Quality Power IPO is a book-built issue worth Rs 858.70 crores, including a fresh issue of Rs 225.00 crores and an offer for sale of Rs 633.70 crores. It opens on February 14, 2025, and closes on February 18, 2025, likely listing on BSE and NSE on February 21, 2025.

The price band is ₹401 to ₹425 per share, with a minimum lot size of 26 shares.

Retail investors should bid at the cutoff price of ₹11,050 to avoid oversubscription. Minimum investment for sNII is ₹2,09,950 and for bNII is ₹10,05,550.

Pantomath Capital Advisors is the lead manager, and Link Intime India is the registrar. Refer to  Quality Power IPO RHP for detailed information.

Quality Power IPO

• IPO Dates: February 14 – 18 2025
• Listing Date: [.]
• Face Value: ₹10 per share.
• Issue Price Band: ₹401 to ₹425 per share.
• Lot Size: 26 shares.
• Total Issue Size: ₹858.70 Cr
• Fresh Issue: ₹225.00 Cr
• Offer for Sale: ₹633.70 Cr
• Issue Type: Book Built Issue IPO.
• Listing At: BSE, NSE.
• Share Holding Pre-Issue: 7,21,50,000 shares.
• Share Holding Post-Issue: 7,74,44,118 shares.

Timeline

IPO Open Date:	February 14, 2025
IPO Close Date:	February 18, 2025
Basis of Allotment:	February 19, 2025
Refunds:	February 20, 2025
Credit to Demat Account:	February 20, 2025
IPO Listing Date:	February 21, 2025

Quality Power Electrical Equipments Limited: A Deep Dive

Company Overview:

Quality Power Electrical Equipments Limited is an Indian company specializing in high-voltage electrical equipment and power solutions. They are a key player in the energy transition space, providing critical components for grid connectivity and the integration of renewable energy sources.

Core Business:

• Manufacture and Supply of High-Voltage Electrical Equipment:
  • Reactors
  • Transformers
  • Line Traps
  • Instrument Transformers
  • Capacitor Banks
  • Converters
  • Harmonic Filters
  • Grid Interconnection Solutions (STATCOM, SVC, etc.)
• Focus on Energy Transition: Their products are crucial for the efficient and reliable integration of renewable energy sources like solar and wind power into the grid.

Market Position:

• Niche Player: While facing competition from global giants like ABB, Siemens, and GE, Quality Power has carved a niche for itself by focusing on specific segments and delivering high-quality, customized solutions.
• Strong Domestic Presence: The company has a strong foothold in the Indian market, which is experiencing significant growth in renewable energy adoption.
• Growing Global Presence: With a focus on exports, Quality Power is expanding its global reach, serving clients in various international markets.

Future Outlook:

• Favorable Industry Trends: The global shift towards renewable energy sources presents significant growth opportunities for Quality Power.
• Technological Advancements: The company’s ability to leverage advancements in power electronics, grid modernization, and smart grid technologies will be crucial for future success.
• Strategic Acquisitions: The recent acquisition of Mehru Electrical is expected to enhance its product offerings, expand its market reach, and strengthen its competitive position.

Challenges:

• Intense Competition: The power equipment market is highly competitive, with established global players possessing significant resources and market share.
• Raw Material Price Volatility: Fluctuations in raw material prices can impact profitability and margins.
• Currency Fluctuations: As a significant portion of revenue comes from exports, currency fluctuations can impact profitability.
• Regulatory Changes: Changes in government policies and regulations related to the power sector can impact the company’s operations.

Objective

The primary objectives of the Quality Power IPO are:

• Fund Acquisition: A significant portion of the proceeds from the fresh issue will be used to acquire Mehru Electrical and Mechanical Engineers Private Limited. This acquisition is expected to strengthen Quality Power’s business capabilities and market position.
• Fund Capital Expenditure: A portion of the funds will be utilized for capital expenditure, specifically for purchasing plant and machinery. This investment aims to enhance production capacity, improve manufacturing efficiency, and support the company’s growth.
• Fund Strategic Initiatives: The remaining funds will be used for general corporate purposes, which may include funding future acquisitions, exploring new business opportunities, and supporting other strategic initiatives.
• Provide an Exit Route for Existing Shareholders: The Offer for Sale (OFS) component of the IPO allows existing shareholders, such as promoters, to partially or fully divest their stake in the company.

