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Prostarm Info Systems 

• Prostarm Info Systems is coming out with a 100% book building; initial public offering (IPO) of 1,60,00,000 shares of Rs 10 each in a price band Rs 95-105 per equity share.
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on May 27, 2025 and will close on May 29, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 10 and is priced 9.50 times of its face value on the lower side and 10.50 times on the higher side.
• Book running lead manager to the issue is Choice Capital Advisors.
• Compliance Officer for the issue is Sachin Gupta.

Profile of the company

Prostarm Info Systems is engaged in designing, manufacturing, assembling, sale, service and supply of Energy Storage Equipment and Power Conditioning Equipment (Power Solution Products) in India. Its manufactured Power Solution Products comprise of UPS system, inverter system, lift inverter system, solar hybrid inverter systems, lithium-ion battery packs, servo-controlled voltage stabilisers (SCVS), isolation transformers and other power solution products. It offers both customized and standard products and solutions, manufactured and assembled at its in-house facilities and also through third party contract manufacturers. In addition to its core manufactured products, it also deals in sale and supply of third party power solution products such as batteries, reverse logistics/end-of-life products and other assets such as IT Assets, solar panel and allied products.

The company also undertakes rooftop solar photovoltaic power plant projects across India on EPC basis. Its comprehensive range of value-added services include installation, rental, after-sales services (including warranty and post-warranty services), Annual Maintenance Contracts (AMC) which supplements its Power Solution Products, catering to a wide spectrum of customers and their requirements.

The company specializes in power electronics solutions, offering reliable and affordable products to businesses across various sectors and have built a reputation for delivering dependable UPS systems that ensure continuous power availability in critical sectors like banking, finance, and healthcare. Over the years, it has leveraged its expertise, processes and infrastructure to cater to diverse end-use industries such as healthcare, aviation, research, BFSI, railways, defense, security, education, renewable energy, information technology and oil & gas. As on date, the company is empaneled vendor for Airports Authority of India; West Bengal Public Health Engineering Department; West Bengal Electronic Industry Development Corporation Limited; Telangana State Technology Services Limited; Railtel Corporation of India Limited; and NTPC Vidyut Vyapar and Nigam Limited.

Proceed is being used for:

• Funding working capital requirements of the company
• Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company
• Achieving inorganic growth through unidentified acquisitions and other strategic initiatives and General corporate purposes

Industry Overview

The Indian Lithium - Ion battery market in India was recorded at Rs 5,58,078 million in FY24 and grew at a CAGR of 7.66% between FY19 and FY24. Further, going ahead the market is expected to grow at a 19.67% till FY30. It is forecasted to reach Rs 16,39,090 million by FY30. The Indian Lithium-Ion Battery Market is growing rapidly, driven by the surging demand for energy storage solutions in various sectors, including automotive, consumer electronics, and renewable energy. The rising popularity of electric vehicles (EVs) is a major driver of market expansion, backed by government programs like the FAME scheme that promote the use of EVs and build infrastructure. Furthermore, the increasing presence of smartphones, laptops, and other portable devices in the consumer electronics industry is also driving the demand for these batteries.

Meanwhile, the power back-up systems market is growing due to the problem of power shortage in the country and with the technological advancements. The gap between the demand and supply of power in the country is increasing the demand for uninterrupted power supply by the industrial sectors. The UPS are used to prevent damage from power loss and common electric occurrences, prevention of loss of data, it prevents connectivity issues. It provides clean, continuous power and is used in various sectors like banking, power, manufacturing, transportation, retail, healthcare, and entertainment, etc. The difference between an inverter device and a UPS is that an inverter is a power backup device while the UPS provides backup as well as power conditioning. Since typically, UPS system provides surge suppressions and voltage regulations, it helps in power conditioning too. The integral part of the UPS is the battery bank since it acts as back-up power source that supports the UPS system. The most common battery system being used in the UPS is the Lead Acid battery system.

Furthermore, there is a growing market for rooftop solar installations, driven by lower installation expenses and favorable policies like net metering and accelerated depreciation. Opting for rooftop solar EPC services presents an opportunity to tap into the expansion within the residential, commercial, and industrial sectors. Additionally, the rise in urbanization and energy requirements in urban areas enhances the prospects for rooftop solar solutions. The need for clean energy solutions is also being driven by rising environmental consciousness and the need to cut carbon emissions. India's renewable energy strategy places a strong emphasis on solar power, which is becoming more and more popular in the commercial, industrial, and residential sectors. This is driving up market growth.

Pros and strengths

Diversified and continuously evolving and expanding product portfolio: The company has a diverse and continuously evolving product portfolio, product verticals and customer base. Further, it offers its customers multiple products to meet their power storage and power conditioning requirements. It has a diverse customer base comprising of government, project contractors, industrial and institutional clients, dealers and distributors, and cater to a range of industries including healthcare, aviation, research, BFSI, railways, defence, security, education, renewable energy, information technology and oil & gas.

Established relationships with customers and wide customer base: It has established and will continue to focus on strengthening its relationships with domestic customers across its product verticals. The varied applications of its products have helped it to build a wide customer base across various industries. Some of its marquee customers across the industries that it caters to, include certain PSU Banks, Larsen & Toubro Limited, Tata Power Co. Limited and Bajaj Finance Limited.

