Chamunda Electricals has made headlines with its recent initial public offering (IPO) which is garnering significant attention from investors. The SME IPO, which is set to provide funding for the company's operations and expansions, officially opened on February 4 and is expected to close today, February 6, 2025. The IPO has been marketed with a price band ranging from ₹47 to ₹50, allowing investors to acquire shares with a minimum lot size of 3,000 shares, costing at least ₹1,50,000 to participate.
Chamunda Electricals, established in 2013, specializes in the operation and maintenance of electrical substations, catering to voltage levels up to 66 kilovolts (kV) and offers testing and commissioning services for substations up to 220 kV. With continued advancements within the renewable energy sector, the company has also made strides by establishing solar power generation capabilities with installations amounting to 1.5 megawatts (MW).
On its second day of bidding, the demand for the Chamunda Electricals IPO surged, with subscription figures indicating the retail portion of the offering was subscribed 43.2 times and the non-institutional investors’ category exceeding 24 times. Meanwhile, qualified institutional buyers logged their own impressive number, subscribing 6.02 times the allotted portion. By Wednesday, February 5, the overall subscription reached approximately 28.22 times, showcasing the remarkable interest the IPO has attracted. Industry watchers noted this level of subscription emphasizes strong investor confidence.
By Day 3 of the IPO, the subscriptions reached unprecedented levels, with reports indicating the IPO was oversubscribed 56.10 times as of 10:26 AM on the final day. This translated to investor bids for over 10.84 million shares, far exceeding the 19.32 million shares initially on offer. The stellar response signified high demand, particularly among retail investors and high-net-worth individuals, exemplifying enthusiasm around the offering.
According to market data, the grey market premium (GMP) for Chamunda Electricals shares continually displayed its potential. Ahead of listing, shares were trading at approximately ₹66, which reflected a premium of ₹16 over the upper end of the IPO price band of ₹50, translating to around 32% above the offering price. This positive indication showcases market sentiment, with expectations of strong listing gains occurring when the company’s shares officially hit the market.
Proceeds from the IPO, projected to raise ₹14.60 crore, are earmarked for several strategic initiatives including capital expenditures for acquiring new testing kits and equipment, enhancing working capital, and repaying existing debts. The adequacy to allocate funds effectively is viewed as instrumental for Chamunda Electricals as it aims to expand its service offerings sustainably.
The technology surrounding electrical substations and solar power generation is experiencing continuous evolution, which has placed companies like Chamunda Electricals in favorable positions within the sector. This backdrop of growth reinforces the appeal of their IPO to investors seeking to support green initiatives and advancement within the energy sector.
Facilitated by GYR Capital Advisors as the lead manager and Kfin Technologies serving as the registrar, the overall IPO process remains poised to deliver strong returns to early investors. Post allotment, which is expected to wrap up by February 7, successful bidders will see their shares deposited via demat accounts by February 10. The shares are anticipated to begin trading on the National Stock Exchange’s SME platform on February 11, marking the commencement of Chamunda Electricals’ public market presence.
The allocation method earmarks 50% of shares for institutional investors, 35% for retail, and 15% for non-institutional investors, effectively balancing risk among different investment categories. The dynamic participation across these segments indicates broader confidence among various investor types as financial market conditions continue to evolve.
Investors contemplating participation should diligently review the current market trends, IPO metrics, and the substantial subscription rates observed, all of which can be included as key decision-making factors. Financial advisors have emphasized not relying solely on the grey market premiums when subscribing to IPOs, highlighting the importance of company fundamentals and market conditions.
Overall, the Chamunda Electricals IPO is spearheaded by promising metrics indicative of strong backing from market participants. Whether it will fulfill the investor expectations post-listing remains to be seen, but as interest intensifies, the stage is set for Chamunda Electricals to thrive within the public market sphere.