products in the medium term. AT the upper band of the issue price, the company will raise ~Rs3.6bn which will be used to repay debt and fund working capital requirement. At upper band of issue the post money valuation works out to Rs13bn (PE of 26x FY16 proforma earnings) which is discount to peers. We believe improving brand visibility, reducing leverage; strong growth opportunity, lower working capital intensity and improving utilization should help HPL deliver healthy earnings growth over the next few years. “Subscribe”.

There is no doubt that the pricing is very reasonable. IMHO, we can easily do a comparative analysis considering multiples from moneycontrol and NSE. Also Pg 297 has clearly stated the financials of the company. With improvement in WC cycles and direct reduction in interest, there is high visibility of NP improvement in next year. AFAIK, this IPO is a very good platform the domestic manufacturer. I see true ‘Make in India’ intent here.
HPL highlighted that the IPO proceeds will be used to retire some of high interest (~12.5% rate) debt and use the remaining proceeds for working capital requirement. The next focus will remain on brand building.      
Products are of high quality, focus is on domestic production, good facilities, good R&D and strong business outlook. High priced peers makes this best opportunity to get into electrical sector at very cheap price. Will reach target of 250 on opening day. Go for it.
Cheap valuation, good company clarifying all questions before hand. High clarity on forward strategy, high focus on India and pricing. Opportunity for strong future growth. 20-30% upside expected on day 1
I think investors will lap up the shares. India focussed company. Well established brand with focus on “Make in India” since 1992. 7 manufacturing facilities with significant unutilised capacity and opportunity to diversify product portfolio in future. Strong sales and distribution network and good brand. HPL has all elements of a successful electrical equipment business. With ability to meet WC requirement, reduction in debt and focus on branding, it seems poised for strong take off. Nice opportunity to apply.
If the company delivers on brand and working capital, could be a multi-bagger with re-rating. Currently low price is attractive enough to take this chance..

EAGLE EYE - hpl ipo fill or not

Profit making company.
Just close ur eyes 👀 n apply in full force .
Chances of loss 0%
Profit min 10% .
maximum figures u can get between 22 to 26.

Electronic equipment business is more of brand and distribution network play. It is important look at HPL IPO with practicality – do small survey of product (brand, wholesalers, distributors, and retailers) and market sizing and so on. On most visits, the shop keepers and distributors had a positive opinion on the products. They had specifically mentioned that the quality is at par with most competitors and also pricing is competitive. With marketing and advertising, we believe HPL will achieve high revenue and customer loyalty. 
The pricing of HPL Electric & Power seems attractive. There are only few equipment manufacturing companies listed in the space. Also they are commanding very high premium. This is very good opportunity to buy into a new company and get exposure in this sector. RHP talks of drivers like affordable housing, UDAY, Make in India, modernisation and so on. These are very apparent along with the improvement in the macros. Good time to invest and get some cyclical exposure with a definite growth story. In FY16, the pre-IPO valuation of HPL is at high discount at 19 times PE and just 9 times EBITDA. Peers trading at over 30x EBITDA and over 50x PE Multiple. On reducing the debt using the IPO capital, bottomline of HPL will increase by interest expense ~INR 25-30 Cr. Along with the normal growth HPL will be at 11-12x PE in FY18 which is also very cheap. 

Latest premimum + or - please. Only genuine reply are welcome....!!!!!!

Nahi khula

Net Proceeds to repay loans availed from ICICI Bank Limited and the State Bank of India, which are associates/affiliates of the Book Running Lead Managers to the Issue. So it is clear icici and sbi needs HPL to come at higher price
ICICI MF and SBI MF will subscribe to issue HPL will get the money to repay SBI and ICICI bank and MF of ICIC and SBI customers NAV will be effected and SEBI toothless tiger will do nothing to protect small investor.
ICICI bank and SBI bank get there money all cozy relationship
JUST AVOID very high valuation given more then 50% of its business come from low margin business with State government

Apply this ipo for listing gain {15 to 20%}. Valuation r high no dough but according to current market condition {High Nifty PE} market is on his peck bull run is going on so party is not over{till Diwali] so according to me experience don''t worry apply with full power for listing gain.

thanks sir for all your guidance.

I want to know shall we apply for HPL at lower price band or just avoid.