Danish Power IPO Listing

On October 29^th, Danish Power limited has made a decent debut on NSE SME platform with 50% premium.

Danish Power limited is a Rajasthan based company which was founded in  July 1985. The Danish Power limited manufacturers various types of transformers which includes invertible duty Transformers required for renewal sources of energy such as solar panels and wind farm.

And India’s recent initiative to shift it’s power needs from non-renewable to renewable energy have made them noticeable for every long term as well as short term investor in the Indian financial market.

Danish power have listed the company for IPO on October 22 today’s about 198 crores in primary market.

The Rajasthan based power company have listed themselves on NSE SME for 570 per share at a premium of 50% against the offer price of 380 per share. The Danish powers were subscribed 126.65 times.

Overall Danish powers were able to take investors in confidence because of following reasons.

1. Reduce debt – The company have reduced its depth in the previous quarters, making it potential profitable company for investors.
2. Profit growth – the company have ensured a decent profit growth of 57.8% CAGR over last 5 years.
3.  Good ROE – company have maintained a good ROE ( return on equity) in past 3 years, that is 38.5 %.
4. Reduce Deptor days – the company have reduced its Deptor days from 75.8 to 46.6 days.
5. Companies working capital – the company have ensured to reduce its working capital requirements from 55.4 days to 44 days.

With the above advantages more and more investors for feeling confident in investing Danish Power limited and subscribe its IPO.

However, the company have to deal with the following challenges after over subscription of their IPO as now they are the buzz word in the market.

1. Raw material price fluctuation – with the increasing uncertainty in the middle East + the rising Geo political tensions the prices of raw materials will sur fluctuate.
2. High competition – The company have been able  to achieve all of the this great feat but now  competition is much more tougher than what it was.
3. Sustainability concerns – since the over subscription of their IPO have push their bottom line they high it is now interesting to see that whether the company can sustain it or not.
4. Dependency on Renewable energy sector growth – the company derive its major growth from renewable energy sector group and it is like ‘putting all the eggs in one basket’ for the company.

 If Danish powers can manage all of it then surely it is a horse of long race.

Moreover, it will be interesting to see whether the Danish powers will be able to impress investors as they were doing till now, or the entire IPO was just a smoke screen for something else. Only time can answer that but as of now the stars are favourable for Danish powers limited making their debut at decent one.

Disclaimer: Demat Dive is not giving any buying advice on any stock. Consult a SEBI registered advisor before investing anywhere.