Wide geographical presence and distribution network: The company’s operations are supported by a network of 21 branch offices and 2 storage facilities across 18 states and 1 union territory within India. This infrastructure not only supports sales but also enables it to provide after-sales services, ensuring that its customers receive reliable and timely assistance for maintenance and operational needs. In addition to offering its products directly to government, institutional and corporate customers, it also relies on a strong network of dealers and distributors for sale of its products to institutional and corporate clients efficiently.

Consistent track record of financial performance leading to strong balance sheet position: The company’s commitment to continuous efficiency improvements, enhanced productivity and cost rationalization has allowed it to achieve consistent and strong financial performance. Its revenue from operations, EBITDA, and restated profit after tax have steadily increased from Fiscal 2022 to nine month period ended December 31, 2024. Specifically, its revenue from operations reached Rs 25,787.04 lakh in Fiscal 2024, Rs 23,036.32 lakh in Fiscal 2023, and Rs 17,130.73 lakh in Fiscal 2022, demonstrating a CAGR of 22.69% during this period. Further, revenue from operations during the nine month period ended December 31, 2024 amounted to Rs 26,862.66 lakh.

Risks and concerns

Maximum revenue comes from limited customers: The company has garnered 71.80%, 51.88%, 39.60% and 44.30% of its total revenue from top 10 customers for the nine-month period ended December 31, 2024 and for Fiscals 2024, 2023 and 2022, respectively. The loss of one or more key customers for any reason, such as an inability to negotiate acceptable purchase terms, contract renewals, disputes, adverse financial changes like bankruptcy, mergers, declining sales, delayed requirements, or work stoppages, could negatively impact its business, operations, and financial condition.

Heavily dependent on its suppliers: The company’s business operations are significantly dependent on third party suppliers at all stages of product development and sales. It relies on a network of third party domestic and international suppliers for supply of materials, components and products. Its purchase includes batteries, UPS, lithium-ion cells, electronic components and spares, wiring harness, plastic and metal parts, cabinets, process consumables and solar panels, etc. Its suppliers are majorly situated in India and China, and it procures its material on a purchase order basis. Such suppliers may not perform or be able to perform their obligations in a timely manner, or at all and any delay, shortage, interruption, reduction in the supply of or volatility in the prices of materials and components on which it relies may have a material adverse effect on its business, results of operations, financial condition, cash flows and future prospects.

Geographical constrain: The company is operating three manufacturing units out of which, two are situated in Pisoli, Pune, Maharashtra and one is situated in Mahape, Mumbai, Maharashtra. Given the geographic concentration of its manufacturing operations in one state i.e. Maharashtra, its operations are susceptible to disruptions which may be caused by certain local and regional factors, including but not limited to political, economic and weather conditions, natural disasters, demographic factors, and other unforeseen events and circumstances. If any such disruptions occur, its operations may be affected leading to significant delays in the manufacturing and sale of its products which could materially and adversely affect its business, financial condition and results of operations.

Limited operating history in manufacturing: The company has a limited operating history in manufacturing. Established in year 2008, it initially focused on the sale, supply, and installation of batteries and uninterruptible power supply systems sourced from third-party vendors. From the year 2021, it has gradually transitioned into full-scale design, manufacturing, and assembly of products such as UPS systems, lift inverters, solar hybrid inverters, lithium-ion battery packs, servo-controlled voltage stabilizers, isolation transformers, and other power solutions. Its business and prospects must be evaluated in light of the risks and challenges associated with being a new entrant in manufacturing power solution products. These include its ability to develop and manufacture reliable products, deliver and service a large volume of orders, adapt to customer demands and feedback, respond to technological advancements and changes in the competitive landscape, and manage growth effectively and efficiently. Due to inadequate experience of handling a manufacturing facility, it may also not be able to carefully handle situations such as labour unrest and strikes, plant shutdowns, natural or man-made disasters, fire or epidemics.

Outlook

Prostarm Info Systems is an Indian company specialising in designing, manufacturing, and selling Energy Storage and Power Conditioning Equipment, known as Power Solution Products. The company has established relationships with the customers and wide customer base. It also has consistent track record of financial performance leading to strong balance sheet position. On the concern side, the company’s revenue from operations is dependent upon a limited number of customers and the loss of any of these customers or loss of revenue from any of these customers could have a material adverse effect on its business, financial condition, results of operations and cash flows. Moreover, the company is heavily dependent on its suppliers and any disruptions in the supply or an increase in prices of materials and components could adversely affect its operations.

The issue has been offering 1,60,00,000 shares in a price band of Rs 95-105 per equity share. The aggregate size of the offer is around Rs 152.00 crore to Rs 168.00 crore based on lower and upper price band respectively. Minimum application is to be made for 142 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations has grown by 11.94% to Rs 25,787.04 lakh for the Fiscal 2024, compared to Rs 23,036.32 lakh in Fiscal 2023. Moreover, the company reported a 17.85% increase in profit after tax, rising from Rs 1,934.55 lakh in the Fiscal 2023, to Rs 2,279.80 lakh for the Fiscal 2024.

The company plans to explore opportunities for investing in additional facilities and enhancing its production capabilities, including the design, customization, and integration of automation technologies into its processes. Optimizing its production will improve output and quality, increase economies of scale, lower supply chain logistics costs and reduce its time to market. This will ultimately boost its profitability and enable it to provide faster turnaround times for its clients. To support its growth and expansion, it continues to assess strategic investment opportunities in domestic markets, aiming to further increase its market share and diversify its product portfolio. Further, it will pursue acquisitions or partnerships that add value for its business, stakeholders, and customers. These growth opportunities may include acquisitions, joint ventures, and strategic alliances.