IPO Size: Rs. 819 cr, Entirely Fresh Issue

• for Rs. 630 cr capex of a new BESS project

Price band: Rs. 208-219 per share

• Raised Rs. 348 cr between Aug 2024 to Jan 2025, from individuals, in 4 tranches, all at Rs. 140 per share  

M cap: Rs. 4,727 cr, implying 17% dilution

IPO Date: Fri 26^th Sep to Tue 30^th Sep 2025, Listing Mon 6^th Oct 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Telecom Infra Company Diversifying into Renewable Energy

Pace Digitek is a Bengaluru based, telecom infra company, undertaking turnkey projects for mobile towers and optic fibre cables. ~94% of FY25’s Rs. 2,439 cr revenue comes from telecom vertical. Company has recently diversified into renewal energy sector, through solar energy projects, lithium-ion battery manufacture and BEES (battery energy storage system).  

Greenfield Capex

It has won 750 MW / 1,500 MWH BESS project in 75 sub stations, of Maharashtra State Electricity on a ‘build, own, operate’ basis, for total cost of Rs. 1,851 cr. Rs. 630 cr will be funded via IPO while Rs. 1,220 cr debt has been tied-up from IREDA. Based on tariff entitlement of Rs. 2.19 lakh / MW / month, the project has potential to give Rs. 180 cr topline, per annum from commissioning, for 12 years.

High Margin, due to Integration of Product, Project and O&M/AMC

FY25 revenue of Rs. 2,439 cr, comprised healthy margins of 21% EBITDA and 11% net. FY25 PAT stood at Rs. 268 cr, leading to an EPS of Rs. 16.3.

Nearly entire business is from PSUs (such as BSNL) hence debtors outstanding are as high as 9 months of sales, or Rs. 1,843 cr, on Rs. 2,439 cr, although net working capital is closer to 4 months. As of 31.3.25, net worth stands at Rs. 1,170 cr, with a healthy RoE of 23% and net debt reduced to Rs. 161 cr, out of repayment from pre-IPO funds.

Healthy Order Book

Current order book of Rs. 7,633 cr, implies 3.1x book-to-bill ratio, and is split as Rs. 3,570 cr telecom, Rs. 2,470 cr BESS, Rs. 2,400 cr solar projects. Company guides order execution in the next 18 months, with an attractive bid pipeline of 20 submission in FY25 and 14 under evaluation.

Very Strong Outlook

Telecom is likely to be more of an annuity-like, for tower AMC, instead of new rollout. Energy business is complimentary to company’s telecom vertical, with supply of solar module and lithium-ion battery for tower installation and commissioning. By FY27E, energy vertical will become very meaningful, with approximate 50% of revenue contribution, indicating huge long term growth visibility.

Company has recently won an off-grid solar water pumping project and plans to backward integrate to solar cell and module manufacturing, as also, bidding for ‘Kavach’ protection system of Indian Railways.  

Attractive Pricing

M cap of Rs. 4,730 cr and Enterprise Value (EV) of Rs. 4,670 cr implies a PE multiple of 17x and EV/EBITDA of 9.3x, on historic basis. While IPO is priced at 56% higher than the last fund raise, about 13 months ago, huge growth opportunity with double digit net margin overshadow large working capital requirement. This pricing is inexpensive, with 69.5% promoter holding, post listing, also indicting prudent capital deployment with minimal dilution.