Sterlite Power Transmission Pre IPO Details

Sterlite Power Transmission was started on 5th May 2015 & its HQ is located in Delhi. Sterlite Power Transmission is a leading Power Transmission developer. Sterlite is part of Vedanta Group of Companies whose founder is Anil Aggarwal. Prateek Pravin Agarwal is the present MD. Sterlite Power as a company bids for different projects, and design power projects, with its operations, spread over different locations. The company played a major role in the completion of India’s first Infrastructure Investment Trust (Invit) project. Sterlite played a major role in advancement under Digital India Mission.

The power Sector is divided into 3 Segments namely Generation, Transmission & Distribution. Generation as the name suggests is related to generating power through different renewable sources like Hydrogen, Solar, Wind etc. Transmission is the bulk movement of electrical energy from a generating site such as a power plant to an electric substation. Distribution involves the process of making power available to the users from the electric substations.

Financials of Sterlite Power Transmission:

The company’s total income is around Rs. 3800 Crores. The average Revenue growth rate of the company has been 7.19%. Assets like Plant & Machinery owned by the company are valued at Rs. 214.48 Cr., buildings valued at 39.37 Cr., Transmission lines valued at 17 Cr, and Data Processing Equipment at 11 Cr. The company generates its revenue most from the sale of conductors & power cables followed by engineering, procurement & construction contracts.

Return on Equity (RoE) measures the returns generated to the shareholders, by the company on the amount invested by Shareholders. Sterlite's Return on Equity has increased by a healthy 150.24%.

The company has pushed itself from negative towards positive in Profit After Tax (PAT) in the last 2 yrs with an average growth % of last 3 yrs standing at 53.97%.

Sterlite Power Transmission hold has been that impressive. Its Debt has been paid by selling off assets & with the help of revenue generated from other companies within the same group.

The company’s Earning Before Interest, Tax, Depreciation & Amortization (EBITDA) has averaged at 25.06% over the last 5 yrs. The operating Profit Growth rate on average has increased by 40.06% over the last 5 yrs.

Sterlite paid a dividend of Rs. 5.30. It’s a sign that the company values its shareholders.

Bank of Votorantim invested in Sterlite Power Transmission as a debt to the company. Twin Stars overseas Ltd. holds a majority stake in the company with a share of 71%.

IPO Details:

Sterlite had filed a DRHP under which it plans to issue fresh shares of Rs. 1250 Cr. each with a face value of Rs. 2 each. The company might consider Rs. 220 Cr. in Pre-IPO Placement. It has reserved 75% for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NII) & remaining 10% for Retail Investors. The Price Band is expected to be in the range of Rs. 950-1000.

Merger & Acquisitions: 

SGL4 applied for a merger with Sterlite Power in March 2021. Sterlite has invested its money in other companies as well as it had participated in a Disinvestment process where it diluted 60% stakes of Sterlite Investment & Managers Ltd. It's now planning to issue & lock 20% equity share capital worth 12 Lakh 49 thousand of those 60% diluted stake to Electron IM Private Ltd. Company later sold out the retained 40% shares worth 24 Lakh which were showed in their books of accounts.

SWOT Analysis:

Strength:

1. Entry Barriers that discourage companies from entering the sector resulting in low competition

Weakness:

1. Power Line Maintenance

Opportunities:

1. India’s transition to Renewable Energy sources for generating electricity

Threats:

1. Competition from big players like Adani

2. Increase in Raw Material Prices