Quality Power  : Weighing the Pros and Cons

Pros:

• Strong Growth Potential: The company operates in the growing renewable energy sector, which is experiencing significant demand due to the global shift towards sustainable energy sources.
• Experienced Management: Quality Power has a seasoned management team with expertise in the power sector.
• Focus on High-Growth Areas: The company specializes in critical high-voltage equipment for grid connectivity and energy transition, aligning with global trends.
• Strategic Acquisition: The acquisition of Mehru Electrical is expected to enhance the company’s product offerings and market reach.
• Strong Financials: Quality Power has demonstrated consistent revenue and profit growth in recent years.

Cons:

• High Dependence on Exports: A significant portion of the company’s revenue comes from exports, making it susceptible to global economic fluctuations and currency fluctuations.
• Competition: The power equipment market is competitive with established players like GE, Siemens, and ABB.
• Raw Material Costs: Fluctuations in raw material prices can impact profitability.
• Regulatory Risks: Changes in government policies and regulations related to the power sector could impact the company’s operations.
• Offer for Sale: A significant portion of the IPO is an Offer for Sale (OFS), meaning a portion of the proceeds will go to existing shareholders rather than the company itself.

So,How Does Quality Power IPO Fare in Terms of Financials ?

Quality Power – Financial Data (Restated Consolidated)

Period Ended	Assets	Revenue	Profit After Tax	Net Worth	Reserves and Surplus	Total Borrowing
30 Sep 2024	399.64	182.72	50.08	238.63	150.43	25.55
31 Mar 2024	358.88	233.14	55.47	190.33	162.56	38.28
31 Mar 2023	312.24	273.55	39.89	175.66	153.86	10.61
31 Mar 2022	252.86	211.73	42.23	160.29	149.76	11.52

(₹ Crore)

Review:

• Growth in Assets: The company has shown consistent growth in assets over the past year, indicating expansion and investment.
• Revenue Fluctuation: Revenue has fluctuated, with a significant drop in the most recent period (Sep 2024). This requires further investigation to understand the underlying factors.
• Profitability: Profit after tax has also shown some fluctuations, with a notable increase in the March 2024 period followed by a decline in the September 2024 period.
• Net Worth Growth: Net worth has steadily increased over the reported periods, reflecting the company’s profitability and retained earnings.
• Borrowings: Total borrowings have increased in recent periods, which could impact financial leverage and interest expenses.

Quality Power IPO Valuation :

KPI	Value
Return on Equity (ROE)	29.15%
Return on Capital Employed (ROCE)	19.20%
Debt-to-Equity Ratio	0.20
Return on Net Worth (RONW)	29.15%
Profit After Tax (PAT) Margin	16.74%
Price-to-Book Value (P/B Ratio)	16.11

Review:

• Strong Profitability: ROE and ROCE are both high, indicating strong profitability. ROE of 29.15% suggests the company is generating significant returns for shareholders relative to the equity invested. ROCE of 19.20% indicates efficient use of capital employed.
• Low Leverage: A Debt-to-Equity ratio of 0.20 suggests the company has a conservative capital structure with limited debt. This reduces financial risk and enhances financial stability.
• High Profit Margins: A PAT margin of 16.74% indicates that the company is able to generate significant profit from its sales.
• High P/B Ratio: A P/B ratio of 16.11 suggests that the market values the company’s assets significantly higher than their book value. This could indicate strong growth prospects, high brand value, or intangible assets not reflected in the book value.

Key Takeaways:

• The company appears to be highly profitable with strong returns on equity and capital.
• The conservative capital structure minimizes financial risk.
• High profit margins indicate efficient operations and strong pricing power.
• The high P/B ratio suggests strong market confidence in the company’s future prospects.

