Danish Power IPO Listed with 50% Premium!

Danish Power Limited, established in July 1985 and specializing in manufacturing transformers for renewable energy projects including wind farms and solar power plants, made a strong debut on the Indian stock market on Tuesday, 29th October 2024, with its shares listing on the NSE SME platform. The company operates two manufacturing facilities in Jaipur, producing transformers up to 63 MVA 132 kV Class and various control panels.

Listing Details

• Listing Price: Danish Power shares were listed at ₹570 per share at market open on NSE SME, marking a strong start to its journey as a publicly traded company.
• Comparison to Issue Price: The listing price represents a substantial premium over the IPO issue price. Danish Power had set its IPO price band from ₹360 to ₹380 per share, with the final issue price being fixed at the upper end of ₹380.
• Percentage Change: The listing price of ₹570 on NSE SME translates to a premium of 50% over the issue price of ₹380.

First-Day Trading Performance

• Opening vs. Latest Price: Following its strong opening, by 10:48:18 AM IST, the stock was trading at ₹565, down 0.88% from its previous closing price but still significantly above the issue price.
• Market Capitalisation: As of 10:48:18 AM IST, the company's market capitalisation stood at ₹1,095.44 crore.
• Trading Volume: The traded volume was 21.21 lakh shares with a traded value of ₹118.61 crore, with 100% deliverable quantity.

Market Sentiment and Analysis

• Market Reaction: After hitting an early high of ₹571.60, the stock has experienced some profit booking.
• Subscription Rate: The IPO was heavily oversubscribed by 126.65 times (as of October 24, 2024, 6:20:01 PM), with NIIs leading at 275.92 times subscription, followed by QIBs at 104.79 times, and retail investors at 79.88 times.
• Trading Range: As of 10:48:18 AM IST, the stock hit a high of ₹571.60 and a low of ₹541.50 during early trading.

Growth Drivers and Challenges 

Expected drivers of future performance:

• Strong presence in renewable energy sector
• Well-equipped manufacturing facilities
• Long-term relationships with major clients
• Diverse product portfolio serving multiple industries
• ISO certified manufacturing facilities

Potential challenges:

• Sudden boost in bottom lines raising sustainability concerns
• High competition in transformer manufacturing
• Raw material price fluctuations
• Dependency on renewable energy sector growth

Utilisation of IPO Proceeds

• Danish Power plans to use the funds for:
• Expansion of manufacturing facility with new factory shed
• Installation of additional plant and machinery
• Meeting working capital requirements
• Repayment of specific borrowings
• General corporate purposes

Financial Performance

The company has demonstrated strong growth:

• Revenue increased by 76.65% to ₹334.64 crore in FY2024 from ₹189.44 crore in FY2023
• Profit After Tax (PAT) rose by 344.21% to ₹38.07 crore in FY2024 from ₹8.57 crore in FY2023

As Danish Power begins its journey as a listed entity, market participants will closely monitor its expansion plans and ability to maintain growth momentum. The strong listing and overwhelming subscription rates suggest optimistic market sentiment towards the company's prospects in the transformer manufacturing sector, particularly in renewable energy applications.