Electronics Mart India IPO Review 2022 – GMP, Strengths, & More!

Electronics Mart India Limited is coming up with its Initial Public Offering. The IPO will open for subscription on October 4th, 2022, and close on October 7th, 2022. It is looking to raise Rs. 500 Crores which will be a fresh issue. In this article, we will look at the Electronics Mart India IPO Review 2022 and analyze its strengths and weaknesses. Keep reading to find out! 

Electronics Mart India IPO Review – About The Company

Electronics Mart India Ltd (EMIL) started its operations in the year 1980. Today it stands as one of the fastest growing consumer durable & electronics retailers in India.

It is a multi-brand consumer durable and electronics retailer dealing in home entertainment, mobiles, laptop, home appliances, cameras, kitchen appliances, and personal care.

The company has a focus on large appliances such as air conditioners, televisions, washing machines, and refrigerators, along with mobiles and small appliances, and IT, among others. Their offering includes more than 6,000 SKUs (stock keeping units) across product categories from more than 70 consumer durable and electronic brands. 

As of August 2021, the company has a total of 99 stores out of which 8 are owned, 85 stores are under the long-term lease rental model and the rest 6 are partly owned and partly leased.   

The company operated majorly in three ways:

Retail: The company runs 85 Multi Brand Outlets (MBOs) under the name “Bajaj Electronics”,  1 MBO under the name “Tirupati Electronics” and 2 specialized stores under the name “Kitchen Stories” to meet the demands of its customers.

Wholesale: The company is also engaged in the wholesale business of consumer durables, where we supply products to single-shop retailers in Andhra Pradesh and Telangana regions.

E-Commerce: Their current e-commerce website functions as a catalogue for the products they sell at their stores. 

Electronics Mart India IPO Review – Financial Highlights

(Source: DRHP of the company)

Electronics Mart India  IPO Review – Competitors

• Reliance Industries (Reliance Retail)
• Tata Group (Croma)
• Vijay Sales
• Aditya Vision
• Sargam
• Girias
• Adishwar

Electronics Mart India  IPO Review – Industry Overview

India’s retail industry clocked a healthy 9.5% compound annual growth rate between fiscals 2016 and 2020, backed by rising urbanization, nuclearisation, increased disposable incomes, and improving affordability and consumer sentiment.

CRISIL Research has estimated that the size of India’s consumer durables industry, including large consumer durables mobile phones, and smaller appliances, was at Rs 2.4 trillion as of fiscal 2021.

The organized segment’s share in the consumer durables market is expected to rise from 58% in fiscal 2021 to 76- 78% by fiscal 2026. Meanwhile, the unorganized players also saw a rise in their share in Q1FY22.

Strengths of the Company

• The company is the largest in the South and the 4th largest overall in the consumer durable and electronics retail segment in terms of revenue.
• The company is increasing its market presence and geographic reach with cluster-based expansion.
• The company has a diversified product portfolio that caters to the needs of its customers from all areas.
• The company has ensured robust customer service support, timely delivery of its products & quick installation support.
• It has an experienced management team with a proven track record.

Weaknesses of the Company

• The company is dependent on external suppliers for its product requirements. Any delay in procurement can disrupt operations.
• A large portion of their total revenue is dependent on a smaller segment of their total products.
• There are certain legal proceedings involving the company and its promoters.
• The company operated in a highly competitive industry. Any new or existing player can prove to be a threat to the company.
• The company is exposed to certain risks such as cyber security threats, seasonal and cyclical volatility, and changes in taxation laws.

Electronics Mart India IPO Review- Key IPO Information

Particulars	Details
IPO Size	₹500 Crores
Fresh Issue	₹500 Crores
Offer for Sale (OFS)	-
Opening date	October 4, 2022
Closing date	October 7, 2022
Face Value	₹10 per share
Price Band	₹56 to ₹59 per share
Lot Size	254 Shares
Minimum Lot Size	1 (254 shares)
Maximum Lot Size	13 (3302 shares)
Listing Date	October 17, 2022

Promoters:  Pavan Kumar Bajaj and Karan Bajaj

Book Running Lead Managers: Anand Rathi Advisors Limited, JM Financial Limited, and  IIFL Securities Limited 

Registrar To The Offer: KFin Technologies Private Limited

The Objective of the Issue

The Net Proceeds from the Fresh Issue are proposed to be utilized for: 

• Funding of capital expenditure for expansion and opening of stores and warehouses.
• Funding incremental working capital requirements.
• Repayment/prepayment, in full or part, of all or certain borrowings availed by the Company.
• General Corporate Purposes

In Closing

In this article, we looked at the details of Electronics Mart India  IPO Review 2022. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for the investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.

