The initial public offer of TD Power Systems may be worth subscribing to, for investors with a 3-year horizon. The offer price of Rs 256-261 discounts the company's expected per share earnings for FY-13 by a modest 9.8 times, at the higher end of the price band. A sound balance sheet with low debt, positive operating cash flows in the last three years, stable profit margins even during the slowdown and superior return on equity are positive factors.
The company may find favour given the market’s current focus on companies with low debt and healthy cash flows. The company manufactures alternating current (AC) generators, the company’s growing presence in the Engineering Procurement and Construction (EPC) space in the less than 150 MW captive power project segment has helped integrate operations, thus generating superior profit margins. The offer closes on August 26. Read the detailed analysis in Business Line’s print edition on Thursday.