The initial public offering (IPO) of Quadrant Future Tek kicks-off for bidding on Tuesday, January 07. The railways security solutions provider is offering its shares in the range of Rs 275-290 apiece. Investors can apply for the issue until Thursday, January 09 bidding for a minimum of 50 equity shares and its multiples thereafter.
Mohali-based Quadrant Future Tek was incorporated in September 2015, which develops next-generation train control and signaling systems for the 'KAVACH' project of Indian railways, enhancing safety and reliability for passengers. It also has a specialty cable manufacturing facility with an Electron Beam Irradiation Centre.
The issue is entirely a fresh share sale of Rs 1 crore shares amounting to Rs 290 crore. The net proceeds from the issue shall be utilized towards funding long-term working capital requirements, capital expenditure for the development of Electronic Interlocking System; repayment or repayment of outstanding working capital term loan; and General corporate purposes.
Quadrant Future Tek raised Rs 130.5 crore from 15 institutional investors via anchor book as it allocated 45 lakh equity shares at a price of Rs 290 apiece. The anchor book included names like Bengal Finance and Investment, Shine Star Build Cap, Whiteoak Capital, LIC MF, Bank of India MF, Citigroup, Ashoka Whiteoak ICAV, Subhkam Ventures, Capri Global Capital and more.
Quadrant Future Tek has a facility in Village Basma, Tehsil Banur for manufacturing, testing, and developing speciality cables and hardware for the train control & signalling Division. It is technology-driven, with products that meet ISO, IRIS, and TS standards and follow strict quality management systems for specialty cables.
For the six months ended on September 30, 2024, Quadrant Future Tek reported a net loss of Rs 12.11 crore with a revenue of Rs 65.14 crore. The company's net profit came in at Rs 14.71 crore with a revenue of Rs 151.82 crore for the financial year 2023-24. The company will command a total market capitalization of Rs 1,160 crore.
The company has reserved 75 per cent of the net issue for qualified institutional bidders (QIBs). Non-institutional investors (NIIs) will have 15 per cent of the net issue. Remaining 10 per cent of the net issue shall be issued to retail investors of the issue.
Sundae Capital Advisors is the book running lead manager of the Quadrant Future Tek IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed at the bourses on both BSE and NSE with Tuesday, January 14 as the tentative date of listing. Here's what a host of brokerage firms said about the IPO of Quadrant Future Tek:
SBI Securities Rating: Subscribe Quadrant Future Tek is valued at FY24 P/E multiple of 79 times. Its revenue, Ebitda and PAT, achieved a CAGR of 20.6 per cent, 96.5 per cent and 175.2 per cent to Rs 152 crore, Rs 37 crore and Rs 15 crore, respectively during FY22-FY24 period. It leads peers with an Ebitda margin of 24.1 per cent in FY24 and its return ratios are equally competitive, said SBI Securities.
"The industry forecast indicates a robust growth for the Indian Specialty Cable and Train Control System market projected to expand at a CAGR of 9.8 per cent and 12.7 per cent from CY24E-CY30E period. The strategic MoU signed with RailTel Corp to provide KAVACH coupled with recent order wins, Give compelling factors to subscribe to the issue," it said.
KR Choksey Finserv Rating: Subscribe Quadrant Future Tek leverages cutting-edge technologies like Electron Beam Cross Linked polymers. These innovations enhance the durability and performance of its products across demanding sectors including railways, defense and electric vehicles. With significant infra developments and government initiatives, Quadrant is well positioned within its industry, said KR Choksey.
"Quadrant Future Tek valuation is notably higher than some of its peers, justified by its strong market position, robust growth prospects and solid financial performance, evidenced by a robust ROE of 33 per cent. The premium valuation is further underpinned by its large addressable market and significant project wins," it said with a 'subscribe' rating.
Canara Bank Securities Rating: Subscribe for long term Quadrant Future Tek (QFTL) has diversified into specialized cable manufacturing and integrated backwards, enhancing cost efficiency and market adaptability. The cables, utilized in railway, defence, and electric vehicle (EV) sectors, exhibit superior durability and lightweight properties, contributing to Ebit margins ranging from 16-24 per cent in the cables division, said Canara Bank Securities.
"As QFTL scales operations, enhances integration and broadens its market reach, the company is well-positioned for sustainable growth. Despite slower product adaptation by the total addressable market, QFTL has strategic positioning and a robust pipeline, therefore we recommend Subscribe, QFTL for long-term gains," it said.
StoxBox Rating: Subscribe A strategic MoU with RailTel Corp and a Rs. 78.6 crore order from Chittaranjan Locomotive Works strengthen the company’s position as a leading original equipment manufacturer (OEM), said StoxBox. "The issue is valued at a P/E ratio of 59.1 times on the upper price band based on FY24 earnings, which is deemed fair compared to its peers," it said with a 'subscribe' rating.
Ventura Securities Rating: Subscribe The growing demand for automated railway safety systems under the 'Make in India' initiative and increasing applications for e- beam cables in renewable energy and EV sectors present significant growth opportunities, said Ventura. "With its innovative solutions, robust financial performance, and focus on quality, Quadrant is well positioned for sustained growth and offers a promising investment opportunity," it said with a subscribe rating.