Sterlite Power Transmissions IPO Company Profile :
Sterlite Power Transmissions Limited is a leading private-sector power transmission infrastructure developer and solutions provider, operating in Brazil and India. According to CRISIL Research, the company is the largest private player in terms of project portfolio under the inter-state TBCB route (“Tariff Based Competitive Bidding”), with a market share of 26% of transmission projects. Further, according to data from the Brazilian Electricity Regulatory Authority (“ANEEL”), the company has a 13% market share of the transmission projects auctioned by ANEEL in the period January 2017-June 2021.
Sterlite Power Transmissions Limited develops integrated power transmission infrastructure and provides solution services through two business units:
- Global Infrastructure business:
It has a global focus, with operations currently in India and Brazil. Global Infrastructure business unit bids for, constructs, designs, owns, and operates power transmission assets. As part of the business model, the company has monetized a number of operational/partially operational projects in the past, which has provided it with a means of capital rotation. The company’s ability to monetize the operational projects allows it to generate growth capital and helps in its endeavor to keep the balance sheet asset-light.
- Solutions business unit:
It consists of the products sub-unit, which manufactures and supplies a wide range of products including high-performance power conductors, optical ground wire (“OPGW”), and extra-high voltage (“EHV”) cables; and the Master System Integration (“MSI”) sub-unit, which provides bespoke solutions for the upgrade, uprate and fiberzation of existing transmission infrastructure projects.
- Convergence business unit:
It leverages existing power utility infrastructure for telecommunications purposes by building optical fibre infrastructure on top of existing utility networks. While the contribution of the Convergence business unit to the company’s overall business is currently minor, it believes that the business provides an opportunity for future growth.
Sterlite Power Transmissions IPO Details:
| IPO Open Date | Not Available |
| IPO Close Date | Not Available |
| Listing Date | Not Available |
| Face Value | ₹2 per share |
| Price | Not Available |
| Lot Size | Not Available |
| Issue Size | [●] shares
(aggregating up to ₹1250 Cr) |
| Pre-IPO Placement | [●] shares
(aggregating up to ₹220 Cr) |
| Fresh Issue | [●] shares
(aggregating up to ₹1250 Cr) |
| Offer for Sale | Not Applicable |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| QIB Shares Offered | Not more than 75% of the Offer |
| NII (HNI) Shares Offered | Not less than 15% of the Offer |
| Retail Shares Offered | Not less than 10% of the Offer |
| Company Promoters | Twin Star Overseas Limited and Anil Agarwal |
Sterlite Power Transmissions IPO Financial Analysis:
| Particulars | FY-21(in cr.) | FY-20(in cr.) | FY-19(in cr.) | CAGR |
| Revenue from Operations | 2092.39 | 3004.32 | 3555.01 | -16.2% |
| Other Income* | 1724.57 | 2154.00 | 16.45 | |
| Cost Of Operations | 1438.44 | 1980.28 | 2424.97 | |
| Employee Cost | 230.13 | 244.57 | 165.49 | |
| Other expenses | 450.67 | 527.84 | 521.38 | |
| EBITDA | 1697.72 | 2405.63 | 459.63 | 54.6% |
| EBITDA margin% | 44.48% | 46.64% | 12.87% | |
| Depreciation | 2.96 | 241.01 | 390.94 | |
| Interest | 535.56 | 734.62 | 584.97 | |
| Share of profit of associates and joint venture | 0.58 | 0.87 | 32.60 | |
| Exceptional Item | 0.00 | 92.59 | 0.00 | |
| PBT | 1159.78 | 1338.28 | -483.67 | |
| Total tax | 289.65 | 395.31 | 41.12 | |
| PAT | 870.12 | 942.97 | -524.80 | |
| PAT margin% | 41.59% | 31.39% | -14.76% |
*- Major part of other income comes from the net gain on the sale of power transmission assets.
