Quality Power Electrical Equipments Limited IPO: Check IPO Date, Lot Size, Price & Details

Introduction:

The company is an Indian enterprise catering to global clients in the field of critical energy transition equipment and advanced power technologies. It specializes in providing high-voltage electrical equipment and integrated solutions for grid connectivity and energy transition.

As a technology-driven organization, the company delivers power products and solutions across the power generation, transmission, distribution, and automation sectors. Additionally, it offers specialized equipment and solutions for emerging applications, including large-scale renewable energy integration.

Notably, the company is among the select global manufacturers of critical high-voltage equipment for High Voltage Direct Current (HVDC) and Flexible AC Transmission Systems (FACTS) networks. These technologies play a crucial role in facilitating the transition from renewable energy sources to conventional power grids.

The company serves clients operating in key areas such as:
(i) Power Transmission – enabling efficient electricity transfer over long distances,
(ii) Power Distribution – ensuring reliable delivery of electricity to end users, and
(iii) Power Automation – leveraging advanced technologies for optimized power management.

Revenue from international markets amounted to ₹1,179.99 million, ₹2,425.15 million, ₹1,948.30 million, and ₹1,356.51 million for the six-month period ended September 30, 2024, and the financial years ended March 31, 2024, 2023, and 2022, respectively. These figures accounted for 75.77%, 80.68%, 76.93%, and 74.27% of the company’s total revenue from operations.

IPO Details:

Objectives of Issue:

The Net Proceeds of the Fresh Issue are proposed to be utilized in the following manner:

• Payment of the purchase consideration for the acquisition of Mehru Electrical and Mechanical Engineers Private Limited
• Funding capital expenditure requirements of the Company for purchase plant and machinery
• Funding inorganic growth through unidentified acquisitions and other strategic initiatives
• General Corporate Purposes.

Key Strengths:

• Benefits out of global shift towards decarbonisation and adoption of renewable energy -  The company is one of the few global players specializing in the manufacturing of critical high-voltage equipment for HVDC and FACTS networks, which are essential for integrating renewable energy into conventional power grids. With a presence in over 100 countries, it serves a diverse range of industries, including automotive, oil and gas, cement, chemicals, renewables, traction and locomotives, steel and metals, and power utilities across six continents. This extensive reach positions the company as a key enabler of the global energy transition.Its portfolio includes advanced equipment and solutions designed for emerging applications, such as large-scale renewable energy projects. The adoption of HVDC and STATCOM technologies is crucial in accelerating the transition to green energy, ensuring the seamless and stable incorporation of renewable sources into existing power infrastructure.
• Diversified customer base of global businesses with long lasting relationships – Since its inception, the company has been committed to delivering high-quality high-voltage electrical equipment and solutions that support grid connectivity and energy transition. As of September 30, 2024, it serves a diverse customer base of 143 clients.Its end customers span various sectors, including power utilities, renewable energy providers, and industries such as automotive, oil and gas, cement, chemicals, traction and locomotives, steel, and metals. Among its clientele are major business conglomerates, including Fortune 500 companies.The company has fostered long-term relationships with most of its customers, a testament to its consistent focus on product quality, reliability, and timely delivery of solutions.
• Comprehensive product portfolio in the energy transition equipment and power technologies sector in India and abroad with high trade barriers- The company commenced its operations with the manufacturing of reactors and transformers and has progressively expanded its portfolio to include high-voltage electrical equipment and solutions for grid connectivity and energy transition. With over two decades of industry expertise, it now offers a comprehensive range of products, including reactors, transformers, line traps, composites, capacitor banks, harmonic filters, SVC systems, and reactive power compensation systems.Specializing in high-voltage electrical equipment, the company provides products and solutions across power generation, transmission, distribution, and automation sectors. Its product portfolio is categorized into two segments: (i) power products and (ii) power quality equipment.The power transmission sector, both in India and internationally, presents significant entry barriers due to the capital-intensive nature of infrastructure development and stringent product specifications. Additionally, complex approval processes required by customers further extend the market entry timeline, reinforcing these barriers.

Risks:

• Dependent on Global Economy and Business Policies– The company's diverse product portfolio serves both domestic and international markets, ensuring broad customer reach across key regions such as Asia, the Middle East, North America, South America, Australia, and Europe. Notably, approximately 75% of its revenue is derived from international markets.Operating in multiple global markets exposes the company to region-specific risks as well as broader challenges associated with international trade. These include compliance with local laws and regulatory frameworks, restrictions on ownership and corporate structure, changes in foreign policies and trade regulations, import and export licensing requirements, tariffs, and taxation policies. Additionally, fluctuations in foreign currency exchange rates against the Indian Rupee pose a financial risk to its international revenue streams.
• Over Dependency on Top 10 customers- - The company generates over 52.66% of its total revenue from operations through sales to its top 10 customers during the six-month period ended September 30, 2024, as well as in Fiscal 2024, Fiscal 2023, and Fiscal 2022. It remains reliant on these key customers for a significant share of its revenue and anticipates this dependency to continue in the foreseeable future.The loss of any of its top 10 customers, particularly the largest one, could have a material adverse impact on its business, financial performance, and overall stability. This risk may arise due to various factors, including customers losing or failing to secure orders or contracts from their clients, non-renewal of existing agreements, inability to meet evolving quality specifications or technological advancements, contractual disputes, or financial distress such as bankruptcy, liquidation, or other financial hardships affecting key customers.

Financial Snapshot:

KPI comparison with Industry Peers

Conclusion

Considering its financial performance, the company has outperformed its peers across multiple metrics, including revenue growth, profit margins, return on capital, and leverage.

A comparison of the company's price-to-earnings (PE) ratio with that of its peers indicates that it is underpriced, as it is trading at a lower PE multiple than its industry counterparts.

Additionally, the company is well-positioned to benefit from the ongoing energy transition from non-renewable to renewable sources, given its role in manufacturing critical high-voltage equipment for HVDC and FACTS networks—key components in integrating renewable energy into traditional power grids.

Given its strong fundamentals and attractive valuation, the company presents a compelling long-term investment opportunity. Therefore, we recommend to subscribe for long term.