Quality Power Electrical Equipments is set to launch its public issue from 14 to 18 February 2025. Asit C. Mehta Investment Intermediates (ACMIIL) has expressed confidence in the company’s prospects, highlighting its leadership in high-voltage electrical solutions and strong global presence. Investor interest is high, given the company’s financial strength and role in power infrastructure.
Company Overview
Quality Power Electrical Equipments specializes in power generation, transmission, distribution, and automation solutions. It is one of the few global companies manufacturing high-voltage equipment crucial for High Voltage Direct Current (HVDC) and Flexible Alternating Current Transmission Systems (FACTS). Its product portfolio includes:
- Transformers
- Reactors
- Line tuners
- Capacitor banks
- Harmonic filters
- Grid interconnection solutions like STATCOM and SVC
The company serves over 210 customers across 100 countries, spanning industries such as automobiles, oil and gas, cement, chemicals, railways, and renewable energy. Several Fortune 500 companies are among its clientele.
Financial Performance and Growth Potential
ACMIIL’s analysis underscores Quality Power’s financial strength:
- Revenue Growth: INR 300.6 crore in FY24, with a CAGR of 28% over FY22-24.
- Profitability: Profit After Tax (PAT) grew from INR 42.2 crore in FY22 to INR 55.5 crore in FY24.
- Strong Margins: PAT margin stood at 32.2% in H1FY25, showcasing operational efficiency.
- Capital Efficiency: ROE at 42.0%, ROCE at 31.7% in H1FY25.
- Low Debt: Debt-to-equity ratio of 0.1x, with a working capital cycle of just 47 days.
Quality Power – IPO Details
- IPO Dates: 14 – 18 February 2025
- Price Band: INR 401 – 425 per share
- Issue Size: INR 822.9 – 858.7 crore
- Fresh Issue: INR 225.0 crore
- Offer for Sale (OFS): 1.49 crore shares (INR 597.9 – 633.7 crore)
- Post-Issue Market Cap: INR 3,118.2 – 3,291.4 crore
- Retail Investor Allocation: 10%
- Listing on: NSE & BSE
Competitive Landscape
Compared to established players like GE T&D India, Hitachi Energy India, and Siemens, Quality Power shows superior financial and operational metrics:
| Company | EBITDA Margin (%) | PAT Margin (%) | ROE (%) | Export Revenue (%) |
|---|---|---|---|---|
| Quality Power | 20.2 | 27.4 | 42.0 | 80.7 |
| GE T&D India | 18.7 | 13.4 | 40.6 | 30.9 |
| Hitachi Energy India | 5.5 | 2.2 | 8.9 | 24.5 |
| Siemens | 13.9 | 11.7 | 17.7 | 15.5 |
Quality Power outperforms its competitors in profitability, return ratios, and global revenue share.
ACMIIL’s Outlook and Positive Stance
ACMIIL’s endorsement of the IPO is based on several unique aspects that set Quality Power apart from its peers:
- Unmatched Export Dominance: Quality Power generates over 80% of its revenue from international markets, significantly higher than its competitors. This global presence reduces dependence on domestic demand fluctuations and provides exposure to high-growth international power infrastructure projects.
- Superior Profitability Metrics: ACMIIL highlights that Quality Power’s PAT margin of 32.2% in H1FY25 is the highest among its listed peers, indicating exceptional operational efficiency.
- Industry-Leading ROE and ROCE: The firm emphasizes that Quality Power’s ROE of 42% and ROCE of 31.7% in H1FY25 reflect best-in-class capital efficiency and return on investment.
- Strategic Inorganic Growth: ACMIIL supports the company’s decision to acquire Mehru Electrical and Mechanical Engineers Pvt. Ltd., which will expand its portfolio into instrument transformers up to 400 kV, increasing its presence in high-demand regions such as Southeast Asia and Africa.
- Capacity Expansion Strategy: The upcoming expansion of the Sangli manufacturing facility is expected to quadruple production capacity, a move that ACMIIL believes will significantly boost revenue potential.
- Barrier to New Entrants: ACMIIL underscores the high barriers to entry in the HVDC and STATCOM markets, as Quality Power’s two-decade track record and specialized capabilities make it a preferred vendor for critical energy transition projects globally.
Grey Market Premium (GMP) and Market Sentiment
As of 11 February 2025, the IPO’s GMP stands at INR 25 per share, reflecting positive investor sentiment. Strong interest from institutional and retail investors suggests promising listing-day performance, contingent on subscription demand and market conditions.
Final Verdict
Quality Power Electrical Equipments stands out as a financially sound, strategically positioned player in the energy transition space. Its strong balance sheet, expansion strategy, and high-margin business model make it an attractive investment.
With Asit C. Mehta’s ‘BUY’ rating, the IPO is expected to draw substantial interest and could offer solid long-term value.
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