Quality Power IPO: Check subscription status, GMP, listing & allotment date

Quality Power Electrical Equipments is aiming to raise Rs 858.70 crore through its Initial Public Offering (IPO), with shares priced in the range of Rs 401-425 per share. Investors can apply for a minimum of 26 shares and in multiples thereafter. The IPO comprises a fresh issue of Rs 225 crore and an Offer for Sale (OFS) of 1,49,10,500 equity shares worth Rs 633.70 crore.

Company Overview and Business Model

Founded in 2001 and headquartered in Sangli, Maharashtra, Quality Power Electrical Equipments specializes in manufacturing high-voltage electrical equipment and providing solutions for energy transition and grid connectivity. The company operates across the power generation, transmission, distribution, and automation sectors.

It is one of the few global manufacturers of critical high-voltage equipment for High Voltage Direct Current (HVDC) and Flexible AC Transmission Systems (FACTS) networks. The company serves 143 customers, including power utilities, industries, and renewable energy firms. Its manufacturing units are based in Sangli, Maharashtra, and Aluva, Kerala.

As part of its global expansion strategy, Quality Power acquired a 51% stake in Endoks Enerji Anonim Sirketi, a Turkey-based power solutions firm, in 2011. The company has a strong international presence, with exports accounting for 80.68% of revenue in FY24 and 75.77% in FY25.

Subscription Status and Market Response

The IPO, which opened for bidding on 14 February 2025, has received a mixed response from investors. According to stock exchange data as of 17:00 IST on 17 February 2025, investors had placed bids for 92,24,514 equity shares against the 1,11,12,530 shares on offer, leading to a subscription rate of 0.83 times. The bidding process is set to close on 18 February 2025.

• Non-Institutional Investors (NIIs): Subscribed 1.04 times.
• Qualified Institutional Buyers (QIBs): Subscribed 62% of their allocation.
• Retail Investors: Bids were placed for 92% of the allocated shares.

Despite steady participation, the grey market premium (GMP) for the IPO has seen a significant decline due to lukewarm bidding interest and weak market sentiment. Initially, the GMP was around Rs 100 per share, but it has now dropped to zero, suggesting the possibility of a flat listing.

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Financial Performance and Utilization of IPO Proceeds

Quality Power reported a consolidated net profit of Rs 50.08 crore and revenue of Rs 155.74 crore for the six months ending 30 September 2024. In FY23-24, it posted a revenue of Rs 331.4 crore and a net profit of Rs 55.47 crore. The IPO is expected to enhance the company’s financial position and support its expansion plans.

Utilization of IPO Proceeds

Anchor Investors and Market Capitalization

Ahead of the IPO, Quality Power secured Rs 386.41 crore from 21 anchor investors on 13 February 2025. A total of 90.92 lakh shares were allotted at Rs 425 per share.

Post-IPO, the company’s market capitalization is expected to reach Rs 3,291.38 crore. The allocation breakdown for investors is as follows:

• 75% of shares reserved for QIBs.
• 15% allocated to NIIs.
• 10% set aside for retail investors.

Brokerages’ Outlook and Investment Considerations

Brokerage firms have given a mixed outlook on the IPO, with some recommending it as a long-term investment due to the company’s niche market, strong product portfolio, and growing demand. However, concerns about aggressive valuations and prevailing market conditions have led to a cautious stance.

KR Choksey Finserv highlighted that from FY22 to FY24, the company’s revenue, EBITDA, and adjusted net profit grew by 28%, 28%, and 54%, respectively. The IPO is priced at a P/E multiple of 88 times for FY24, with ROE at 28% and ROCE at 18%.

Dalal & Broacha noted that while Quality Power is well-positioned in the energy transition sector, its reliance on exports, customer concentration, and competition pose risks. On a fully diluted basis, the IPO is priced at 33 times post-issue valuations.

IPO Allotment and Listing Date

The basis of allotment for the IPO will be finalized by Wednesday, and the status will be available by Thursday. Shares of Quality Power are expected to be listed on both BSE and NSE on Friday, 21 February 2025.

Conclusion

While Quality Power Electrical Equipments presents an opportunity for long-term investors due to its market positioning and growth potential, the short-term outlook remains uncertain. The lackluster GMP and moderate subscription levels indicate a cautious sentiment in the market. Investors should carefully assess their risk appetite and long-term objectives before making a decision.