Quality Power IPO Day 3 Highlights: Issue booked 1.29x. Check GMP, key dates, review, subscription status

The initial public offer of Quality Power Electrical Equipments IPO has been subscribed 1.29x on the third day of subscription today, at 19:00 IST, as per BSE data.

The initial share sale received bid for 1,43,31,330 shares against 9,14,23,354 shares on offer, according to BSE.

The portion for retail investors received 1.83 times subscription while the quota for non-institutional investors has been subscribed 1.45 times and the qualified institutional buyers (QIBs) part is booked 1.03 times.

The firm has consistently grown its revenue and profits. For H1 FY25, QPEEL reported ₹182.72 crore in total income and ₹50.08 crore in net profit. Approximately 80.7% of revenue comes from global markets. The company benefits from significant other income through net monetary gains, primarily from dollar hedging, contributing to its higher PAT relative to EBITDA.

With over 80% of revenue from global markets, QPEEL avoids tender-based businesses, ensuring stability. Quality Power's issue is available at a P/E ratio of 81x based on FY24 earnings, significantly lower than the listed peer average of 276x, partly due to MNCs reporting profits in home markets and supply-demand imbalances spread across geographically.

Despite valuation concerns, given its market position and focus on technological advancements, a SUBSCRIBE for long-term gains is recommended.

The initial public offer of Quality Power Electrical Equipments IPO has been subscribed 1.28x on the third day of subscription today, at 16:12 IST, as per BSE data.

The initial share sale received bid for 1,41,68,414 shares against 9,14,23,354 shares on offer, according to BSE.

The portion for retail investors received 1.76 times subscription while the quota for non-institutional investors has been subscribed 1.45 times and the qualified institutional buyers (QIBs) part is booked 1.03 times.

At the upper price band, Quality Power is demanding a EV/S multiple of 5.9x, which is at discount to peer average. Considering its over two decades of experience in the energy transition sector and wide range of products & solutions, we believe the company is well positioned to benefit from the rising demand of energy transition equipments, which would assist in generating a profitable business growth. Thus, we assign a “SUBSCRIBE” rating for the issue.

• Global energy transition and power technology player catering to diverse industry segments
• Demonstrated track record of growth and financial performance along with Diversified customer base of global businesses with long lasting relationships
• Comprehensive product portfolio in the energy transition equipment and power technologies sector in India and abroad with high trade barriers
• Demonstrated record of strategic acquisitions along with an enhanced order book contributing to growth
• Research and development capabilities to offer future ready solutions

The initial public offer of Quality Power Electrical Equipments IPO has been subscribed 1.15x on the third day of subscription today, at 14:39 IST, as per BSE data.

The initial share sale received bid for 1,27,33,266 shares against 9,14,23,354 shares on offer, according to BSE.

The portion for retail investors received 1.59 times subscription while the quota for non-institutional investors has been subscribed 1.31 times and the qualified institutional buyers (QIBs) part is booked 91%.

The issue is priced at a P/BV of 12.85 based on its NAV of Rs. 33.07 as at H1FY25 and if we attribute FY25 earnings at higher price band of ₹425, it is asking for a P/E of 31x and asking a Market Cap of around ₹ 3291 Cr. Average Industry P/E stands at 267x. The issue appears reasonably priced. Quality Power Electrical Equipments Ltd. is well positioned to capitalize 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.

They are currently operating with three manufacturing facilities, with two in India, located in Sangli, Maharashtra and Aluva, Kerala. The third facility is located in Ankara, Turkey (through acquisition of Endkos).

The initial public offer of Quality Power Electrical Equipments IPO has been subscribed 1.01x on the third day of subscription today, at 13:30 IST, as per BSE data.

The initial share sale received bid for 1,12,13,046 shares against 9,14,23,354 shares on offer, according to BSE.

The portion for retail investors received 1.49 times subscription while the quota for non-institutional investors has been subscribed 1.23 times and the qualified institutional buyers (QIBs) part is booked 74%.

• Focus on growth through organic and inorganic acquisitions
• Focus on research and development and engineering capabilities
• Expanding operating facilities and increase operating capacity

Quality Power caters to clients involved in the business of (i) Power transmission (ii) Power distribution and (iii) Power automation. Their end user consists of power utilities, power industries and renewable energy entities.

