IPO Note : Pace Digitek Ltd by Choice Broking Ltd
Salient features of the IPO:
* Pace Digitek Ltd. (PDL) incorporated in 2007, is a telecom infrastructure solutions provider for telecom tower erection and optical fibre cable (OFC) laying, engaged in services like manufacturing, installation, commissioning, and operations & maintenance. It operates across 3 verticals: telecommunications, energy, and information & communication technology (ICT), with presence in several Indian states along with operations in Myanmar and Africa. Following its 2014 acquisition of GE Power Electronics India and the ‘Lineage Power’ brand, it expanded into end-to-end direct current power systems manufacturing, further strengthened by backward integration through subsidiary Lineage Power Pvt. Ltd. in FY23. PDL is also executing projects for solarization of telecom towers.
* This issue is an entirely fresh issue (Rs. 819.15cr). From the fresh issue net proceeds, the company will be utilizing Rs. 630cr for funding capital expenditure requirement for investment in subsidiary, Pace Renewable Energies Pvt Ltd, for setting up battery energy storage systems (BESS) for a project awarded by the Maharashtra State Electricity Distribution Company Ltd (MSEDCL). Residual proceeds will be used for general corporate purposes.
Key competitive strengths:
* End-to-end solution provider with integrated operations in telecom sector
* Diversified business segments with strong order book
* Experienced Board of Directors buttressed by technically proficient and qualified senior management personnel and employees
* Advanced manufacturing facilities with production efficiency
* Track record of financial and operational performance with profitable growth
Business strategy:
* Through Lineage, it has recently commenced manufacturing BESS and undertake projects and intend to grow these operations
* Deepen its existing products and services offerings and expand geographical reach
Risk and concerns:
* Customer concentration (~89% from top 3 customers)
* Technology obsolescence
* High dependency on telecom sector
* Significant proportion of orders from government related entities
* Competition
Valuation Overview and IPO Rating:
Pace Digitek Ltd. incorporated in 2007, is a multi-disciplinary telecom infrastructure solutions provider with operations spanning telecom, energy, and ICT. Through its subsidiary Lineage, it manufactures telecom tower equipment, lithium-ion battery systems, and advanced BESS, supported by three large facilities in Bengaluru. The company has evolved from a pure equipment manufacturer to a turnkey solutions player with strengths in backward integration, diversified verticals, government-backed projects (solarization, rural electrification, KAVACH), and expansion into African markets. With India’s renewable energy push and rising demand for energy storage solutions, PDL is strategically placed to benefit from long-term industry growth
At the upper end of its price band, the company is valued at a P/E of 16.9x (FY25 EPS of Rs. 12.9) and EV/Sales of 1.6x, which is at a discount to peers. A robust order book ensures steady revenue visibility, while its integrated business model drives cost efficiency and quality control. Supported by strong sector tailwinds in renewable energy and geographic diversification. Thus, we recommend a “SUBSCRIBE” rating.
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SEBI Registration no.: INZ 000160131