Are you applying for the IPO? Let us know in the comments below.

You can now get the latest updates in the stock market on Trade Brains News and you can even use our Trade Brains Portal for fundamental analysis of your favourite stocks.

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Fundamental Analysis Of Blue Dart Express – Financials, Moat & More

Fundamental Analysis of Blue Dart Express: Have you ever wondered how many parcels are delivered every second? Or which is one of the biggest industries in the world? How do documents and couriers reach destinations? There is one industry that answers these questions- logistics.

In this article on Fundamental Analysis of Blue Dart Express, we shall cover the company’s business, its financials, its competitive advantage, and more. Keep reading to find out.

What is logistics?

Logistics is the overall process of planning, managing, and executing the efficient transportation of goods from one place to another. Most businesses have logistics involved in their work. However, businesses like Amazon and Flipkart are relatable.

Some of these businesses have their own logistics networks, while others outsource this function of their business.

Fundamental Analysis of Blue Dart Express

Industry Overview

India’s logistics industry has to face a variety of challenges. Thanks to its geographic presence and the second largest population in the world. The country has one of the highest road densities in Asia, however, the quality of roads is subpar as compared to many developing countries.

Attempts are being made to improve the roads and the transport industry is consolidating with smaller unorganized players dropping out of the market, and organized players gaining ground.

The pandemic had two key impacts on the industry. First, on warehousing and second on transportation. Ordering and maintaining appropriate quantities of inventory stored in warehouses became more challenging.

Moreover, traditional forecasting methods became ineffective. In fact, formal and technologically capable organizations are better armored to take up larger challenges from the ever-growing domestic and international economic scene.

The size of the Indian logistics market was around 250 billion US dollars in FY21. It was estimated that it would grow to 380 billion dollars in 2025, at a compound annual growth rate between 10 to 12 percent. However, India has a higher logistics cost as a percentage of GDP at 14 percent, compared to the BRICS average of 11 percent.

About Blue Dart Express

Think of time-sensitive shipments, think of Blue Dart Express! Many people believe that this Indian courier service provider is an international company. Thanks to its brand colors and logo! Blue Dart Express is South Asia’s premier express air and integrated transportation & distribution company.

It offers secure and reliable delivery of consignments to over 35,000 locations in India. In fact, it delivers 24 parcels every second!

It is a part of the DPDHL Group’s (DHL Express, DHL Global Forwarding & DHL Supply Chain) Post – E-commerce – Parcel (PeP) division. As a result, Blue Dart Express gets access to the largest and most comprehensive express and logistics network worldwide.

This network covers almost all the countries across the globe. Further, it offers a wide spectrum of distribution services including air express, freight forwarding, supply chain solutions, and customs clearance.

The company has:

• a countrywide surface network to complement their air services.
• warehouses at 85 locations in India
• bonded warehouses in Ahmedabad, Bangalore, Chennai, Delhi, Mumbai, Kolkata, and Hyderabad.
• a dedicated capacity to support their time-definite morning deliveries through night freighter flight operations.

Services

Blue Dart Express enables deliveries at predefined times for critical shipments such as passports, tenders, and original papers/certificates. In addition, it provides industry-specific services. This includes temperature-controlled logistics for its customers in life sciences and healthcare as well as thermal packaging.

Further, it provides cargo solutions like the airport to airport, interline, and charters. The company enabled 16 digital wallets on the hand-held courier machines apart from accepting credit/ debit cards during the lockdown to ensure contactless delivery.

Awards and Recognition

Blue Dart Express is a market leader and delivers unmatched standards of service quality. Thanks to its motivated workforce, dedicated air and ground capacity, cutting-edge technology, a wide range of innovative, vertical-specific products, and value-added services.

