Prostarm Info Systems Limited, an integrated power solutions provider based in Navi Mumbai, India, has recently launched its Initial Public Offering (IPO). This analysis aims to provide general investors with a clear overview of the company, its financial health, the market it operates in, and the potential opportunities and risks associated with this investment opportunity.
Table of Contents
- Company Overview and Business Model
- Prostarm IPO Financial Performance
- Prostarm Info Systems IPO Details
- Power Solutions Industry Outlook
- Prostarm IPO Risks
- Should You Subscribe to the Prostarm Info Systems IPO?
- Frequently Asked Questions (FAQs)
Established in 2008, Prostarm Info Systems is a specialist in the design, manufacturing, and sale of energy storage and power conditioning equipment.
Key offerings include:
- Uninterruptible Power Supply (UPS) systems
- Inverter systems
- Solar hybrid inverter systems
- Lithium-ion battery packs
- Servo-controlled voltage stabilisers
- Isolation transformers
Additional services:
- Sale of third-party batteries
- Reverse logistics
- End-of-life disposal services for UPS systems and batteries
- Rooftop solar power plant projects in India on an Engineering, Procurement, and Construction (EPC) basis
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Key clients:
- Larsen & Toubro Ltd
- Tata Power Co. Ltd
- Bajaj Finance Ltd
Prostarm demonstrates a significant national footprint with ambitions for international expansion.
Prostarm Info Systems has exhibited robust financial growth in recent years, making its performance a key highlight for potential investors.
Highlights:
Revenue Growth:
- FY24 revenue: ₹257.87 crore
- FY24 Profit After Tax (PAT): ₹22.79 crore
- 9M FY25 revenue: ₹270.27 crore
- 9M FY25 net profit: ₹22.11 crore
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Compounded Annual Growth Rate (CAGR) FY22–FY24:
- Revenue CAGR: 23%
- EBITDA CAGR: 49%
- PAT CAGR: 43%
Profitability Ratios (FY24):
- Return on Equity (ROE): 37.86%
- Return on Capital Employed (ROCE): 22.95%
- PAT Margin: 4.75%
These figures suggest strong operational efficiency and a proven ability to convert revenue into profit.
Prostarm Info Systems IPO Valuation & Peer Comparison
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Company
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P/E Ratio (approx.)
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Prostarm Info Systems (IPO upper band)
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20.2x
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Servotech Power Systems
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243x
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Sungarner Energies
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55x
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The Prostarm Info Systems IPO is a fresh issue of 1.60 crore (16,000,000) equity shares, aiming to raise a total of ₹168 crore. Importantly, there is no Offer for Sale (OFS) component, meaning all proceeds will directly benefit the company.
Key details:
- Offer Price: ₹95 to ₹105 per equity share
- Lot Size: Minimum application lot size of 142 equity shares
- Key Dates:
- IPO opening: 27 May 2025
- IPO closing: 29 May 2025
- Tentative listing: 3 June 2025 on BSE and NSE
Use of Proceeds:
- ₹72.50 crore for meeting capital needs, particularly working capital requirements
- ₹17.95 crore for repayment of certain debts
- Remaining funds for inorganic growth initiatives, unspecified acquisitions, other strategic endeavours, and general corporate purposes
Want to understand the Prostarm Info Systems IPO better? Watch this quick video!
Prostarm operates in the integrated power solutions sector, which is experiencing significant growth driven by increasing energy demands across industrial and mission-critical sectors.
Growth Drivers:
- Robust demand in sectors requiring uninterrupted power (data centres, healthcare, defence)
- Rising adoption of renewable energy sources, particularly solar
- Push for cleaner, greener energy solutions
Government Initiatives:
- Production-Linked Incentive (PLI) schemes promoting the manufacturing of advanced energy storage systems like lithium-ion batteries
Competitive Positioning:
- Faces competition from organised and unorganised players
- Valuation at upper price band ₹105: ~20.2x annualised FY25E EPS
- Significantly lower valuation compared to Servotech Renewable Power System (P/E of 243) and Sungarner Energies (P/E of 55)
- Attractive entry point for investors
Strategic Advantages:
- Diverse and evolving product range
- Strong relationships with domestic customers
- Strategic sourcing from India and China
- Growing focus on exports
- Expansion-ready infrastructure
- Continuous investment in design and customisation capabilities
These factors position Prostarm to capitalise on future market growth.
