Mangal Electrical IPO: Fairly Priced Offering Backed by Strong Growth, Capacity Expansion, and Sector Tailwinds

Mangal Electrical is coming out with an IPO through the book-building route, aiming to raise Rs 400 crore. The issue is entirely a fresh offer comprising 0.71 crore equity shares, aggregating to Rs 400 crore. The IPO will open for subscription on August 20, 2025, and close on August 22, 2025. The basis of allotment is expected to be finalized on August 25, 2025, while the shares are proposed to be listed on both BSE and NSE with a tentative listing date of August 28, 2025.

The price band for the IPO has been fixed at Rs 533 to Rs 561 per share, with a lot size of 26 shares. For retail investors, the minimum investment required is Rs 13,858 for one lot. Among non-institutional investors, the minimum bid size for Small NII (sNII) is 14 lots, equivalent to 364 shares and an investment of Rs 2,04,204. For Big NII (bNII), the minimum application size is 69 lots, amounting to 1,794 shares worth Rs 10,06,434.

Systematix Corporate Services Ltd. is acting as the book-running lead manager for the issue, while Bigshare Services Pvt. Ltd. has been appointed as the registrar.

See details below:

Use of Proceeds and Promoter Details:

Mangal Electrical is a family-led company promoted by Rahul Mangal, Ashish Mangal, Saroj Mangal, and Aniketa Mangal. The promoters currently hold 100 per cent of the company’s equity, which will reduce to 74.19 per cent post-issue.

• Debt Reduction: Rs 101.27 crore for repayment/prepayment (full or part) of certain outstanding borrowings.
• Capacity Expansion: Rs 87.86 crore for capital expenditure, including civil works for expanding Unit IV facility at Reengus, Sikar (Rajasthan).
• Working Capital: Rs 122 crore allocated to meet working capital requirements.
• General Corporate Purposes: Balance amount to be used for overall corporate needs.

Company Profile:

Mangal Electrical Industries Limited is a diversified power equipment manufacturer specializing in transformer components and complete transformer solutions. The company’s product portfolio includes transformer laminations, CRGO slit coils, amorphous cores, coil and core assemblies, wound and toroidal cores, and oil-immersed circuit breakers. In addition to manufacturing, it is also engaged in the trading of CRGO and CRNO coils, as well as amorphous ribbons. The company manufactures transformers ranging from single-phase 5 KVA units to three-phase 10 MVA units, catering to varied customer needs across the power infrastructure segment.

Beyond products, Mangal Electrical also provides EPC services for setting up electrical substations, enabling it to serve the power sector with comprehensive offerings mix. Its manufacturing infrastructure comprises five production facilities in Rajasthan with a strong aggregate capacity — 16,200 MT for CRGO, 10,22,500 KVA for transformers, 75,000 units for ICBs, and 2,400 MT for amorphous units annually. Such scale, combined with operational integration, positions the company as a key player in India’s transformer component and equipment ecosystem.

Industry Outlook:

India’s power infrastructure is expanding rapidly, with rising substation capacity and strong government as well as private investments creating a favorable environment for transformer manufacturers like Mangal Electrical. By securing key licenses and certifications, the company is well-positioned to cater to both domestic and global customers.

The Indian transformer industry, valued at around Rs 35,390 crore in FY 2025, is projected to reach Rs 52,298 crore by FY 2030, growing at a CAGR of 8.1 per cent. This expansion is being driven by government initiatives such as the National Electricity Policy, RDSS, and the Green Energy Corridor, along with rising demand from smart cities, industrial parks, renewable energy projects, and a manufacturing sector that accounts for nearly one-third of India’s power consumption. Substation additions, particularly in the 220 kV and 400 kV segments, have been robust, with the 400 kV segment alone expanding from 30,560 MVA in FY 2019 to 40,540 MVA in FY 2025. Between 2023 and 2030, demand is expected to remain steady at around 381 transformer units annually, with a cumulative capacity of 118,390 MVA per year, providing a stable growth environment for manufacturers.

Meanwhile, the CRGO transformer component market is also on an upward trajectory, expected to grow from Rs 7,080 crore in FY 2025 to Rs 10,460 crore by FY 2030, at a CAGR of 8.1 per cent. India has emerged as a strong exporter, with component exports worth Rs 4,473.73 crore in FY 2025. Stricter import quality norms, including BIS certification—particularly for Chinese suppliers—are further strengthening opportunities for domestic players to enhance their presence in both local and global markets.

