Is Mangal Electrical's Net Profit Declining Ahead of Its IPO?
Click to start listening
Synopsis
Mangal Electrical's upcoming IPO is a significant milestone, but its financial performance reveals a concerning trend. With a 15% drop in net profit for FY24, rising expenses have overshadowed revenue growth. The company's strategic plans for the IPO may address these challenges.
Key Takeaways
- Mangal Electrical Industries received SEBI approval for a Rs 450 crore IPO.
- Net profit fell by 15.32% in FY24, despite revenue growth.
- Total expenses surged by 30.49% to Rs 424.02 crore.
- IPO proceeds will fund debt repayment and capital expansion.
- Shares will be listed on NSE and BSE.
Mumbai, June 12 (NationPress) Jaipur-based Mangal Electrical Industries has secured the final go-ahead from the Securities and Exchange Board of India (SEBI) to initiate its initial public offering (IPO) valued at Rs 450 crore.
While this IPO represents a crucial step in the company's journey towards expansion, its financial disclosures for FY24 indicate a tough year characterized by escalating expenses and diminishing profits.
According to the draft red herring prospectus (DRHP) submitted to SEBI, Mangal Electrical's net profit has seen a decline of approximately 15.32 percent for the financial year ending March 31, 2024.
The company reported a profit of Rs 20.94 crore in FY24, down from Rs 24.73 crore in FY23.
Total expenses increased significantly by 30.49 percent, totaling Rs 424.02 crore in FY24, compared to Rs 324.94 crore in FY23.
This profit reduction occurred despite a rise in revenue. The company's operational revenue climbed to Rs 449.48 crore in FY24, up from Rs 354.3 crore in FY23, reflecting a growth of around 26.86 percent.
Total income also experienced a similar upward trend of 26.36 percent, reaching Rs 452.13 crore in FY24.
The IPO will feature a fresh issuance of shares without any offer-for-sale (OFS) component, with each share having a face value of Rs 10.
Of the Rs 450 crore to be raised, Mangal Electrical intends to allocate Rs 96.03 crore for the repayment or prepayment of certain borrowings.
Around Rs 120 crore will be directed towards capital expenditures, including the expansion of its Unit IV facility in Reengus, Rajasthan, and enhancements at its Jaipur headquarters.
Moreover, Rs 122 crore will be utilized to cover working capital requirements and other general corporate purposes.
Systematix Corporate Services Limited is serving as the sole book-running lead manager for this IPO, while Bigshare Services Private Limited is appointed as the registrar.
The company's shares are set to be listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Point of View
Mangal Electrical’s financial challenges underscore the complexities that many companies face during growth periods. The drop in net profit, despite increased revenues, highlights the critical need for effective cost management. As the company prepares for its IPO, stakeholders should keep a close eye on how it addresses these financial hurdles while pursuing ambitious expansion strategies.
NationPress
13/06/2025
Frequently Asked Questions
What is Mangal Electrical's IPO valuation?
Mangal Electrical's IPO is valued at Rs 450 crore.
How much did the net profit fall in FY24?
The net profit fell by approximately 15.32 percent in FY24.
What are the plans for the IPO proceeds?
The proceeds will be used for debt repayment, capital expenditure, and working capital needs.
When did Mangal Electrical receive SEBI approval?
Mangal Electrical received SEBI approval on June 12.
Where will Mangal Electrical's shares be listed?
The shares will be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