Curious about what other companies are coming up with their IPOs? Don’t miss our complete list of Upcoming IPOs in the Indian Stock Market.
While the opportunities are compelling, investors should be aware of the inherent risks associated with investing in Prostarm Info Systems:
- Negative Operating Cash Flows:
Experienced negative operating cash flows for three consecutive years (FY23, FY24, 9M FY25) due to increased trade receivables, inventory build-up, and capital investments. Indicates a working capital-intensive model requiring careful management.
- Customer Concentration:
A significant portion of revenue relies on a limited number of clients. Loss of any major customer could adversely impact financial performance.
- Legal and Regulatory Risks:
Received a show cause notice under the Customs Act, 1962. An unfavourable ruling could lead to penalties and reputational damage. Also exposed to policy-driven delays via government tenders and PSU orders.
- Competitive Intensity:
Highly competitive power solutions market, which could pressure pricing and market share.
- Debt Servicing:
Debt service coverage ratio declined from 10.3 in FY22 to 5.59 in FY24. IPO proceeds are partly intended for debt repayment.
- International Expansion Challenges:
Risks of foreign regulatory hurdles, currency fluctuations, political instability, and logistical inefficiencies.
- Working Capital Needs:
Rising inventory and receivables suggest increasing working capital needs. Inadequate management or financing could impede operations and scalability.
- Technology Obsolescence:
Rapid technological advancements in power electronics and energy storage pose a risk of obsolescence if the company fails to innovate.
- Grey Market Premium (GMP):
As of the IPO opening, GMP stands at ₹0, indicating no anticipated immediate listing gains, which might deter short-term investors seeking quick profits.
Brokerage firms and market analysts have largely given a ‘Subscribe’ rating for the Prostarm Info Systems IPO, particularly for long-term investors.
Positives Highlighted:
- Diverse product portfolio
- Broad customer base
- Strategic operational strengths
- Strong financial growth
Valuation:
- Approximately 20.2x its annualised FY25E EPS at the upper price band
- Reasonable compared to listed peers with higher multiples
Cautionary Notes:
- Negative operating cash flows
- Customer concentration risk
Use of IPO proceeds:
- Debt reduction
- Working capital management
- Inorganic growth initiatives
Final Thought:
Investors with a long-term investment horizon and an appetite for growth in the critical power and energy solutions sector may find Prostarm Info Systems an interesting proposition. However, those seeking immediate listing gains or averse to the identified risks should exercise caution.
1️. What does Prostarm Info Systems Limited do?
Prostarm Info Systems Limited is an integrated power solutions provider based in Navi Mumbai, India. The company specialises in the design, manufacturing, and sale of products like UPS systems, inverters, solar hybrid inverters, lithium-ion battery packs, voltage stabilisers, isolation transformers, and offers services including rooftop solar EPC projects, reverse logistics, and end-of-life UPS and battery disposal.
2️. When is the Prostarm Info Systems IPO opening and closing?
The Prostarm Info Systems IPO is scheduled to open for subscription on 27th May 2025 and will close on 29th May 2025. The tentative listing date is 3rd June 2025 on the BSE and NSE.
3️. What is the Prostarm Info Systems IPO price band and lot size?
The IPO price band is set at ₹95 to ₹105 per equity share. The minimum lot size for application is 142 shares.
4️. How will Prostarm Info Systems use the IPO proceeds?
The company plans to use the IPO funds for:
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₹72.50 crore towards working capital requirements
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₹17.95 crore for debt repayment
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The remaining amount for inorganic growth initiatives, acquisitions, and general corporate purposes.
5️. Is Prostarm Info Systems IPO worth subscribing to?
Brokerage firms and analysts have given a ‘Subscribe’ rating for long-term investors owing to the company’s strong financial growth, diverse product range, strategic operational strengths, and reasonable valuations. However, potential investors should carefully consider risks like negative operating cash flows, customer concentration, and competitive pressures.
6️. What is the Prostarm Info Systems IPO GMP today?
As of the IPO opening day, the Grey Market Premium (GMP) for Prostarm Info Systems IPO stands at ₹0, suggesting no anticipated listing gains in the unlisted market.
7️. Who are the key competitors of Prostarm Info Systems?
Key competitors in the integrated power solutions space include: