Investing in the future: A high-voltage IPO in the power sector!
The ongoing expansion of India’s energy sector, coupled with the global shift towards renewable energy, along with the company's comprehensive product portfolio and robust financial track record, strategically positions it for long-term growth.
About the issue
Quality Power Electrical Equipments Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. Below are the issue details.
| IPO Details |
| IPO Opening Date |
February 14, 2025 |
| IPO Closing Date |
February 18, 2025 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 10 per equity share |
| IPO Price |
Rs 401 to Rs 425 per equity share |
| Min Order Quantity |
26 shares |
| Listing At |
BSE, NSE |
| Total Issue |
2,02,04,618 shares of FV Rs 10* |
| (Aggregating up to Rs 858.70 Cr)* |
| Fresh Issue |
52,94,118 shares of FV Rs 10* |
| (Aggregating up to Rs 225.00 Cr)* |
| Offer for Sale |
1,49,10,500 shares of FV Rs 10* |
| (Aggregating up to Rs 633.70 Cr)* |
| QIB Shares Offered |
75% of the Offer |
| Retail Shares Offered |
10% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
1. Payment of the purchase consideration for the acquisition of Mehru Electrical and Mechanical Engineers Pvt Ltd.
2. Funding capital expenditure requirements of the company for purchasing plant and machinery.
3. Funding inorganic growth through unidentified acquisitions and other strategic initiatives.
4. General corporate purposes.
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Promoter holding
Thalavaidurai Pandyan, Chitra Pandyan, Bharanidharan Pandyan, and Pandyan Family Trust are the company's promoters. The promoters currently hold a pre-issue shareholding stake of 100 per cent in the company.
Company profile
The company is an Indian player catering to global clients in critical energy transition equipment and power technologies. Driven by innovation, it specializes in power products and solutions spanning power generation, transmission, distribution, and automation.
It provides high-voltage electrical equipment and solutions for grid connectivity and energy transition while also offering tailored equipment for emerging applications such as large-scale renewables. Its product portfolio includes reactors, transformers, line traps, instrument transformers, capacitor banks, converters, harmonic filters, and reactive power compensation systems.
Notably, it is among the few global manufacturers of critical high-voltage equipment for High Voltage Direct Current (HVDC) and Flexible AC Transmission Systems (FACTS) networks.
The company operates manufacturing facilities in Sangli, Maharashtra, and Aluva, Kerala. Strengthening its global presence, it acquired a 51 per cent stake in Endoks Enerji Anonim Şirketi in 2011, expanding its design, operation, assembly, project management, and delivery capabilities in Ankara, Turkey.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
H1FY25 |
| Revenue |
211.73 |
273.55 |
331.40 |
182.71 |
| Profit Before Tax |
48.99 |
47.64 |
63.25 |
54.84 |
| Net Profit |
42.23 |
39.89 |
55.47 |
50.08 |
While the company has maintained consistent revenue growth in recent years, its profitability faced a slight setback in FY23 before rebounding to stronger levels. The lower profits in FY23 were primarily due to changes in accounting standards and delayed shipments caused by global disruptions.
Between FY22 and FY24, it achieved a Compound Annual Growth Rate (CAGR) of 25 per cent in revenue and 15 per cent in net profit.
When annualised, the figures from H1FY25 suggest a revenue growth of around 10 per cent and an impressive 80 per cent surge in net profit compared to FY24. Historical data indicates that the company generates a larger share of its revenue in the second half of the year, resulting in a significantly stronger topline performance.
Valuation & Returns
| Company Name |
P/E |
P/B |
RoE (%)* |
| Quality Power Electrical Equipments Ltd |
47 |
7 |
29 |
| Listed Peers |
| Transformers & Rectifiers (India) Ltd |
80 |
11 |
10 |
| Hitachi Energy India Ltd |
158 |
32 |
13 |
| GE Vernova T&D India Ltd |
81 |
26 |
16 |
*RoE: Based on FY24 data
The issue is priced with a P/BV ratio of 12.85 times, calculated using its Net Asset Value (NAV) of Rs 33.07 as of September 30, 2024. At the upper price cap, it is priced at a P/BV ratio of around 7.10 times, considering its post-IPO NAV.
Considering the company's annualized FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio is calculated at around 47x.
The company delivered an impressive return on equity (RoE) of 29 per cent and a return on capital employed (RoCE) of 19 per cent for FY24. As a result, the company has significantly outperformed its listed peers regarding both valuation and returns.
Outlook
The ongoing expansion of India’s energy sector, fuelled by government initiatives and infrastructure investments, reinforces the company’s long-term growth potential. Additionally, it stands to gain from the global shift toward decarbonisation and the increasing adoption of renewable energy.
With a comprehensive product portfolio in energy transition equipment and power technologies—an industry characterised by high trade barriers—the company benefits from a strong financial track record and a growing order book, positioning it for sustained growth.
Considering these factors, we recommend that investors subscribe to the issue from a long-term perspective.