Electro Force India IPO Financial Analysis

Electro Force India, specializes in producing electrical components and manufacturing metal/plastic contact parts for various industries in India, including electronics, lighting, switchgear, and related sectors, is launching its IPO on December 19, 2023. Here's a summary of the company's business model, strengths, weaknesses, and growth potential to assist investors in making informed decisions.

Electro Force India IPO Overview

Established in 2010, Electro Force (India) Ltd specializes in designing and manufacturing electrical components and metal/plastic contact parts for India's electronics, lighting, switchgear, and allied industries. The company's offerings include stamping and plastic components produced through metal stamping, injection molding, and insert molding, catering to various electrical products such as MCBs, manual transfer switches, MCCBs & RCBs, and brushless DC motors. Services provided encompass quality testing, packaging, assembly, secondary operations, and logistics.

Electro Force's expertise covers product designing, prototyping, and process development for precision sheet metal components and plastic products in the electrical and switchgear industry. Core manufacturing capabilities include high-speed sheet metal stamping, injection and insert molding, progressive cold forging, high-frequency welding, and automated/manual assembly and testing. With a commitment to quality, on-time delivery, and cost-effective solutions.

Electro Force India IPO Strengths

1 . The company has maintained long-term customer relationships by consistently delivering high-quality services, products, and manufacturing capabilities. This commitment ensures customer satisfaction, fosters loyalty, and encourages repeat business over the years.

2. The company offers a variety of products and has grown its business by consistently introducing new products to its existing customers.

3. Skilled leadership team with expertise.

4. Internal research and development and an in-house tool room foster ongoing innovation in product development.

Electro Force India IPO Risk

1. The company, along with its promoters and directors, is currently facing legal proceedings. A lack of successful defense in these matters could negatively impact the business.

2. The company facing negative cash flows from specific activities in recent fiscal periods. Prolonged negative cash flow may pose a challenge to its growth and overall business outlook.

3. The company operates by selling products on a B2B basis to a select group of customers. The business could face challenges if these customers decide to obtain their products from alternative sources, potentially impacting the company's overall operations and performance.

4. As of now, the company doesn't possess any patents related to its manufacturing processes.

Electro Force India IPO Details

Electro Force India IPO is scheduled from December 19 to December 21, 2023. The stock has a face value of ₹10 per share, and the IPO's price range is ₹93 per share.

Financial Performance of Electro Force India IPO

Over the past three years, the company has shown improvement in its profit after tax. In 2021, it was -2.24 crore, followed by an increase to 8.64 crore in 2022, and a sustained growth to 8 crore in 2023.

Key Ratios

The company's return on equity (ROE) improved, showing 43.60% in FY23 compared to 83.40% in FY22 and a low -130.23% in FY21. Similarly, the return on assets (ROA) increased, with percentages of 11.06% in FY23, 18.06% in FY22, and a negative -13.02% in FY21. These trends suggest a positive shift in financial performance and efficiency over the three years, indicating better returns on both equity and assets.

Electro Force India Vs Peers

When comparing Electro Force (India) Limited with its peers, the company's price-to-earnings ratio (PE) stands at 20.22. In contrast, Centum Electronics Limited has a much higher PE of 191.78, and RIR Power Electronics Limited's PE is 100.74. This suggests that Electro Force (India) Limited may be relatively more attractively valued in terms of its earnings multiple when compared to its peers.

Promoters of Electro Force India

1. Pravin Kumar
2. Brijendra Kumar Agarwal
3. Ayesspea Holdings & Investment,
4. Garuda Television Pvt Ltd.

Currently, the promoters own 100% of the company. After the IPO listing, their ownership will decrease to 62.93% due to dilution.

Final Words

This article takes a closer look at the Electro Force India IPO, which is open for subscription starting December 18, 2023. It advises investors to carefully examine the company's information, financials, subscription status, and the Grey Market Premium (GMP). The GMP provides a sense of the expected listing performance, offering valuable insights for investors to make informed decisions.