Tamilnadu Coke & Power files DRHP for IPO, aims for ferrosilicon Unit and solar power expansion Tamilnadu Coke & Power Limited (TNCPL), a prominent Low Ash Metallurgical (“LAM”) Coke manufacturer, has officially filed its Draft Red Herring Prospectus (DRHP) with the NSE Emerge. The proposed offering consists of a fresh issuance of 64,14,000 equity shares, each with a face value of Rs. 10. Beeline Capital Advisors Private Limited has been appointed as the Book Running Lead Manager, while Link Intime India Private Limited will serve as the Registrar to the issue. Headquartered in Thandalacherry village, Gummidipoondi Taluk, Tamil Nadu, TNCPL specializes in producing LAM Coke through the conversion of coking coal, coal sales, power generation from waste heat recovery, and electricity sales. Its LAM Coke product portfolio includes Lumpy Coke, Blast Furnace Coke, Nut Coke, and Coke Fines. The DRHP outlines the allocation of proceeds from the IPO for various purposes, including establishing a new Ferrosilicon manufacturing unit, setting up a solar power plant, acquiring additional land, and general corporate purposes. TNCPL plans to utilize Rs. 39.60 crore to establish a 2×5 Mega Volt-Amps (MVA) Ferrosilicon plant, Rs. 5 crore for land acquisition, and Rs. 8.63 crore for a new solar power plant. Mr. Ayaan Ahuja, Chairman & Managing Director of Tamilnadu Coke & Power Limited, emphasized the company’s focus on operational efficiency in metallurgical coke manufacturing and power generation. The IPO proceeds will facilitate expansion into new markets and product segments, including the establishment of a Ferrosilicon facility and a solar power plant. TNCPL, promoted by Tamilnadu Global Trading LLP and Mr. Ayaan Ahuja, acquired land and assets from Basudha Udyog Private Limited in 2017-18. The strategic location of its manufacturing unit and power plant in Thandalacherry provides a transportation advantage, serving customers in Maharashtra, Karnataka, Andhra Pradesh, and Chhattisgarh. In FY2022-23, TNCPL reported a revenue of Rs. 51.60 crore, up from Rs. 46.11 crore in FY2021-22. The company achieved a profit (PAT) of Rs. 20.83 crore in FY2022-23, compared to Rs. 17.47 crore in the previous fiscal year. The IPO is anticipated to support TNCPL’s growth initiatives, including the entry into Ferrosilicon manufacturing and expansion of its solar power generation capabilities.
Services miss estimates; Software better than expected: Services business grew 0.6% q-o-q cc and missed HCLT’s Q3FY23 guidance, mainly due to a 3.8% q-o-q cc decline in the ER&D segment. Growth in the IT&BS segment moderated slightly to 1.6% q-o-qcc but was in line with estimates. BFSI and Life Sciences were the key growth drivers, while communications were the drag among verticals. Growth was led by the Americas region, while Europe and ROW posted declines.
Decline in bookings reflects delays in decision-making: HCLT won 10 large deals in services and three large deals in Software with net-new deal TCV of $2.1bn, down 8% y-o-y. Deal wins were driven by the services portfolio, were centered on cost optimisation and vendor consolidation and came mainly from BFSI, manufacturing and Life Sciences verticals. Management highlighted a ramp-down in discretionary spending in Hitech and communications verticals but pointed to a strong deal pipeline.
FY24 guidance in line with expectations: HCLT has guided for 6-8% y-o-y growth for overall business and 6.5-8.5% y-o-y cc growth in services segment and 18-19% margins in FY24—all in line with our assumptions. We maintain our FY24-25 cc revenue growth and margin estimates and expect HCLT to deliver 6.5% cc revenue growth and 18.4% margins in FY24. However, we lower our earnings forecasts by 2% to factor the higher tax rate indicated by the management.
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Raise PT: HCLT has fared better in Q4, particularly in North America and BFSI, unlike its peers. However, rising demand uncertainty as a US recession nears remains a concern. HCLT’s stock at CMP trades at 17x PE and offers a 5% yield, which in our view should limit downsides and derating. Hence, we raise our target PE to 17x (16x earlier) and raise our PT to Rs 1,125, offering 8% potential upside.