ATC Energies Limited, an emerging player in the lithium-ion battery manufacturing sector, is launching its IPO, scheduled to open for subscription on 25th March 2025 and closing on 27th March 2025. The issue comprises a book-built offering totaling ₹63.76 crores, including a fresh issue of 43.24 lakh shares aggregating ₹51.02 crores and an offer-for-sale (OFS) of 10.80 lakh shares valued at ₹12.74 crores. The IPO will be listed on NSE’s SME segment, with the tentative listing date set for 2nd April 2025.
IPO Highlights
- IPO Size: ₹63.76 crores (Fresh Issue: ₹51.02 crores, OFS: ₹12.74 crores)
- Price Band: ₹112 – ₹118 per share
- Face Value: ₹10 per share
- Minimum Investment: ₹1,41,600 (Retail, 1 lot of 1,200 shares at upper band)
- Lot Size: Retail – 1,200 shares; HNI – 2,400 shares
- Listing Exchange: NSE SME
- Book Running Lead Manager: Indorient Financial Services Ltd.
- Registrar: Kfin Technologies Limited
- Market Maker: Alacrity Securities Ltd.
IPO Timeline
- Opening Date: 25th March 2025
- Closing Date: 27th March 2025
- Allotment Date: 28th March 2025
- Refunds Initiation & Share Credit: 1st April 2025
- Listing Date: 2nd April 2025
Company Overview
Established in 1998, ATC Energies Limited specializes in manufacturing lithium-ion batteries with a diverse product range categorized into mini, small, medium, and large battery segments. The company primarily caters to the banking sector, providing battery solutions for POS and ATM machines, besides serving broader industries with tailored energy storage solutions. Operating through manufacturing units in Vasai (Thane) and Noida (NCR), the company emphasizes technological innovation, in-house engineering, and customization capabilities.
Financial Performance Analysis
ATC Energies’ financials reflect a trajectory of recovery and growth post an earlier downturn:
- Revenue: Grew significantly by 54.52%, from ₹3,313.54 lakhs in FY2023 to ₹5,120.37 lakhs in FY2024 after declining 9.17% in the previous fiscal.
- EBITDA: Improved to ₹1,516.35 lakhs in FY2024 from ₹1,148.80 lakhs in FY2023, recovering from a previous 24.88% decrease.
- Profit After Tax (PAT): PAT rebounded from ₹775.57 lakhs in FY2023 (34.61% decline from FY2022) to ₹1,089.16 lakhs in FY2024, reflecting improved profitability.
The EBITDA margin remains robust at 29.61% for FY2024, despite a contraction from earlier years (41.29% in FY2022). PAT margins follow a similar pattern, standing at a healthy 21.27% in FY2024, signifying operational resilience and efficiency.
Technical Analysis
- Return on Equity (ROE): Strong at 39.38%, suggesting high efficiency in utilizing shareholder funds.
- Debt-to-Equity Ratio: Low at 0.32, indicating moderate leverage and sound financial health.
- ROCE: Impressive at 42.66%, showcasing efficient capital allocation and management.
- Price-to-Book Value (P/BV): Stands at 5.73, reflecting investors’ optimistic valuation.
IPO Valuation Metrics
- Pre-IPO EPS: ₹6.78
- Post-IPO EPS: ₹5.66
- Pre-IPO PE Ratio: 17.4
- Post-IPO PE Ratio: 20.84
The moderate PE ratio suggests reasonable valuation, although the dilution post-IPO slightly increases valuations, indicating a premium for growth expectations.
Objectives of the IPO
The proceeds from the IPO are earmarked for several strategic initiatives aimed at bolstering operational capabilities:
- Debt Repayment: ₹952.83 lakhs allocated towards fully repaying borrowings related to the Noida factory acquisition.
- Capital Expenditure: ₹672.16 lakhs intended for refurbishment and upgrade of infrastructure at the Noida facility.
- Technology Upgradation: ₹746.88 lakhs dedicated to upgrading IT infrastructure at Noida and Vasai facilities.
- Working Capital: ₹950.00 lakhs planned to enhance working capital.
This strategic allocation of funds aims to strengthen operational efficiency, scale production capacity, and optimize technological infrastructure, positively influencing future profitability.
Grey Market Premium (GMP)
Initially reflecting strong optimism at ₹21 premium on 25th March 2025, GMP sharply declined to ₹0 shortly afterward, indicating fluctuating investor sentiment. This volatility underscores potential caution among investors regarding listing gains, despite initial positivity.
Subscription Status
As of 25th March 2025, ATC Energies IPO observed limited initial traction:
- Retail Investors: 0.04 times subscription
- QIB and NII: Not yet subscribed significantly
- Total Subscription: Merely 0.02 times
However, a robust subscription by anchor investors (fully subscribed) provides a positive cue, potentially catalyzing broader investor participation in the following days.
Peer Comparison
Comparatively, ATC Energies exhibits strong fundamentals but faces valuation pressure:
- EPS: ₹6.78 (ATC) vs. ₹9.18 (Eveready Industries), ₹19.14 (High Energy Batteries)
- PE Ratio: Competitive at 17.4 pre-IPO vs. Eveready Industries’ 90.92 and High Energy Batteries’ 35.65.
- RONW: Superior at 39.28% versus Eveready (18.91%) and High Energy Batteries (21.29%).
These metrics indicate ATC Energies is attractively positioned on profitability and efficiency compared to peers.
Investment Pros and Cons
Pros:
- Diversified product portfolio enhancing resilience.
- Strong financial recovery and impressive profitability.
- Robust ROE and efficient capital utilization.
- In-house technology and customization strengths.
Cons:
- Dependency on limited key customers posing revenue risks.
- Absence of long-term contracts with suppliers leading to supply chain uncertainties.
- Negative cash flows in recent years could pressure liquidity.
- Sharp GMP fluctuations reflecting market sentiment volatility.
Risk Factors and Investor Considerations
- Customer Concentration: High reliance on two major clients introduces significant revenue risk if relationships change or business declines.
- Supply Chain Disruptions: Lack of exclusive supply agreements heightens vulnerability to raw material volatility.
- Liquidity Concerns: Historical negative cash flows could necessitate additional financing, impacting profitability.
Conclusion: Should You Invest?
ATC Energies Limited’s IPO presents a balanced proposition. The company’s strong financial recovery, high profitability margins, impressive ROE, and strategic utilization of IPO funds provide compelling investment incentives. However, investor caution is warranted given supply chain risks, client concentration, and liquidity pressures.
For short-term investors, GMP volatility signals caution. Listing gains may depend heavily on final subscription momentum and market sentiment closer to listing.
Long-term investors might find value in ATC Energies’ robust financial fundamentals, growth-oriented strategic plans, and strong market positioning within the expanding lithium-ion battery industry.
In summary, ATC Energies IPO presents an attractive opportunity for investors comfortable with moderate risks and looking for exposure to India’s growing energy storage sector. Investors should carefully balance the company’s significant growth potential against inherent operational and financial risks.
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