Here are a few awards and recognitions that it has received:

• ‘India’s Best Companies to Work For by The Great Place to Work® Institute
• the Top 25 Best Employers in India 2016 by AON Hewitt
• Fortune 500’s India’s Largest Corporations
• Forbes India’s Super 50 Companies
• Reader’s Digest’s Most Trusted Brand

Blue Dart Express – DHL Relationship

Blue Dart Express and DHL signed a Sales Alliance Agreement on 12th September 2002. This alliance was further strengthened in 2005 when DHL Express (Singapore) Pte. LTD. acquired an 81.03% stake in Blue Dart Express.

DHL is the world’s leading express and logistics company. It combines worldwide coverage with an in-depth understanding of local markets.

Thanks to its global expertise in solutions, express, air and ocean freight, and overland transport. The company’s harmonized international network links more than 220 countries and territories worldwide.

DHL Express is the No.1 international air express services provider in India. On the other hand, Blue Dart Express is the leader in the air express industry in India.

The coming together of these companies is a win-win relationship that benefits all the stakeholders. Moreover, it provides both organizations with the flexibility to grow their individual businesses unhindered.

Blue Dart Express – Moat

Blue Dart Express is a defensive stock. This means that it provides consistent dividends and stable earnings regardless of the state of the overall stock market. Sometimes they tend to outperform the market in adverse situations.

There is a constant demand for logistics, therefore the scrip tends to be very stable. Such stocks can be used for hedging.

The company is linked by some of the most advanced communication systems. Further, it is positioned to offer a consistent premium and standardized quality of service.

They are the only express carrier in India to offer a wide range of services. Customers can send a document as well as a charter load of shipments.

A dedicated team of specialists provides the expertise for customs as well as regulatory clearances at all states within the country.

It carries packages as its prime business, rather than a by-product of a passenger airline.

Blue Dart Express’ services are self-sustaining. They have their own bonded warehouses, ground handling, and maintenance capability.

Blue Dart Express – Financials

Chart showing the net sales and the net profit of Blue Dart Express Limited for a period of five years

Blue Dart Express Limited is a large-cap company with a market capitalization of over 20,000 crores.

Its sales, as well as net profits, show an increasing trend over a period of five years. When we take a look at its balance sheets for the mentioned period, we find that its debt has been decreasing.

Further, it has a high return on capital employed at 40.82% and a moderate return on assets at 13.51%. Its net profit margin shows an increasing trend.

The company has a price-to-book value of 18.65. This means that the company’s shares are currently trading at a premium to their book value.

Particulars	Value
Face Value (₹)	10
EPS (₹)	197.96
ROE (%)	43.83
Debt to Equity	0.23
Current Ratio	0.85
Market Cap (₹ in Cr.)	22964
Promoter’s Holdings (%)	75
Dividend Yield (%)	0.7
Stock P/E (TTM)	43.39
Sector PE	54.14
Net Profit Margin	8.66

Strengths

• Blue Dart Express Limited has an ideal debt-to-equity ratio, between 0 and 1.
• It has a very high return on equity of 43.83% and is a large-cap company.
• The company has very high promoter holdings of 75%. This stake is held by DHL Express (Singapore) Pte. LTD.
• Blue Dart Express’ PE ratio is lower than that of the sector. Therefore, it is favorable for the business as well as investors. It could mean that the stock is undervalued.

Weaknesses

The company’s current ratio is lower than 1 which means that its current assets are lower than its current liabilities.

Blue Dart Express – Future prospects

The company wants to focus on its core domestic products and expand its market share. It is looking forward to expanding its market share and consolidating its unique and premium position in the industry.

Further, it plans to leverage its established infrastructure to continue adding value and customized solutions to the changing and evolving demands of the customer.

The company wants to carve a leadership position in the industry as India’s and the region’s link to the world. For this, it will continue to differentiate itself in all areas of its core competencies – supply chain management, logistics, and e-commerce.

Blue Dart Express has successfully commenced Visual Line of Sight trials of drone delivery in Hyderabad under the “Medicine from Sky” project of the Telangana Government in September 2021. Moreover, Skye Air Mobility, an Indian Drone Delivery startup firm, was a part of the consortium that worked on the project.

