IPO-bound GK Energy faces operating losses, rising costs

New Delhi, May 6 (IANS) GK Energy Limited, a company specialising in solar-powered agricultural water pump systems, is preparing to launch its initial public offering (IPO) after receiving final approval from the Securities and Exchange Board of India (SEBI) last month.

However, ahead of the public issue, the company’s financials show that operating losses and expenses increased in the first half of the financial year (FY25).

According to its draft red herring prospectus (DRHP), GK Energy's total expenses more than doubled to Rs 352.93 crore for the six months ended September 30, 2024, up from Rs 168.17 crore in the same period the previous year.

This steep rise in costs weighed heavily on the company's operations, with cash used in operating activities plunged by nearly 1,084 per cent to Rs 119.11 crore for the six months ended September 30, 2024, compared to a Rs 10.06 crore in the same period in the previous year.

However, GK Energy’s revenue from operations rose to Rs 421.90 crore for the six months ended September 30, 2024, up by nearly 140 per cent from Rs 175.98 crore in the same period the previous year.

Total income also increased to Rs 423. 63 crore from Rs 176. 43 crore. Net profit jumped to Rs 51. 08 crore from Rs 6.1 crore, the company said in its DRHP.

GK Energy’s IPO will include a fresh issue of shares worth up to Rs 500 crore and an offer for sale (OFS) of 84 lakh equity shares by promoters Gopal Rajaram Kabra and Mehul Ajit Shah.

Of the Rs 500 crore fresh issue, Rs 422.45 crore will be used to meet long-term working capital needs, while the rest will be directed towards general corporate purposes.

The company also plans to reserve a portion of the IPO for eligible employees. IIFL Capital Services Limited and HDFC Bank Limited are the book-running lead managers, while Link Intime India Private Limited is acting as the registrar.

--IANS

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