Quality Power Electrical Equipments Limited is an Indian company specializing in high-voltage electrical equipment and energy transition solutions for the power grid. The company serves a global client base with its innovative products aimed at improving energy efficiency and promoting sustainable power generation. The company is offering an IPO amounting to ₹858.70 crores, which consists of a fresh issue of ₹225.00 crores and an offer for sale of ₹633.69 crores.

IPO Details

• Price Band: ₹401 to ₹425 per equity share
• Market Capitalization: ₹3,291.37 crores at the upper price band
• Lot Size: 26 shares
• Retail Investment: A minimum investment of ₹11,050 is required
• HNI Investment: Minimum investment for HNIs is ₹2,09,950 for 19 lots
• Subscription Period: February 14, 2025 to February 18, 2025
• Listing Date: Expected on February 21, 2025

Grey Market Premium (GMP)

As of February 11, 2025, the GMP for the Quality Power Electrical Equipments IPO is ₹31, indicating an expected listing gain of 7.29%. However, the GMP is an unregulated, speculative market, and the actual listing price may differ based on various factors. It’s important to remember that GMP figures should not be the sole factor in making investment decisions.

Financial Performance and Valuation

Quality Power Electrical Equipments has shown consistent growth in recent years. For the fiscal year 2024, the company posted revenues of ₹1,827.15 million, with a profit after tax of ₹500.78 million. The company’s EBITDA stood at ₹583.81 million. Key financial metrics for the company include:

• Pre-Issue EPS: ₹5.19
• Post-Issue EPS: ₹4.83
• Pre-Issue P/E Ratio: 81.89x
• Post-Issue P/E Ratio: 87.91x
• Industry P/E Ratio: 22x

Despite its high P/E ratio, the company has a strong return on capital employed (ROCE) of 19.20% and return on equity (ROE) of 19.15%. The IPO is considered fairly priced, but its high P/E ratio suggests limited upside potential for listing gains.

Use of Proceeds

The proceeds from the IPO will be used for several strategic purposes:

1. Acquisition: ₹1170 million for purchasing Mehru Electrical and Mechanical Engineers Private Limited.
2. Capital Expenditure: ₹272.17 million for purchasing plant and machinery.
3. Other Strategic Initiatives: Funding inorganic growth, acquisitions, and general corporate purposes.

IPO Subscription Status

As of 1:00 PM on February 17, 2025, the IPO was subscribed 0.77 times on its second day of the subscription period. The subscription levels will give a better indication of investor interest as the closing date approaches.

IPO Allotment Status

Investors can check their allotment status starting February 20, 2025. To do so, visit the registrar’s website, select the Quality Power Electrical Equipments IPO from the dropdown, and enter your application number or PAN.

IPO Review and Recommendation

While Quality Power Electrical Equipments presents a stable growth trajectory and a solid product offering in a critical sector, the IPO is priced on the higher end with a P/E ratio much above the industry average. Given the high valuation and moderate subscription interest, we recommend avoiding the IPO if you are looking for listing gains. The high P/E ratio suggests limited potential for significant upside on listing.

By analyzing the company’s financials, growth prospects, and IPO pricing, investors should consider their risk tolerance and long-term outlook before investing in the Quality Power Electrical Equipments IPO.

The Upcoming IPOs in this week and coming weeks are Swasth Foodtech, Beezaasan Explotech, HP Telecom India.

The Current active IPO are Royalarc Electrodes, Tejas Cargo India, Quality Power Electrical Equipments, L.K. Mehta, Shanmuga Hospital.

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