In Closing

In this article, we took a look at the Fundamental Analysis of Blue Dart Express. It is a large-cap logistics company listed in India. We took at the industry that it functions in, the services it provides, and its relation with DHL. Further, we took a look at financials, future prospects, and sustainability.

That’s all for this article folks and happy investing until next time!

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Top Stocks Under Rs 95 to add to your watchlist – Detailed Analysis

Top Stocks under Rs 95: Many of us start our journeys in the stock market with hopes to earn a quick buck. We hear that people buy stocks, keep them in their account for some time and then sell them at a higher price. Anyone with common sense could know that. Albeit, the tough part is knowing which stock to invest in.

Some of them think that they could choose the Top stocks under Rs 95. That way they can buy a good number of shares.

Market experts suggest that choosing stocks just because of their price is a bad way to choose. In this article, we shall take a look at some of the Top stocks under Rs 95 based on certain parameters.
These parameters indicate that the companies are relatively safer to invest in, based on their fundamentals.

Top Stocks Under Rs 95

Company	Trident Limited	Indian Oil Corporation Limited	Steel Authority of India Limited	IIFL Securities Limited	Manali Petrochemicals Limited
Current Market Price	36.75	71.45	79.75	73.15	94.25
Face Value (₹)	1	10	10	2	5
EPS (₹)	1.48	13.25	22.15	9.24	19.63
ROE (%)	21.68	18.79	22.58	25.89	36.98
Debt to Equity	0.41	0.93	0.25	0.51	0.02
Current Ratio	1.27	0.76	0.73	1.14	4.92
Market Cap (Cr)	18727	100,896	32,940	2,224	1,621
Promoter’s Holdings (%)	72.94	51.5	65	31.29	44.86
Dividend Yield (%)	0.98	15.96	10.97	4.1	2.65
Stock P/E (TTM)	24.83	5.39	3.6	7.92	4.8
Sector PE	12.53	23.7	5.33	38.63	15.64
Net Profit Margin	11.9	4.15	11.42	25.89	22.79

Let’s take a look at their businesses, shall we?

Top Stocks under Rs 95 # 1 – Indian Oil Corporation Limited

Indian Oil Corporation Limited is a Maharatna company, controlled by the Government of India. It is a diversified and integrated energy major with a presence in almost all streams of oil, gas, petrochemicals, and alternative energy sources. The company is at Rank 142 on the Fortune 500 list, India’s highest rank Energy PSU.

It is one of the largest refining companies in India with 80.55 MMTPA of Group Refining Capacity and more than 15,000 km of cross-country pipelines. Moreover, the company is also forging crucial partnerships to strengthen the Green Hydrogen ecosystem in India.

In addition, it has achieved the milestone of installing over 2000 EV charging stations at IndianOil Fuel Stations.

Indian oil corporation owns about 73% of crude pipelines and 52% of product pipelines in India. It is a leader in market infrastructure and controls 42% of retail outlets, 50% of LPG distributorship, and 47% of Aviation Fuel stations in India.

The company has a presence in Sri Lanka, Mauritius, UAE, Singapore, Sweden, the USA, and the Netherlands through its subsidiaries. Further, it holds a 51.89% stake in Chennai Petroleum Corporation Ltd, it’s subsidiary.

IOCL Singapore Pte Ltd and Petronet LNG Ltd are a few other major subsidiaries of the company.

Top Stocks Under Rs 95 # 2 – Steel Authority of India Limited

Steel Authority of India Limited (SAIL) is a Maharatna company. It is one of the largest steel-making companies in India. It produces iron and steel at five integrated plants and three special steel plants.

These plants are located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. SAIL manufactures a variety of steel products.

The company produces both basic and special steel for domestic construction, engineering, power, railway, automotive, and defense industries and for sale in export markets.

Some of the products that it produces are hot and cold rolled sheets and coils, galvanized sheets, electrical sheets, and structural.

Moreover, its flat steel products are much in demand in the domestic as well as the international market.

Top Stocks under Rs 95 # 3 – Trident Limited

Trident Limited is the flagship company of the Trident Group. It manufactures yarn, bath linen, bed linen, wheat straw-based paper, chemicals, and captive power. The company has manufacturing facilities in Barnala (Punjab) and Budhni (Madhya Pradesh).

