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Quadrant Future-Tek IPO subscribed 15.86 times on Day 2. Check GMP and other details
Team Finance Saathi
08/Jan/2025
What's covered under the Article:
- Quadrant Future-Tek IPO has a price band of ₹275-₹290 per share, with a total issue size of ₹290 Crores.
- Grey Market Premium (GMP) of ₹145 suggests strong listing gains of up to 50%.
- Financials show steady growth despite a loss in PAT for FY24, with positive ROE and ROCE metrics.
Quadrant Future-Tek Limited is a technology and innovation-driven company specializing in electronics manufacturing and cable production. The company operates state-of-the-art production facilities in Mohali, Punjab, and has two engineering centers in Bangalore and Hyderabad. The company's people policy focuses on fostering intrapreneurial qualities among its employees, balancing passion and profession. Quadrant is particularly recognized for its expertise in the rail, defense, and electronic component markets, with its top management boasting over 26 years of industry experience.
The Quadrant Future-Tek IPO is a book-built issue with an issue size of ₹290 Crores, consisting entirely of a fresh issue of 100 lakh shares. The price band for the IPO is set at ₹275 to ₹290 per equity share. The subscription period opens on January 07, 2025, and closes on January 09, 2025. The shares will be listed on both the BSE and NSE, with a tentative listing date of January 14, 2025.
At the upper price band of ₹290 per share, the market capitalization of Quadrant Future-Tek will be approximately ₹1,160 Crores. The lot size is set at 50 shares, meaning retail investors are required to invest a minimum of ₹14,500, while HNIs need to apply for 14 lots (700 shares), amounting to ₹2,03,000.
Subscription and Grey Market Premium (GMP):
As of January 07, 2025, the Grey Market Premium (GMP) for Quadrant Future-Tek IPO stands at a strong ₹145, suggesting a listing gain potential of 50% if the stock trades at the expected listing price of ₹435. This significant premium reflects a positive market sentiment towards the IPO, indicating that the shares may be in high demand post-listing.
Financial Performance and Valuation:
Quadrant Future-Tek has seen substantial revenue growth over the past few years, with revenues from operations for the period ending September 30, 2024, reported at ₹651.35 million. This is a slight decrease compared to ₹1,518.23 million in FY2024 and ₹1,529.45 million in FY2023, but still shows a solid foundation for future growth.
- EBITDA for FY2024 stands at ₹8.17 million, a notable decrease from ₹367.05 million in FY2023, which indicates the company has faced some challenges in operational efficiency.
- Profit After Tax (PAT) has been negative for the period ending September 30, 2024, at ₹-120.05 million, although the company posted a profit of ₹146.92 million in FY2023, showcasing a volatile performance.
The key performance indicators reflect the following:
- Pre-issue EPS of ₹4.9 and post-issue EPS of ₹3.67 for FY24.
- Pre-issue P/E ratio of 59.18x and post-issue P/E ratio of 78.95x, indicating a higher valuation than the industry average P/E of 57x.
- Return on Capital Employed (ROCE) for FY24 stands at 26.12%, and Return on Equity (ROE) is 33.41%, suggesting that the company is generating strong returns on its capital and equity.
Despite a negative PAT for FY24, the strong GMP and positive financial metrics point toward optimistic investor sentiment regarding the IPO's future performance.
Investment Recommendation:
The Quadrant Future-Tek IPO has a strong market outlook with a substantial Grey Market Premium (GMP) of ₹145, reflecting the potential for up to 50% listing gains. Despite the negative PAT for FY24, the company’s strong ROE and ROCE, along with its innovative technology and strong management team, make this an attractive IPO for investors looking for short-term listing gains.
Given the positive financial indicators and high investor demand reflected in the GMP, we recommend applying for the Quadrant Future-Tek IPO for potential listing gains. However, prospective investors should also evaluate the company's long-term performance, considering the fluctuations in profitability over the past few years.
The Upcoming IPOs in this week and coming weeks are Sat Kartar Shopping,Barflex Polyfilms.