Prostarm Info Systems IPO: Should You Subscribe?

Prostarm Info Systems Ltd, a Maharashtra-based power solutions manufacturer, launched its initial public offering (IPO) on May 27, 2025, with bidding closing on May 29, 2025. Ahead of the opening, the grey market premium (GMP) surged to Rs 25, reflecting a 24% premium.

However, investors are advised to carefully consider both the opportunities and risks before subscribing. For a detailed review, read our comprehensive IPO analysis below.

Prostarm Info Systems IPO Details 

• Issue Details: Mainstream
• Issue Size: Rs 168 crore
• Price Band: Rs 95 – Rs 105
• Lot Size: 142 shares
• Listing Date: June 3, 2025

Overview of Prostarm Info Systems Ltd

Prostarm specializes in the design, manufacturing, assembly, sale, servicing and supply of energy storage and power conditioning equipment, including UPS systems, inverter systems, lift inverters, solar hybrid inverters, lithium-ion battery packs, servo-controlled voltage stabilizers, etc. It operates 3 manufacturing units located in Maharashtra.

The company also sells and supplies third-party power solution products, including batteries, reverse logistics and end-of-life products, as well as IT equipment, solar panels and allied products. Additionally, it executes rooftop solar photovoltaic power plant projects on an EPC basis, supported by a network of 21 branch offices and 2 storage facilities spanning 18 states and 1 union territory in India.

Prostarm Info Systems Key Strengths

• Solid Financial Growth: From FY22 to FY24, Prostarm delivered a strong CAGR of 23% in operational revenue, 49% in EBITDA and 45% in net profit.
• Robust Return Metrics: Prostarm demonstrates strong operational efficiency with impressive return metrics— Return on Net Worth (RoNW) at 32.09% and Return on Capital Employed (RoCE) at 32.41% in FY24—surpassing its listed peers.
• Expanding Profit Margins: Profitability has strengthened consistently, with EBITDA margins increasing from 9.67% in FY22 to 14.20% in FY24 and net profit margins rising from 6.35% to 8.84% over the same period.
• Diverse Industry Presence: Prostarm serves a wide range of end-use sectors, including healthcare, aviation, research, BFSI, railways, defence, security, education, renewable energy, IT, oil & gas. Key clients include PSU Banks, L&T, Tata Power, Bajaj Finance, etc. The firm is also an empanelled vendor for prestigious entities such as Airports Authority of India, Telangana State Technology Services, Railtel and NTPC Vidyut Vyapar Nigam.
• Strong Customer Retention: In FY24, Prostarm served 700+ customers, with 40% having a relationship of three or more years. These long-term customers contributed 40% of the operating revenue in FY24, highlighting sustained client loyalty and recurring business.

Prostarm Info Systems Risk Factors

• Client Concentration: As of December 31, 2024, approximately 72% of Prostarm’s revenue is derived from its top 10 customers. A decline in business from these key customers could adversely affect its operations and results.
• Cash Flow Concerns: Prostarm has reported negative operating cash flow for the nine months ending December 31, 2024, as well as for FY24 and FY23. Persistent negative cash flows may impact business continuity and financial health.
• Legal Risks: Prostarm and its promoters, directors and subsidiaries are currently involved in legal proceedings with outstanding claims totalling ~Rs 30.8 crore. A negative outcome from these legal challenges could harm the company’s reputation, financial health and cash flows.
• Contingent Liabilities: As of December 31, 2024, Prostarm reported contingent liabilities of Rs 25.75 crore, which, if materialized, could adversely affect its financial position.

Final Thoughts: Should You Subscribe to Prostarm Info Systems’ IPO?

Prostarm Info Systems has shown strong financial growth, backed by industry-leading return ratios and profitability margins. FY25E growth also looks promising based on annualized figures.

From a valuation perspective, the IPO appears reasonably priced with a price-to-earnings (P/E) ratio of 19x based on FY24 earnings. The grey market premium (GMP) for the IPO further indicates a positive listing on the stock exchanges.

Given the company’s diversified product portfolio, solid financials and fair valuation, investors may consider subscribing to the IPO with a medium-to-long term perspective.

For a deep dive into other IPOs, explore: IPO Corner on Liquide