Trident Limited caters to all segments of the market – brands, department stores, home specialty chains, mass merchants, and institutional customers. Most of their clients are from India, the USA, Europe, Australia, and New Zealand.

It is one of the largest manufacturers of terry towels in the world. Further, it is the world’s largest wheat straw-based paper manufacturer and the second largest player in home textiles, and the third-largest yarn manufacturer in India.

It has proposed the expansion in the State of Madhya Pradesh with a total capital outlay of ₹ 7,200 Cr by 2025. Further, the company has drastically reduced its debt since 2019.

Top Stocks under Rs 95 # 4 – IIFL Securities

IIFL Securities Limited, (formerly India Infoline Limited) is the broking arm of the IIFL group. It is one of the largest independent full-service retail and institutional broking house in India.

Further, it provides diversified financial services and products to corporates, institutional investors, foreign portfolio investors, mutual funds, and other classes of investors.

The company was incorporated in 1996. Since then, it has served over 2.4 million customers through a network of about 2,500 points of presence covering its branches and business partners in over 500 cities in India. It has a pan -India presence with more than 11 lakh active clients.

IIFL Securities in February 2021 won the bid to acquire nearly 11 lakh demat accounts held by Karvy Stock Broking.

Products and services

Some of its major products and services are:

• Retail broking for equities, commodities, and currency.
• Financial planning, depository participant services, mutual fund distribution, bonds, PMS, AIF, retirement planning, and estate planning.
• Broking services, corporate access & research support in institutional broking.
• Investment banking – Initial Public Offer (IPO), Qualified Institutional Placement (QIP), rights issues, preferential placement, Follow-on Public Offer (FPO), mergers & acquisitions, share buybacks, tender offers and delisting, and advisory services.

Top Stocks under Rs 95 # 5- Manali Petrochemicals

Manali Petrochemicals is engaged in the manufacturing and selling of Propylene Oxide (PO), Propylene Glycol (PG) and Polyols (PY) which are used in industrial raw materials. The company is located in Chennai and is the only domestic manufacturer of Propylene Glycol.

Further, it is the first and largest Indian manufacturer of Propylene Oxide which is the input material for the aforesaid derivative products.

Chennai Petroleum Corporation Limited is the major supplier of propylene that the company uses. The Indian Polyol market under normal circumstances is dominated by imports. Major players have set up large capacity plants globally and they enjoy subsidies from local governments.

Key Metrics

Company	Trident Limited	Indian Oil Corporation Limited	Steel Authority of India Limited	IIFL Securities Limited	Manali Petrochemicals Limited
Current Market Price	36.75	71.45	79.75	73.15	94.25
Face Value (₹)	1	10	10	2	5
EPS (₹)	1.48	13.25	22.15	9.24	19.63
ROE (%)	21.68	18.79	22.58	25.89	36.98
Debt to Equity	0.41	0.93	0.25	0.51	0.02
Current Ratio	1.27	0.76	0.73	1.14	4.92
Market Cap (Cr)	18727	100,896	32,940	2,224	1,621
Promoter’s Holdings (%)	72.94	51.5	65	31.29	44.86
Dividend Yield (%)	0.98	15.96	10.97	4.1	2.65
Stock P/E (TTM)	24.83	5.39	3.6	7.92	4.8
Sector PE	12.53	23.7	5.33	38.63	15.64
Net Profit Margin	11.9	4.15	11.42	25.89	22.79

• The Steel Authority of India has the highest EPS (earnings per share), followed by Manali Petrochemicals Limited and Indian Oil Corporation Limited.
• Manali Petrochemicals has given the highest return on equity (ROE), however, the other companies also have high ROEs.
• All the companies have an ideal debt-to-equity ratio, which is, between zero and one.
• Manali Petrochemicals has a high current ratio. However, the Indian Oil Corporation and Steel Authority of India has a very low current ratio.
• IIFL Securities Limited and Manali Petrochemicals have low promoter holdings as compared to the other three companies.
• The dividend yield for the Indian Oil Corporation and Steel Authority of India is impressive. IIFL Securities as well as Manali Petrochemicals have a good dividend yield. However, the dividend yield for Trident Limited is not that great.
• Low PE ratios are favorable in general. A high PE suggests that investors are expecting higher earnings growth in the future compared to companies with a lower PE.
• IIFL Securities and Manali Petrochemicals have a good net profit margin.

