Macro Cables and Conductors IPO Review: Macro Cables & Conductors is coming up with its Initial Public Offering. The IPO will be open for subscription on September 21, 2023, and closes on September 25, 2023.
Macro Cables & Conductors IPO Review – GMP, Price, Details & More
Macro Cables & Conductors IPO Review – GMP, Price, Details & More
When conducting an IPO (Initial Public Offering) review, whether you are an investor or a financial analyst, there are several critical factors to consider. Here is a comprehensive checklist to help you assess an IPO:
- Company Background:
- Understand the company’s history, including when it was founded and its growth trajectory.
- Know the industry in which the company operates and its competitive landscape.
- Business Model:
- Analyze the company’s business model, including its revenue sources and how it generates profits.
- Financial Performance:
- Review the company’s financial statements, including the income statement, balance sheet, and cash flow statement.
- Assess revenue growth, profitability, and any recent trends.
- Use of Proceeds:
- Determine how the company plans to use the funds raised from the IPO. Is it for growth, debt repayment, or other purposes?
- Management Team:
- Evaluate the experience and track record of the company’s management team and key executives.
- Risks and Challenges:
- Identify and understand the potential risks and challenges the company faces in its industry or market.
- Market Conditions:
- Consider the current market conditions and how they may impact the IPO, including economic trends and investor sentiment.
- Valuation:
- Assess whether the IPO’s offering price is reasonable based on the company’s financials and industry benchmarks.
- Competitive Positioning:
- Determine the company’s competitive advantages and how it differentiates itself from rivals.
- Regulatory Compliance:
- Ensure the company complies with all regulatory requirements and has met the necessary approvals for the IPO.
- IPO Underwriters:
- Research the investment banks or underwriters involved in the IPO and their reputation in the industry.
- Lock-Up Period:
- Understand any lock-up agreements that restrict insiders from selling their shares for a specified period after the IPO.
- Market Sentiment:
- Gauge investor sentiment and interest in the IPO, which can impact the stock’s initial performance.
- Legal and Governance:
- Review the company’s corporate governance structure and any legal issues or lawsuits.
- Prospectus and Offering Documents:
- Read the IPO prospectus and offering documents carefully for detailed information about the company.
- Analyst Recommendations:
- Consider the opinions and recommendations of financial analysts who cover the stock.
- Historical Performance of IPOs:
- Research how similar IPOs in the industry have performed in the past.
- Long-Term Strategy:
- Assess the company’s long-term growth strategy and how it plans to create shareholder value.
- Post-IPO Trading Plan:
- Develop a trading plan that includes entry and exit strategies, risk management, and target price levels.
- Consult Experts:
- If needed, consult with financial advisors or experts who specialize in IPOs for additional insights.
Remember that investing in IPOs carries inherent risks, and it’s crucial to perform due diligence and seek professional advice when necessary. Additionally, market conditions and investor sentiment can influence the success of an IPO, so staying informed and monitoring developments is essential.
Macro Cables & Conductors IPO Review – GMP, Price, Details & More
An IPO, or Initial Public Offering, is a significant financial event for a company in which it offers its shares of stock to the public for the first time. Here are some key points to understand about IPOs:
- Going Public: When a company decides to go public through an IPO, it means that it will transition from being privately held, with ownership typically limited to founders, early investors, and employees, to a publicly traded company with shares that can be bought and sold by the general public on a stock exchange.
- Purpose: The primary purpose of an IPO is to raise capital for the company. By selling shares to the public, the company can raise funds that can be used for various purposes, such as expanding operations, paying off debt, or funding research and development.
- Regulatory Requirements: Going public involves complying with various regulatory requirements, including filing financial statements with the Securities and Exchange Commission (SEC) in the United States. Companies must provide extensive disclosures about their financial health, operations, and risks to potential investors.
- Underwriting: Typically, an investment bank or group of underwriters helps the company navigate the IPO process. They assess the company’s value, set an initial offering price for the shares, and sell those shares to institutional and retail investors.
