Divine Power Energy Limited is a manufacturer of Bare Copper / Aluminium Wire, Bare Copper / Aluminium Strip, Winding Copper / Aluminium Wire, Winding Copper / Aluminium Strip. Winding wires / strips covered with paper, crepe paper and cotton are sold to power distribution companies and transformer manufacturers to manufacture transformers and also to fix normal wear and tear. In the current calendar year the company started manufacturing wires / strips covered with fiberglass which are used in manufacturing electromagnetic coils. The Company has supplied wires / strips covered with fiberglass to markets like Punjab, Bengaluru, Ahmedabad. In the recent past the Company has started trading in super enamelled wires and strips in an effort to cater customer demand and remain competitive. The Company enjoys the patronage of reputed clients such as TATA Power Limited, Pashchimanchal Vidyut Vitran Nigam Limited, BSES, Madhyanchal Vidyut Vitaran Nigam Limited, Dakshinanchal Vidyut Vitran Nigam Limited, Purvanchal Vidyut Vitaran Nigam Limited, Uttarakhand Power Corporation Limited etc. Also, the Company sources its raw material from reliable and reputed suppliers such as NALCO (through National Small Industries Corporation Limited), Birla Copper (through third party), Hindalco etc. The company has one manufacturing plant which is strategically located at Sahibabad, Ghaziabad having total area of 1,777 square meters (Sq. m.). The manufacturing facility is built in an area of 1550 sq. m with an open area of 277 sq. m. The manufacturing facility constitutes two floors which takes the covered area to 3,100 sq. m. in which the company conducts its operations. In the Manufacturing Facility they produce Bare Copper/ Aluminium Wire, Bare Copper/ Aluminium Strip, Winding Copper/ Aluminium Wire, Winding Copper / Aluminium Strip with latest product-specific equipment and machineries including Vertical Paper Covering Machine for Round Wire, Fiberglass Insulation Machine, Automatic Horizontal Multipaper Covering, RBD Machine, Wire Drawing Machines, Conform Machines etc. Our products are made from copper and aluminium with insulation by cotton, paper, crepe paper, fiberglass etc. As on date, the Manufacturing Facility has a total installed capacity to handle 300 metri tonnes per month of Aluminium and 400 metric tonnes per month of Copper. Further, they have a sufficient storage facility at the Manufacturing Facility for the purposes of holding inventories of raw material as well as finished products which ensures stability of operations. As per financial performance, Divine Power Energy Limited has posted total income / net profits of Rs 116.60 Cr / Rs 0.50 Cr (FY21), Rs 122.90 Cr / Rs 0.80 Cr (FY22), Rs 150.84 Cr / Rs 2.84 Cr (FY23) and Rs 222.72 Cr / Rs 6.40 Cr (FY24). So as per previous financials data, company has shown good growth. But, sudden rise in net-profit is very surprising. Company has posted an average EPS of Rs 2.91 and average RoNW of 18.56% for last three fiscals. Issue is priced at a P/BV of 2.47 as per NAV of 16.2 as on 31.03.24. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 106.67, 30.14 and 13.14 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. Khambatta Securities Limited is associated with this SME IPO and handled 6 SME IPOs and 2 Main board IPO in last 3 year. From last 6 SME IPOs, all opened above issue price or at par on the day of listing and From last 2 Main board IPO, all opened above issue price on the day of listing. As of now from last 6 SME IPOs, one is trading below issue price and From last 2 Main board IPO, all are trading above issue price. (As on 19.06.24) As per financials, Divine Power Energy Limited has shown good results, RoNW is 25.06% and P/E is respectively 106.67, 30.14 and 13.14 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit is very surprising. Company is engaged in manufacturing of different types of wire, which is highly competitive and fragmented business segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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