Bonus

Sl Number	Company	CMP (₹)	Market Capitalization (₹ in Crores)
1	Marksans Pharma	52.2	2136.62
2	Punjab Alkalies	74.65	1809.09
3	Dolat Algotech	68.4	1205.58
4	KMC Speciality	55.6	906.84
5	Khaitan Chemical	85.6	834.51
6	Arihant Capital	76.5	793.26
7	Andhra Petrochem	83.4	708.65
8	Shyam Century	21.55	476.61
9	Balu Forge	56.65	472.26
10	Kothari Petroche	76.25	448.71

In Closing

In this article, we took a look at some of the Top stocks under Rs 95. We understood their business and compared them on the basis of key metrics. Later, we took a look at a few more stocks under Rs 95.

Investors should do a complete fundamental analysis of stocks before they invest in them. It is important to keep a track of developments regarding a company that they wish to invest in.

Sometimes, adverse news can materially affect their investment decision. That’s all for this article folks. We hope to see you around. Happy investing, until next time!

You can now get the latest updates in the stock market on Trade Brains News and you can even use our Trade Brains Portal for fundamental analysis of your favourite stocks.

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Fundamental Analysis of Adani Transmission – Future Plans & More

Fundamental Analysis of Adani Transmission: Yes, it is true that the Adani Group is a well-diversified conglomerate. Be it green energy, city gas distribution, or simply power generation, the Adani Group has its hands in all cookie jars. But did you know that the energy sector lies at the core of Gautam Adani’s business empire?

But did you also know that Adani Transmission? brings electricity to your home? Yes, you read that right. In this article, we will conduct a fundamental analysis of Adani Transmission.

Fundamental Analysis of Adani Transmission

Today we will cover the company history, financials, and future plans and also conduct a detailed Fundamental Analysis of Adani Transmission.

Company History

Part of the ports to power conglomerate the Adani Group, Adani Transmission. (ATL) traces its origins back to 2006. A 220 KV transmission line was developed for Mundra Thermal Power Station.

Then over the years, the transmission business saw expansion as part of Adani Enterprises. The company was subsequently demerged and listed as Adani Transmission. in 2015. The rest is history.

Today, Ahmedabad, Gujarat-headquartered ATL is one of India’s largest private sector power transmission companies. It establishes, commissions, operates, and maintains electric power transmission systems.

The company owns a portfolio of over 18,795 ckm of transmission lines and 40,001 MVA of power transformation capacity from 132 to 765 KV of HVAC systems and +/- 500 KV of HVDC systems. Additionally, ATL is also involved in the business of energy distribution through well-integrated utilities in Mumbai and Mundra SEZ area.

The image below presents the structure of Adani Transmission.

It has a workforce of over 11,000 employees and a presence in 13 Indian states with its 31 transmission projects. We got a good snapshot of the history and the present state of Adani Transmission . 

Let us now move ahead to the industry overview as part of our fundamental analysis of Adani Transmission .

Industry Overview

India is the third-largest producer and second-largest consumer of electricity in the world. The nation has a total installed capacity of 395.6 GW. The power so generated is then transferred through the transmission systems run by transmission companies.

India’s transmission infrastructure has always lagged behind its power generation capabilities. Thus, there is an extra focus to streamline energy transmission operations with the country’s production capacity.

As of 31 December 2021, India’s transmission line capacity stood at 4.56 lacs circuit kilometers (ckm) and inter-regional power transfer capacity at 1,12,250 MW. As per the data from National Power Portal, the nation grew its transmission capacity at a CAGR of 6% from 3,20,000 ckm in 2016 to 4,56,716 ckm in 2022.

Similarly, the transformation capacity increased from 8,26,958 MVA to 10,79,766 MVA during the same period. 

The figure below offers a perspective on the growth in transmission lines and transformation capacity in India.

Going forward, growth in renewable energy production is directly expected to help India’s power transmission industry. The reason behind this is that the substantial renewable energy resources are unevenly distributed in the country.

This demands the need for grid digitalization and broadening of the national transmission network as the country prepares for the green energy shift. 