SWOT Analysis of Quality Power IPO

Strengths

• Focus on High-Growth Segment: Specializes in critical high-voltage equipment for grid connectivity and energy transition, aligning with the global shift towards renewable energy.
• Experienced Management: Possesses a seasoned management team with expertise in the power sector.
• Strong Financials: Demonstrates consistent revenue and profit growth in recent years.
• Strategic Acquisition: The acquisition of Mehru Electrical is expected to expand product offerings and market reach.

Weaknesses:

• High Dependence on Exports: Significant reliance on export markets exposes the company to global economic fluctuations and currency risks.
• Competition: Faces competition from large, established global players in the power equipment market.

Opportunities

• Growth in Renewable Energy: The increasing demand for renewable energy sources presents significant growth opportunities.
• Technological Advancements: Leverage advancements in power electronics, grid modernization, and smart grid technologies.
• Market Expansion: Explore new markets and expand its global presence.

Threats

• Raw Material Price Fluctuations: Volatility in raw material prices can impact profitability.
• Regulatory Changes: Changes in government policies and regulations related to the power sector could impact operations.
• Economic Downturn: A global economic slowdown could negatively impact demand for power equipment.
• Competition: Intense competition from established global players.

Competitive Analysis: Quality Power IPO

Key Competitors:

• Global Giants:
  • ABB: A global leader in electrification and automation technologies, with a strong presence in power grids and renewable energy.  
  • Siemens: A diversified technology company with a significant presence in power generation, transmission, and distribution.  
  • GE: A global conglomerate with a strong presence in power generation, transmission, and renewable energy.  
  • Hitachi Energy: A leading provider of power grids solutions, focusing on grid stability and flexibility.  
• Domestic Players:
  • KEC International: A leading EPC player with a strong presence in power transmission and distribution.  
  • Bharat Heavy Electricals Limited (BHEL): A major player in India’s power sector, involved in power generation, transmission, and equipment manufacturing.  

Competitive Landscape:

• Intense Global Competition: The power equipment market is highly competitive, dominated by large multinational corporations with significant resources and global reach.
• Technological Advancements: The industry is constantly evolving with advancements in technologies like HVDC, FACTS, and smart grids, requiring continuous innovation and investment.
• Pricing Pressure: Competitive pricing pressures can impact profitability and margins.  
• Regulatory Landscape: Navigating the evolving regulatory landscape and complying with safety and environmental standards is crucial.

Quality Power’s Competitive Advantages:

• Focus on Niche Segments: Specializes in critical high-voltage equipment for grid connectivity and energy transition, offering a niche focus.  
• Strong Domestic Presence: Has a strong presence in the Indian market, which is a key growth market for renewable energy.
• Experienced Management: Possesses a seasoned management team with expertise in the power sector.
• Strategic Acquisitions: The acquisition of Mehru Electrical expands product offerings and market reach.  

Competitive Disadvantages:

• Smaller Scale: Compared to global giants, Quality Power is a relatively smaller player with limited global reach.
• Export Dependence: Significant reliance on exports exposes the company to global economic fluctuations and currency risks.  
• Resource Constraints: May have limited resources for research and development, marketing, and global expansion compared to larger competitors.

Quality Power IPO GMP

• Grey market premium as on 14-02-2025 = ₹ 35/Share

Disclaimer:

• IPO Grey Market Premium (Quality Power IPO GMP) mention is valid for the specific date as mentioned in the header.
• We are not buying and selling IPO forms on IPO Grey Market.
• Don’t decide to subscribe to an IPO just based on the initial price, as it can change before the listing.Subscribe only considering Fundamentals of the companies.

Quality Power IPO

🔴 Live Subscription Status 🔴

14/02/2025 10:00 AM

	NO OF SHARES OFFERED	Day 1	Day 2	Day 3
Qualified Institutional Buyers(QIBs)
Non Institutional Investors(NIIs)
Retail Individual Investors(RIIs)
Employees
Total

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