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.
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.
(₹ in Lakhs, otherwise mentioned)
(Source: RHP of the company)
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
|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|
|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.
Objectives of the Issue
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 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.
Written By Bharath K.S
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions.
Start Your Stock Market Journey Today!
Want to learn Stock Market trading and Investing? Make sure to check out exclusive Stock Market courses by FinGrad, the learning initiative by Trade Brains. You can enroll in FREE courses and webinars available on FinGrad today and get ahead in your trading career. Join now!!