Thus, rising income levels, increased energy consumption, growing population, renewable energy growth, green energy transmission highways/corridors, urbanization, and smart metering are expected to bring growth to India’s power transmission and distribution industry.  

Fundamental Analysis Adani Transmission – Financials

Revenue and Net-Profit Growth

ATL has grown organically and inorganically over the years as and when the management came across attractive opportunities. For instance, ATL acquired the power distribution business of Reliance Infrastructure Limited in Mumbai in 2018. In 2020 and 2021, it purchased assets of Kalapataru Power Transmission, Maharashtra State Electricity Transmission Company, and Essel Infraprojects. 

Against the industry growth of 6% annually from 2016 to 2022, ATL grew at a CAGR of 18% every year. Its revenues increased at a CAGR of 23.34% in the last five years. However, during the same period, the profitability of the company declined sharply on account of higher interest charges.

From FY2019, the company took more debt to fund its purchases, with profit margins taking a hit.

The table below shows the revenue, net profit, and margin figures of Adani Transmission for the last five years.

Year	Revenue (Rs. Cr.)	Net Profit (Rs. Cr.)	NPM (%)	OPM (%)
2022	11,258	1,236	11	37
2021	9,926	1,290	13	40
2020	11,416	706	6	37
2019	7,305	559	8	38
2018	3,944	1,143	29	72

Debt and Interest Coverage Ratio

Adani Transmission operates in the electricity transmission business in which state and central power distribution companies serve as counterparties to the company. These partnerships are stable in nature and offer strong revenue stability and visibility. 

Thus, the confidence in revenues has allowed the management to pile more debt to fund its acquisitions and organic expansion. Nevertheless, with the debt to equity ratio of 4.35 and a low-interest coverage ratio of 2.03, the company is over-leveraged. 

However, with no default history and strong parentage, the company still has a rating above junk grade at BBB- / Baa3. 

Year	Debt/Equity	Interest Coverage
2022	4.35	2.03
2021	4.23	1.49
2020	4.51	1.6
2019	3.87	1.54
2018	2.28	2.66

Adani Transmission – Future Plans

We looked at the past five years’ numbers of the company. While all that is good, it provokes the question, “What’s ahead?”

1. As of 31 March 2022, ATL had a 20,765 MVA of power transformation capacity under construction including a portfolio of 4,516 km of power transmission lines. It accounts for Rs. 18,000 directed towards the construction of 10 transmission projects including 1 HVDC project.
2. Adani Electricity Mumbai Limited (AEML), a subsidiary of ATL for the purpose of distributing electricity in Mumbai has in place a fully-funded CAPEX plan of Rs. 8,100 crores during the FY23-26 period.

3. The company has eyed Identified tariff-based competitive bidding opportunities worth Rs. 52,000 crores in the near term out of which Rs. 13,400 crores are under RFP/RFQ stage.
4. The privatization of energy distribution along with smart metering has opened up a market of Rs. 2.2 lakh crore for the distribution segment of the Adani Transmission. The management will take adequate expansion steps as and when the right investment avenues are available.

Fundamental Analysis of Adani Transmission – Key Metrics

We are almost at the end of our fundamental analysis of Adani Transmission Ltd. Let us have a quick look at its key metrics.

CMP (Rs.)	4,000	Market Cap (Rs. Cr.)	450,000
Stock P/E	481	Face Value (Rs.)	10.0
ROCE	12%	Book Value (Rs.)	62.4
ROE	19%	Price to Book Value	64.8
Debt to Equity	4.36	Promoter Holding	73.9%
Net Profit Margin	11%	Operating Profit Margin	37%
Interest Coverage Ratio	2.03	Dividend Yield	0.0%

In Conclusion

As we finish our fundamental analysis of Adani Transmission, we can settle down on the two points. In a matter of two years, the stock of Adani Transmission has given an eye-popping return of 1,455%. And that’s a lot. 

Going forward, will it be able to sustain its momentum? It entirely depends on the ability of the company to grow at the same pace. But as the saying goes, “Trees don’t grow to the sky.”

Thus, we may not see the same multi-bagger returns in the future. Do you think there is still steam left in Adani Transmission? How about you enlighten us with your perspective of ATL in the comments below?

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