- Stock Exchange Listing: After the IPO, the company’s shares are listed on a stock exchange (e.g., NYSE, NASDAQ). This allows investors to trade the company’s shares in a public market.
- Liquidity: Going public provides liquidity for existing shareholders, allowing them to sell their shares to the public and potentially realize gains on their investments.
- Volatility: IPOs can be highly volatile. The stock’s price can experience significant fluctuations in the days and weeks following the IPO due to market sentiment and investor demand.
- Long-Term Strategy: Companies must carefully consider their long-term strategy when going public, as it comes with increased scrutiny from investors and regulatory authorities. They may need to balance short-term financial gains with their long-term growth plans.
- Investor Relations: Public companies must establish strong investor relations departments to communicate with shareholders and analysts regularly.
It’s essential for investors to conduct thorough research and due diligence when considering investing in an IPO. While IPOs can offer significant opportunities, they also come with risks, and it’s important to assess a company’s financials, business model, competitive positioning, and market conditions before making an investment decision.
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This is an SME (Small and Medium-sized Enterprise) IPO, and the company is going to be listed on the NSE SME platform.
In this article, we will look at Macro Cables & Conductors IPO Review, analyze its strengths and weaknesses and see what unfolds.
Macro Cables & Conductors IPO : About the company
Macro Cables & Conductors Limited was incorporated in 1989 and is engaged in the business of manufacturing and selling wires, cables and conductors in India.
The company’s products cover the entire range of voltage & transmission lines suitable up to 1.1 KV which include LT XLPE Cables, LT PVC Cables, LT Aerial Bunched Cables, AAAC Conductors and ACSR Conductors.
The products are used in sectors like power, electrical, telecom and automotive. The Majority of products are supplied to electricity boards of different states like Maharashtra, Gujarat, Telangana, Madhya Pradesh etc. and turnkey contractors of India.
It sells products through a diversified sales & distribution mix, majorly by securing government tenders to supply to government projects, supply to EPC contractors for turnkey projects and direct sales to a few private companies. It derives most of its revenue and operations from state electricity boards.
The product revenue bifurcation is as follows, LT Aerial Bunched Cables 52.38%, LT PVC & LT XLPE Cables 31.92%, Conductors 14.87% and others(sale of scraps) 0.83%.The government entities and private entities contribute 81.76% and 18.24% to its total revenue. It derives most of its revenue and operations from state electricity boards.
It has its manufacturing facilities and warehouse in Nasik, Maharashtra with a combined installed production capacity of 18,000 Kms p.a. As of August 7, 2023.
Product Portfolio of Macro Cables & Conductors
LT XLPE Cables: LT XLPE cables are low-tension cables with a voltage level of below 1.1 kv, they are used in domestic and industrial applications.
LT PVC Cables: LT PVC Cables are low-tension cables that are used for transmitting electrical power from one point to another.
LT Aerial Bunched Cables: It is an overhead power cable used for distributing power from low voltage distribution lines to individual customers.
AAAc Conductors: AAAC Conductors are used for primary and secondary transmission in bare overhead distribution and transmission lines and HV Substations.
ACSR Conductors: ACSR Conductors are high-capacity, high-strength stranded conductors typically used in overhead power lines.
Macro Cables & Conductors IPO Review : Industry Overview
India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years. India has the potential to become a global manufacturing hub and by 2030, it can add more than US$ 500 billion annually to the global economy.
The global wire and cable market is growing at a CAGR of 6.45%. It is predicted that the global market size of this industry is expected to reach USD 332.65 bn by 2026. The Indian wire and cable market is growing at an even faster pace, with a whopping CAGR of 15%.
The Indian semiconductor materials market size reached US$ 4.5 Billion in 2022. Looking forward, IMARC Group expects the market to reach US$ 6.5 Billion by 2028, exhibiting a growth rate (CAGR) of 6.3% during 2023-2028.
According to the Institute for Energy Economics and Financial Analysis (IEEFA), as India’s demand for electricity is expected to grow nearly 100%, the wires and cable market will have a steep growth curve going forward.
