GK Energy IPO opens: Analysts bet on long-term prospects; should you apply?

GK Energy IPO: Analysts remain broadly optimistic about GK Energy and have shared favorable reviews of its public offering

GK Energy IPO opens for subscription: The initial public offering (IPO) of engineering, procurement and commissioning (EPC) company, GK Energy, opens for public subscription today, Friday, September 19.

 

The company aims to raise ₹464.26 crore from the public offering. Ahead of the opening of the offering, GK Energy successfully raised ₹139 crore from anchor investors in a bidding that concluded on Thursday, September 18. The anchor portion saw participation from both domestic and foreign institutional investors, including HSBC Mutual Fund (MF), Citigroup Global Markets Mauritius, Motilal Oswal MF, Bandhan MF, Pinebridge Global Funds, and Societe Generale.

 

That said, analysts remain broadly optimistic about GK Energy and have shared favorable reviews of its public offering. However, before we delve into the brokerage views, here are the key details of the GK Energy IPO:

 

GK Energy IPO structure

GK Energy IPO is a book-built issue that consists of a fresh issue of 26.1 million shares worth nearly ₹400 crore, along with an offer for sale (OFS) where Gopal Rajaram Kabra and Mehul Ajit Shah are divesting up to 4.2 million equity shares worth ₹64.26 crore.

 

GK Energy has reserved not more than 50 per cent of the net offer for qualified institutional buyers (QIBs), at least 35 per cent for retail investors, and at least 15 per cent for non-institutional investors (NIIs).

 

GK Energy IPO price band, lot size

The public issue of GK Energy is available at a price band of ₹145-153 per share, with a lot size of 98 shares. Investors can bid for a minimum of 98 shares of the GK Energy IPO and in multiples thereof.

 

A retail investor would require a minimum of ₹14,994 to bid for one lot of the GK Energy IPO, and a maximum of 13 lots (1,274 shares) with an investment amount of ₹1,94,922.

GK Energy IPO grey market premium (GMP)

Sources tracking unofficial market activities revealed that GK Energy shares were trading at around ₹175 per share, reflecting a grey market premium (GMP) of merely ₹22 or 14.38 per cent over the upper end of the issue price.  ALSO READ | Saatvik Green Energy IPO opens today: GMP up 14%; should you apply or not?

GK Energy IPO allotment date, listing date

The three-day subscription window for the GK Energy IPO is set to close on Tuesday, September 23. Following the closure of the subscription window, the basis of allotment for GK Energy IPO shares is likely to be finalised on Wednesday, September 24.

 

The successful allottees will receive the company’s shares in their demat accounts on Thursday, September 25.

 

Shares of GK Energy are expected to make their debut on the BSE and NSE on Friday, September 26.

GK Energy IPO registrar, lead managers

MUFG Intime India serves as the registrar for the public issue, while IIFL Capital Services and HDFC Bank are the book-running lead managers.

GK Energy IPO objective

GK Energy will not receive any proceeds from the OFS. “The proceeds from the offer for sale shall be received by the promoter selling shareholders after deducting their proportion of offer expenses and relevant taxes thereon,” said GK Energy in its Red Herring Prospectus (RHP).

 

However, the company intends to use the proceeds from the fresh issue for funding its long-term working capital requirements and general corporate purposes.  CHECK EURO PRATIK SALES IPO ALLOTMENT STATUS

Should you subscribe to the GK Energy IPO?

Canara Bank Securities - Subscribe for long term

Analysts at Canara Bank Securities have recommended investors to subscribe to the issue for long-term gains, particularly for those with a high-risk appetite.

 

“The issue is fairly priced at 19x PE and 12x PB as compared to 28x PE and 14x PB average of listed players. The company is well poised for growth as it has become one of the key players in the solar EPC space,” said the analysts in a research note.

 

The analysts further highlighted that the company also has orders in the solar rooftop EPC space. However, analysts have concerns with the negative cash flow from operations, which is a result of increasing receivables and competition in the space.

Angel One - Subscribe

Those at Angel One have recommended investors to subscribe to the public issue.

At the upper price band of ₹153, GK Energy, analysts said, is attractively valued, trading at a post-IPO P/E of 23.3x, lower than its industry peers.

 

“The company has demonstrated strong financial performance, with significant revenue and PAT growth in FY 2024. Its robust order book and presence in the growing renewable energy sector further support its growth prospects. Considering these factors, the stock merits a ‘Subscribe’ recommendation,” wrote the analysts in a research note.

About GK Energy

GK Energy is a provider of engineering, procurement and commissioning (“EPC”) services for solar-powered agricultural water pump systems (which are also referred to as solar-powered pump systems) under Component B of the Central Government’s Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan scheme (the “PM-KUSUM Scheme”). The company primarily provides EPC services for solar-powered pump systems, which comprise direct-to-beneficiary sales and sales to others.