Trom Industries Limited launched its Initial Public Offering (IPO) on July 25, 2024, and it will close tomorrow.
1. Company Overview
Trom Industries is a solar EPC company (What is an EPC Company?) providing end-to-end solar energy solutions. The company was founded in 2011 as a partnership firm and became a public company in 2019. It is headquartered in Gandhinagar, Gujarat.
2. Promoter Profile
Jignesh Patel: CMD for the last four years. Holds a diploma in electrical engineering.
Pankaj Pawar: Technical Director at Trom Industries for the last 13 years. Holds an engineering degree in Electrical Engineering.
3. Business Model
They operate as a solar EPC company – they design solar engineering solutions, procure solar panels, batteries and inverters from other manufacturers and commission and install their solar power systems.
While it procures solar panels and the likes from other manufacturers, they manufacture some solar products of their own:
- solar street lights
- solar freezers
- off-grid solar systems
- solar water pumps
These products compliment their business.
They are also having a tiny footwear segment.
4. Financial Performance
| 31 Mar 2024 | 31 Mar 2023 | 31 Mar 2022 | |
|---|---|---|---|
| Revenue | 54.5 cr | 24.1 cr | 30.5cr |
| Profit After Tax | 5.7 cr | 2.8 cr | 3.5 cr |
The company has reported a humongous rise in profits in FY-2024. While this might be due to rise in demand, such a massive deviation does raise questions on the credibility of the FY24 report.
Company has reported a net profit margin of 10.53% as well as a EBIT margin of around 15% for FY 24. Double digit margins indicate a healthy balance sheet.
Net cash flow from operating activities is Rs. 5cr which is a positive.
5. Use of IPO Money
- Expansion and working capital requirements.
6. Risk Factors
Their are two major risks for companies operating in this segment:
- It’s dependence on government support.
- Cut-throat competition existing in the segment now.
7. Valuation
Company at the upper price band is at 18PE. It is estimated to list at 90% gains, so listing PE would be around 35. As per me, the company is going to list at fair valuation with scope to price in future earnings, leaving money on the table for IPO investors as well as investors who take a holding post listing.
8. Should you apply?
If trend is your friend, then you must definitely apply. If you fail to get allotment, you might as well take a holding post listing, if it is possible. Substantial gains are expected in the stock post listing.
Thanks for reading!