Macro Cables & Conductors IPO Review : Financials
If we look at the financials of Macro Cables & Conductors, it has reported assets worth 56.58 Cr in FY21 and 69.93 Cr in FY23, the company’s assets have grown by ~25% over the last 3 years.
In FY21 and FY23 the company reported revenue of 42.82 Cr and 56.93 Cr, the revenue has grown by ~35%, accompanied by profits which have increased from 0.12 Cr in FY21 to 2.80 Cr in FY23. Though the company can generate good revenue it is only able to maintain decent profits due to high operating expenses.
In terms of return ratios, in FY23 it had an ROE of 22.42% and an ROCE of 16.93%. These ratios indicate that the company can get good returns on its equity, but it is only able to generate decent returns on its capital employed.
The Company reported a Debt-to-equity ratio of 2.41 in FY23, which indicates that the company has a high level of debt in proportion to its equity.
Financial Metrics
(₹ in Lakhs, otherwise mentioned)
Competitors of Macro Cables & Conductors
The listed peers of Macro Cables & Conductors as per the RHP of the company are, V-Marc India Limited, Ultracab (India) Limited, Relicab Cable Manufacturing Limited and Dynamic Cables Limited.
Strengths of the Company
- The company has a strong customer base with long-standing relationships which contributes to its operations and growth.
- The company is qualified and eligible to submit tender for government projects as it can meet their requirements and it derives most of its income from it.
- The company focuses on customized product development as per the desires and requirements of the customer, thereby satisfying the end user and gaining customer loyalty.
Weaknesses of the company
- Its major customer base includes government bodies and any delay in passing bills can delay the payments leading to disruption of operations.
- It generates a major portion of its sales from Gujarat, Telangana, Maharashtra and Madhya Pradesh, any adverse changes in these regions can disrupt its operations.
- It generates most of its business from government entities which are undertaken through the bidding process, failing to procure the tenders continuously can adversely affect its operations.
Macro Cables & Conductors IPO Review : GMP
The information about the GMP is not available currently, we shall update the article once we receive the information.
Macro Cables & Conductors IPO Review : Key IPO Information
| Particulars | Details |
|---|---|
| IPO Size | ₹18.73 Cr |
| Fresh Issue | ₹9.36 Cr |
| Offer for sale | ₹9.36 Cr |
| Opening Date | September 21, 2023 |
| Closing Date | September 25, 2023 |
| Face Value | ₹10 per share |
| Price | ₹36 per share |
| Lot Size | 3000 shares |
| Minimum Lots | 1(3000) |
| Maximum Lots | 1(3000) |
| Investment Amount | ₹1,08,000 |
| Listing Date | October 4, 2023 |
Promoters: Mr. Sumit Sugnomal Kukreja, Mr. Sugnomal Mangandas Kukreja and MS. Komal Sumit Kukreja.
Book Running Lead Managers: Shreni Shares Limited.
Registrar to the Issue: Bigshare Services Private Limited.
The Company proposes to utilize the Net Proceeds from the Offer towards funding the following objects
- Funding of capital expenditure requirements of the Company towards the purchase of Solar Power System and 1 + 12 Rigid Stranding Machine.
- Funding Incremental Working Capital Requirement
- General corporate purposes.
In Closing
In this article, we looked at Macro Cables & Conductors IPO review. Through this article, we can see that the company usually deals most of its products (Cables, wires and conductors) with state electricity boards and can generate decent returns due to high operating expenses.
The company has good potential for future growth provided it diversifies its customer base, operations and reduces its operating expenses.
Macro Cables & Conductors IPO is an SME (Small and Medium-sized Enterprise) IPO which is different from the mainline IPO as the minimum investment required and the Minimum/Maximum lot size is ₹108000(3000 shares).
What do you think the future holds for the company, do you believe the company will stay strong like its cables? Are you applying for this IPO? Let us know in the comments below.
Macro Cables & Conductors IPO Review – GMP, Price, Details & More
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