3 weeks ago
The ₹859 crore initial public offering (IPO) of Quality Power Electrical Equipments opens for subscription today, February 14. The IPO will comprise of a fresh issue of shares worth ₹225 crore, and an offer-for-sale of 1.49 crore shares worth ₹633.7 crore by the existing shareholders.
The IPO will close for subscription on Tuesday, February 18.
Quality Power IPO: Review
SBI Securities: Subscribe
Quality Power is valued at a FY24 price-to-earnings (P/E) ratio of 59.3x and an enterprise value to EBITDA (EV/EBITDA) multiple of 80.8x, based on the upper price band on the post-issue capital which looks expensive.
Although the company is doing well on financial metrics and generates healthy return ratios in the range of 34-36%, the brokerage believes the listing gains can be muted due to relatively stretched valuations. Hence, it recommends investors only with long term investment horizon to subscribe to the issue at the cut-off price.
Reliance Securities: Subscribe for long term
The brokerage wrote in its note that the company has a seasoned team which brings extensive industry experience and skilled workforce, enabling the company to capitalise on growth opportunities, acquire companies at strategic pricing driving growth, market expansion and effective project execution to scale stronger growth through its product offerings, unlocks geographical expansion and solidifying leadership in the energy transmission sector in the coming years. Hence, it recommends a subscribe to the issue for the long term.
Sushil Finance: Subscribe for long term
The brokerage believes the issue is reasonably priced. Quality Power is well positioned to capitalise on India's growing energy sector. Looking at all the factors, risks, opportunities and valuation, investors can apply to the issue with long term horizon, it said.
Quality Power IPO: Price band
Price band for the issue has been fixed between ₹401 - ₹425 per share.
Investors can bid for one lot of 26 shares and in multiples thereafter.
Quality Power IPO: GMP today
Ahead of the issue opening, the GMP is around ₹14, which is 3% premium over the IPO price.
However, it is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.
Quality Power IPO: Anchor investment
Ahead of the issue opening, the company has raised ₹386.41 crore from 21 institutional investors via anchor book on February 13.
Marquee institutional investors including LIC Mutual Fund, Bank of India MF, Maybank Securities, Ashish Kacholia-owned Bengal Finance & Investments, India Inflection Opportunity Fund, Kotak Iconic Fund, Mint Focussed Growth Fund, Bharat Value Fund, SBI General Insurance Company, Steptrade Revolution Fund, Benani Capital Scheme, Universal Sompo General Insurance Company, and IMAP India Capital Investment Trust invested in the company via anchor book.
Quality Power IPO: Objective
The company will spend fresh issue funds for the acquisition of Mehru Electrical and Mechanical Engineers, and purchase of plant and machinery. Further, the IPO money will also be utilised for inorganic growth through unidentified acquisitions, and general corporate purposes.
About Quality Power
Incorporated in 2001, Quality Power Electrical Equipments is engaged in the business of energy transition equipment and power technologies. The company provides high-voltage electrical equipment and solutions for grid connectivity and energy transition, specialising in power products across generation, transmission, distribution, and automation sectors.
The company achieved a 28.3% revenue CAGR (FY22-24) with export revenue contributing up to 80.7% (in FY24) and high capital efficiency with ROE of 29.2% and ROCE of 19.2% demonstrating strong market performance.
Pantomath Capital Advisors is the book-running lead manager of the Quality Power IPO, while Link Intime India is the registrar.
The allotment for the Quality Power IPO is expected to be finalised on February 19, 2025. Quality Power IPO will be list on BSE, NSE with a tentative listing date fixed as February 21, 2025.
