Powerica, a generator set maker, plans to raise Rs 700 crore through a fresh issue to repay debt and Rs 400 crore through an offer for sale. The promoter’s stake will fall from 100 per cent to 77.4 per cent after the IPO. The company has diversified into renewable energy and is expanding its wind energy portfolio. However, it relies heavily on a single supplier, Cummins India, for the engines used in the generator sets, which account for more than two-thirds of the total revenue. Furthermore, the company’s return on equity has been falling. Taking these factors into account, investors can expect to have greater clarity on financials after going public.Business
Established in 1984, Powerica is an integrated energy solutions company with a dual business model that encompasses diesel generator sets and wind power generation. The genset business remains the major revenue driver and contributed around 85 percent of the total revenue in FY25. It also provides large medium speed generators through collaboration with Hyundai. It operates three in-house manufacturing facilities located in Karnataka, Dadra & Nagar Haveli and Maharashtra serving industrial, commercial, data center and infrastructure customers.
The company diversified into clean energy in 2008 and has since built a wind energy business covering independent power production (IPP), EPC (Engineering, Procurement and Construction) and operations and maintenance (O&M) services. Its total installed operational wind capacity at the end of FY25 reached 279.6 megawatts (MW).
Finance
Revenue rose 5.3 per cent year-on-year to Rs 2,653 crore in FY25 from Rs 2,378 crore in FY23. Net profit rose 25.8 per cent to Rs 175.8 crore from Rs 106.5 crore during the period. However, Ebitda margin declined to 13 per cent in FY25 from 14 per cent in FY23, underperforming peers such as Cummins India and Kirloskar Oil Engines, which reported margins of 19-23 per cent.
Return on equity (ROE) declined to 17.5 per cent in FY25 from 26.5 per cent in FY24. Debt-to-net equity ratio fell to 0.2 in FY25 from 0.3 in FY23, but rose again to 0.4 in the first half of FY26 as the company ramped up ongoing wind projects.
Valuation
The issue is valued at a FY25/28 price-earnings (P/E) multiple based on post-IPO equity. Considering annualized earnings for FY26, the P/E is 18.6 for the company. Cummins India, which manufactures engines and power generation systems, is trading at a P/E of 52, while Kirloskar Oil Engines, engaged in diesel engines, agricultural equipment and power solutions, is trading at around 34.