Sterlite Power Transmissions IPO Revenue from Operations:
| Segment | FY-21(in cr.) | % | FY-20(in cr.) | % | FY-19(in cr.) | % | CAGR |
| sale of conductors and power cables | 1220.68 | 58.34% | 1172.47 | 39.03% | 1602.14 | 45.07% | -8.7% |
| engineering, procurement and construction (EPC) contracts | 390.95 | 18.68% | 503.15 | 16.75% | 717.70 | 20.19% | -18.3% |
| power transmission services | 207.66 | 9.92% | 330.06 | 10.99% | 460.65 | 12.96% | -23.3% |
| construction of concession assets | 116.87 | 5.59% | 644.82 | 21.46% | 680.09 | 19.13% | -44.4% |
| concession assets | 64.65 | 3.09% | 130.61 | 4.35% | 42.23 | 1.19% | 15.3% |
| operation & maintenance of concession assets | 1.65 | 0.08% | 3.91 | 0.13% | 0.00 | 0.00% | – |
| sale of traded goods | 58.88 | 2.81% | 192.38 | 6.40% | 17.17 | 0.48% | 50.8% |
| project consultancy services | 7.55 | 0.36% | 0.00 | 0.00% | 0.00 | 0.00% | – |
| network infrastructure | 0.66 | 0.03% | 0.24 | 0.01% | 0.00 | 0.00% | – |
| Other operating revenue | 22.85 | 1.09% | 26.69 | 0.89% | 35.03 | 0.99% | -13.3% |
| Total | 2092.39 | 100.00% | 3004.32 | 100.00% | 3555.01 | 100.00% | -16.2% |
Sterlite Power Transmissions IPO Strengths:
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Sterlite Power Transmissions Limited is well-positioned to benefit from this increased deployment of renewable energy going forward. As India shifts to a cleaner source of energy, there will be an increased need for a robust transmission grid to connect the centers of renewable energy generation, which are mainly concentrated in the West and South, to demand centers in the North. According to CRISIL Research, to service a large generation installed base, the estimated investment in the transmission sector is expected to be ₹ 3.5-4.0 trillion over the next five years.
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Sterlite Power Transmissions Limited is the largest private player in terms of project portfolio under the inter-state TBCB route, with a market share of 26% of transmission projects awarded through the TBCB route, which is second only to Power Grid Corporation of India Limited (“PGCIL”), the Indian state-owned electric utility company.
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Sterlite Power Transmissions Limited has in-house capabilities to undertake end-to-end project design. Coupled with the use of key technologies such as robotics and aerial technology, the company is able to execute projects and deliver solutions in a timely manner, with high quality and safety standards
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Sterlite Power Transmissions Limited‘s ROCE was 1.97%, 40.22% and 36.68% for FY2019, FY2020 and FY2021, which reflects the profitability and capital efficiency of the business. The company seeks to maintain an efficient capital structure by raising long-term project financing and having access to multiple sources of funding including financial institutions, public, and private sector banks and non-bank financial companies (“NBFCs”), and the capital markets.
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Sterlite Power Transmissions Limited has integrated ESG best practices into many of the business processes. The company’s ESG focus is demonstrated through sustainable practices adopted throughout the project life cycle, such as optimizing transmission routes to minimize the impact on the environment and bio-diversity, innovations such as tree translocation, and drone-stringing and adopting a “safety-first” culture.
Sterlite Power Transmissions IPO Risk Factors:
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A significant portion of the company’s total income in prior years is derived from net gain on the sale of the completed projects. There is no assurance that the company will be able to successfully sell its Ongoing Projects as they reach operational stages going forward.
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The market for investing in power transmission projects, and energy infrastructure generally, is highly competitive, and the number and variety of investors for energy infrastructure assets has been increasing, which may therefore affect the company’s ability to sustain or increase the growth of the business.
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Revenues from the top three customers in Sterlite Power Transmissions Limited’s solutions (products) business amounted to 32.44%, 20.66%, and 27.42% of the revenue from operations in the Solutions business, respectively. If these customers stop purchasing or significantly reduce their purchases for any reason, the company may not be able to find other customers to replace them, which may adversely affect the business, financial condition, cash flows, prospects, and results of operations of the company
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Sterlite Power Transmissions Limited has a substantial amount of outstanding borrowings, which requires significant cash flows to service, and limits the company’s ability to operate freely.
Objects of the Issue:
Sterlite Power Transmissions Limited proposes to utilize the Net Proceeds from the Issue towards funding the following objects:
- Repayment or pre-payment, in full or part, of certain borrowings availed by the Company and KTL;
- General corporate purposes.
Sterlite Power Transmissions Limited IPO Prospectus:
- Sterlite Power Transmissions Limited IPO DRHP –
- Sterlite Power Transmissions Limited IPO RHP –
Registrar to the Issue:
KFin Technologies Private Limited
Contact Person: M. Murali Krishna
Tel.: +91 40 6716 2222
E-mail: sptl.ipo@kfintech.com