• Global player capitalizing on rising shift towards renewable energy
• Diversified global customer base with long standing relationships
• Comprehensive Product Portfolio

The rising global demand for electricity, particularly the need to integrate renewable energy into the main grid, is expected to drive growth in the energy transition and power technologies sector. The transmission sector has expanded at a CAGR of 8%, increasing from USD 78,736 million in CY19 to USD 1,05,903 million in CY23. 

The initial public offer of Quality Power Electrical Equipments IPO has been subscribed 92% on the third day of subscription today, at 12:12 IST, as per BSE data.

The initial share sale received bid for 1,01,78,636 shares against 9,14,23,354 shares on offer, according to BSE.

The portion for retail investors received 1.38 times subscription while the quota for non-institutional investors has been subscribed 1.20 times and the qualified institutional buyers (QIBs) part is booked 62%.

• Delay, shortage, or disruption in supply of raw materials: The company follow just in time and lean operating processes for procurement of raw materials. Any kind of delay, shortage, or disruption in the supply chain of raw materials might affect the operations, leading to penalty or cancellation of order.
• High capital intensive business: Capital goods supplier business requires high amount of WC capital to effectively run their business.

• Based on the FY24 earnings relative to the company's post-IPO paid-up equity capital, the issue is priced at a P/E ratio of 59x. We believe that the company is overly valued as the compared to its earnings growth. Therefore, we recommend a “Avoid” rating for the issue.
• Quality Power Electrical Equipments Ltd achieved a healthy financial growth with topline and bottom line increasing by 28% and 15% over the last two years driven by the focus on exports and increased demand.

At an upper price band of ₹425, Quality Power Electricals Equipment is valued at a FY 24 PE of 88.5x (Adj. for minority interest) and EV/EBITDA of 86.7x. Over FY22-24, the company’s Revenue/EBITDA/APAT grew at a CAGR of 28.3%/27.8%/50.6% respectively. The ROCE of 15% in FY 24 remains in line with the peer’s average. Based on the reported performance, the business seems to be growing strongly, however we feel the post-IPO valuation for the company seems expensive in the current weak market environment. We thereby assign “Subscribe for Long-Term” rating to the issue.

The initial public offer of Quality Power Electrical Equipments IPO has been subscribed 88% on the third day of subscription today, at 10:48 IST, as per BSE data.

The initial share sale received bid for 97,99,556 shares against 9,14,23,354 shares on offer, according to BSE.

The portion for retail investors received 1.27 times subscription while the quota for non-institutional investors has been subscribed 1.15 times and the qualified institutional buyers (QIBs) part is booked 62%.

Quality Power's IPO consists of both a fresh issue and an offer for sale (OFS), with the fresh issue valued at ₹225 crore. The OFS portion will include 1.2 crore equity shares offered by promoter Chitra Pandyan.

The company's listed peers are Transformers & Rectifiers (India) Ltd (with a P/E of 251.51), Hitachi Energy India Ltd (with a P/E of 308.63), and GE Vernova T&D India Ltd (with a P/E of 241.90).

In the IPO, Quality Power has reserved 75% of the shares in the public issue for qualified institutional buyers (QIB), 15% for non-institutional Institutional Investors (NII), and 10% of the offer is reserved for retail investors.

The energy transmission technology and equipment company Quality Power reported that it has raised over ₹386 crore from anchor investors.

A circular posted on the BSE website stated that the following companies were among those who received shares in the anchor round: LIC Mutual Fund (MF), Bank of India MF, Maybank Securities, Bengal Finance & Investments, Bharat Vaiue Fund, SBI General Insurance, India Inflection Opportunity Fund, Abans Finance, and Kotak Iconic Fund.

• Focus on growth through organic and inorganic acquisitions.
• Continue to focus on research and development and engineering capabilities to develop innovative systems and solutions, as well as improve manufacturing efficiencies.
• Expand its operating facilities and increase its operating capacity.
• Harness industry growth in the energy transition sector and grow its operations.

Quality Power Electrical Equipments IPO GMP today was ₹0, which meant shares were trading at their issue price of ₹425 with no premium or discount in the grey market according to investorgain.com

According to the grey market activities observed over the past 11 sessions, the current IPO GMP is showing a downward trend and is anticipated to decline further. The minimum GMP recorded is ₹0.00, whereas the maximum GMP reached is ₹135.00, according to experts from investorgain.com.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.