Mangal Electrical Industries, promoted by Rahul Mangal, specializes in processing transformer components, including transformer laminations, CRGO slit coils, amorphous cores, coil and core assemblies, wound and toroidal cores, and oil-immersed circuit breakers. It also trades CRGO and CRNO coils, as well as amorphous ribbons. Additionally, it manufactures transformers and customized products for the power infrastructure industry. Its transformer range spans from single-phase 5 KVA to three-phase 10 MVA units. It offers EPC services for setting up electrical substations, serving the power sector.

In FY25, transformer components contributed 70.4% of revenue with transformer manufacturing and EPC accounted for 23.1% and 6.4% respectively.

The company’s operations are integrated both backward and forward, which significantly enhances its operational efficiency and competitive advantage. On the backward integration front, it has developed in-house capabilities for procuring and processing critical raw materials like CRGO, Amorphous and ICB, ensuring consistent quality, cost control, and reduced dependency on external suppliers. This enables it to maintain a stable supply chain, mitigate price volatility risks, and achieve greater economies of scale in production. It uses its transformer manufacturing capabilities and transformer components in its EPC vertical to achieve forward integration.

The company operates five production facilities in Rajasthan, with an aggregate production capacity of (i) 16,200 MT for CRGO, (ii) 10,22,500 KVA for transformers and (iii) 75,000 units for ICB and (iv) 2,400 MT for Amorphous units per annum. While the capacity utilisation for CRGO and Amorphous is low at 57% and 59%, respectively, in FY25 that of ICB and transformers stood at 80% and 95%, respectively.

Most of the end-use customers for transformer/transformer components and EPC are primarily government related entities. Its customer mix primarily include governmental and municipal utilities such as Ajmer Vidyut Vitran Nigam Limited and Jaipur Vidyut Vitran Nigam Limited and private sector power equipment producers such as Voltamp Transformers, Transformers & Rectifiers, Shirdi Sai Electricals and Western Electrotrans.

Apart from catering to clients in domestic market, it has exported its transformer components to Netherlands, United Arab Emirates, Oman, United States of America, Malaysia, Italy and Nepal. In FY25, export revenue as proportion of total revenue from operations stood at 3.05%.

Dynamic Cables, a listed entity forms part of promoter group of the company apart from promoters.

The Issue & Objects of the Issue

The IPO comprises entirely of fresh issue of equity shares, aggregating to Rs 400 crore.

Of the net proceeds from the fresh issue, about Rs 87.8563 crore will be used to meet capital expenditure including civil works of Unit IV expansion at Reengus (Sikar District, Rajasthan); Rs 101.2665 crore for repayment/ prepayment, in full or in part, of certain outstanding borrowings availed by the company ; Rs 122 crore for funding working capital requirements of the company and balance for general corporate purposes.

Strengths

The order book (for all the business segments) as end of June 30, 2025, stood at Rs 294.1978 crore.

Strong backward and forward integration which ensures operational efficiency

The company’s Unit IV facility has obtained NABL certification and procured PGCIL approval for processing of transformers/ reactors up to 765 kV class. It has obtained NTPC approval for CRGO processing.

Weaknesses

Majority of the end-use customers for transformer/transformer components and EPC are primarily government related entities and thus exposed competitive bidding process through tenders.

Has in the past entered related party transactions and may continue to do so in the future. Of the total revenue from operations for fiscal 2025, 2024 and 2023 approximately 14.54%, 18.83% and 37.19%, respectively, was contributed by related party transactions.

The Top 10 customers accounted for 49.94% in FY25 and 43.36% of FY24 revenue.

Approximately 71% of the revenue in FY2025 was concentrated in just three states: Gujarat (31.22%), Rajasthan (19.33%), and Uttar Pradesh (20.14%).

Regulatory restrictions on the import of CRGO material may adversely impact the business operations and cost structure.

Cash flow from operations stood negative in FY25.

Slowdown in investment in the T&D sector in the country will have cascading impact on the order inflow and execution for the company.

Volatility in forex and commodity prices, especially CRGO.

Manufacturing facilities concentrated in Rajasthan.

Valuation

Consolidated re-stated revenue for the fiscal ended FY25 stood higher by 22% to Rs 549.42 crore. With the OPM expanding by strong 540 bps to 14.9%, the growth at OP was 92% to Rs 81.84 crore. Finally, net profit more than doubled (up 126%) to Rs 47.31 crore.

On an expanded equity (at the upper price band) the EPS for FY2025 was Rs 17.1. The P/E at the upper price band works out to 32.8 times of its FY25 EPS. The company quotes at a P/BV of 2.8 times. On FY25 sales, the company trades at 3.1 EV/sales.

In comparison, Jay Bee Laminates and Vilas Trascore quotes at a PE of 19.6 times and 37.1 times of their FY25 EPS and at a P/BV of 3.4 times and 4.4 times, respectively. Indo Tech Transformer, transformer player of similar sales though not a mirror business of the company quotes at a PE of 31.4 times and a P/BV of 7.1 times.