Financials:

(Source – Company’s RHP)

Balance Sheet Snapshot

(Source – Company’s RHP)

Key Metrics

(Source – Company’s RHP)

Key ratios

(Source – Company’s RHP

Listed Peer Comparison 

The company has reported healthy growth in revenue over the last three years, with sales rising from Rs 354 crore in FY23 to Rs 549 crore in FY25, reflecting a strong CAGR of 15.75 per cent. However, this topline expansion has not translated into effective cash generation. Trade receivables increased from Rs 87.44 crore in FY23 to Rs 129.35 crore in FY25, growing broadly in line with sales but showing a worrying uptick in FY25, where receivables stood at 23.54 per cent of sales compared to 19.66 per cent in FY24. This indicates a decline in collection efficiency and higher cash being locked in debtors. Inventory trends are even more concerning. While inventory was stable at around Rs 82 crore in FY23 and FY24, it jumped sharply to Rs 148.27 crore in FY25, rising at a CAGR of 21.89 per cent, well above revenue growth. As a result, inventory as a share of sales swelled to 27 per cent in FY25, pointing towards overstocking or slower turnover.

The pressure from rising receivables and inventory directly impacted cash flows. Cash generated from operations, which stood at Rs 27.39 crore in FY23 and improved to Rs 36.56 crore in FY24, slipped into negative territory at Rs 30.09 crore in FY25. As a percentage of sales, Cashflow from operations (CFO) dropped from 8.13 per cent in FY24 to -5.48 per cent in FY25, underscoring the company’s inability to convert profits into cash. Even though the cash conversion cycle improved briefly in FY24, it worsened again in FY25 due to working capital stress. Overall, while the business is growing in revenue terms, weakening cash flow generation driven by higher receivables and bloated inventories raises concerns over liquidity and operational efficiency.

Strengths

• Experienced Promoters & Management: Over 35 years of industry expertise; strong leadership from Rahul Mangal and team with proven track record in expanding domestic and international presence.
• Diversified Customer Base: Serves 128 customers across India and globally, including utilities, PSUs, and industrial groups, reducing dependence on specific markets.
• Backward & Forward Integration: In-house procurement and processing of CRGO, Amorphous, and ICB materials ensures quality control and cost efficiency; forward integration through transformer manufacturing and EPC services enhances value chain presence.
• Consistent Growth & Profitability: Profitable since inception with sustained revenue growth, supported by both domestic and international opportunities.
• Comprehensive Product Portfolio: Wide range of transformer components, transformers (5 KVA to 10 MVA), trading of CRGO/CRNO coils, and EPC substation services.
• Healthy Order Book: Order book of Rs 294 crore as of June 30, 2025, providing strong revenue visibility.

Weaknesses

• Raw Material Price Volatility: High dependence on CRGO and CRNO coils, with no long-term supplier agreements or hedging policies, exposing margins to fluctuations.
• Geographic Revenue Concentration: Around 71 per cent of FY25 revenue derived from Gujarat, Rajasthan, and Uttar Pradesh, increasing region-specific risks.
• Customer Dependence: Top 10 customers contribute nearly 50 per cent of revenues; loss of key clients or contracts could impact business stability.
• Lower Transformer Contribution: Transformer manufacturing accounted for only 23 per cent of FY25 revenue, limiting exposure to growing demand in the transformer market.
• Capital Intensive Operations: Requires substantial investment in plants, machinery, and raw materials; financing constraints could impact expansion and capacity building.

Valuation & Outlook

Mangal Electrical Industries Limited stands as a well-integrated power infrastructure company with strong technical credentials and a diversified customer base across government utilities, PSUs, private players, and international markets. Its presence in high-capacity transformer manufacturing up to the 765 kV class, coupled with approvals from PGCIL, NABL, and NTPC, underlines its strong industry positioning and credibility. The company’s ongoing capacity expansion plans, including the upgrade of its Unit IV facility and its focus on advanced technology adoption, are expected to enhance scalability, efficiency, and competitiveness. Additionally, the move towards 765 kV class approval provides a meaningful entry into higher-value projects, where demand visibility remains robust, especially with India’s growing transmission and distribution needs. At the upper price band of Rs 561, the issue is valued at Rs 1,550 crore, translating into a P/E of 32.8x, P/B of 2.02x, and EV/EBITDA of 20.7x, which appears fairly priced when compared with sector peers, considering the company’s growth prospects, technical expertise, and expansion strategy. Proceeds from the IPO are strategically planned to reduce debt, expand capacity, and support working capital, all of which are value-accretive in the medium term.

Recommendation

With India’s power demand growing steadily and substation capacity witnessing consistent expansion, transformer manufacturers are well placed to benefit from strong order inflows and long-term demand visibility. Mangal Electrical, with its established brand, advanced approvals, and capacity augmentation roadmap, is positioned to capture a significant share of this opportunity. While valuations are at the higher end, the company’s growth drivers, debt reduction plan, and operational efficiency improvements lend confidence. Hence, investors with a medium- to long-term investment horizon may consider subscribing to the IPO.