Powerica IPO Subscribed Only 2% on Day 2: Should You Invest?

Introduction

The initial public offering (IPO) of Powerica Limited, a Mumbai-based integrated power solutions provider, has met with a subdued response from investors. On the second day of bidding, March 25, 2026, the ₹1,100 crore issue was subscribed by just 2%. This lukewarm demand comes despite the company raising a significant amount from anchor investors and reflects cautious sentiment in the market, further evidenced by a weak Grey Market Premium (GMP).

Subscription Details Unpacked

By the end of the second day, the IPO received bids for just over 5 lakh shares against the total 2.05 crore shares on offer. The breakdown across investor categories highlights the lack of broad-based interest. The portion reserved for Retail Individual Investors (RIIs) was subscribed 4%, while the Non-Institutional Investors (NIIs) category saw a mere 1% subscription. Most notably, the Qualified Institutional Buyers (QIBs) segment is yet to see any significant bids, a factor often watched closely by market participants as an indicator of institutional confidence.

Grey Market Premium Signals Muted Listing

The sentiment in the unofficial grey market, often considered a preliminary indicator of listing performance, has been unenthusiastic. The Grey Market Premium (GMP) for Powerica shares slipped from ₹4 at the start of the IPO to its current level of around ₹2-₹5. This suggests a potential listing gain of just over 1% above the upper price band of ₹395. Such a low premium indicates that the market does not anticipate a strong debut for the stock, which may be discouraging short-term investors.

A Closer Look at the IPO Offer

Powerica's public offering, which closes on March 27, 2026, aims to raise ₹1,100 crore. The issue is a combination of a fresh issue of shares worth ₹700 crore and an Offer for Sale (OFS) of ₹400 crore by existing shareholders. The company has set a price band of ₹375 to ₹395 per share. At the upper end of this band, Powerica is valued at approximately ₹4,998.6 crore. Ahead of the public issue, the company successfully garnered ₹329.40 crore from anchor investors.

Company Financials and Business Model

Powerica has a long-standing presence in the power solutions industry, primarily specializing in diesel generator (DG) sets and medium-speed large generators (MSLG). The DG sets division, powered by a strong partnership with Cummins, accounts for over 80% of its revenue. The company also expanded into the wind power sector in 2008.

Financially, Powerica reported a 20% increase in revenue to ₹2,653.3 crore for FY25 from ₹2,210 crore in the previous year. However, its profit after tax declined by 26.3% to ₹166.8 crore in FY25 from ₹226.3 crore in FY24, mainly due to a reduction in other income. For the six months ending September 2025, the company recorded a profit of ₹129 crore on revenue of ₹1,447.44 crore.

Use of IPO Proceeds

The company intends to utilize a significant portion of the net proceeds from the fresh issue to strengthen its balance sheet. Approximately ₹525 crore is earmarked for the repayment or prepayment of its outstanding borrowings, which stood at ₹1,214.25 crore as of February 2026. The remaining funds will be allocated for general corporate purposes.

Analyst Recommendations

Despite the weak market response, some brokerage firms have expressed a positive long-term outlook. SBI Securities has recommended investors to 'Subscribe' for the long term, valuing the company at 19.4 times its annualized FY26 earnings. Similarly, Canara Bank Securities has issued a 'SUBSCRIBE for Long-Term Investment' rating, citing the company's diversified platform, strong partnerships, and attractive valuation relative to its peers. However, they also pointed out risks such as dependence on key partners and regulatory challenges.

Conclusion

The Powerica IPO is currently navigating a challenging environment marked by investor caution. The low subscription figures on the second day, coupled with a negligible GMP, suggest that the offering may struggle to generate significant momentum before it closes. While long-term fundamentals and positive analyst ratings provide some support, potential investors will be closely watching for any pickup in demand, particularly from institutional buyers, on the final day of bidding.