Exicom Tele Systems IPO opens today: Should you subscribe to the issue?

Exicom Tele Systems Rs 429 crore-initial public offering (IPO) is set to hit Dalal Street for subscription on Tuesday, February 27 and can be bid until Thursday, February 29. The company will be selling its shares in the fixed price band in the range of Rs 135-142 apiece. Investors can apply for a minimum of 100 equity shares and its multiples thereafter.

Exicom Tele-Systems, incorporated in 1994, is a specialist in power systems, electric vehicle (EV) charging, and other related solutions. It operates through two main business divisions: power systems and EV charging solutions. Notably, Exicom was one of the early beginners in India's EV charger manufacturing sector.

The IPO of Exicom Tele Systems includes fresh shares sale of 23,169,014 equity shares worth Rs 329 crore and offer-for-sale (OFS) of up to 70,42,200 equity shares by its promoter NextWave Communications amounting to Rs 100 crore.

The net proceeds from the issue shall be utilized towards financing the assembly lines at the manufacturing facility in Telangana; repayment/prepayment of certain borrowings; funding incremental working capital requirements; investment in R&D and product development and general corporate purposes.

Exicom Tele-Systems has raised Rs 178 crore from anchor investors as it allocated 1,25,38,800 equity shares at a price of Rs 142 apiece. Maybank Asiapac Ex-Japan Equity I Fund, Nepean Long Term Opportunities Fund, Abakkus Diversified Alpha Fund, Quant Mutual Fund, JM Financial Mutual Fund, Aditya Birla Sun Life Trustee and SBI General Insurance participated in the anchor book.

Exicom Tele operates within the EV charger industry, providing both slow charging options—AC chargers tailored for residential usage—and fast charging solutions—DC chargers catering to businesses and public charging networks in urban areas and highways. Its clientele spans established automotive OEMs producing passenger cars and EV buses, charge point operators, and fleet aggregators.

Exicom had installed over 61,000 EV chargers across 400 sites throughout India, as of September 30, 2023. The company has deployed 470,810 Li-ion batteries for telecommunications applications, boasting a storage capacity exceeding 2.10 GWH. Moreover, Exicom has supplied its EV chargers to more than 70 customers.

For the period ended on September 30, 2023, Exicom Tele Systems reported a net profit at Rs 27.46 crore with a revenue of Rs 467.21 crore. Its net profit came in at Rs 6.37 crore with a revenue of Rs 723.40 crore for the financial year ended on March 31, 2023.

The company will be offering 75 per cent of the net offering for the qualified institutional investors (QIBs), whereas non-institutional investors (NIIs) will get 15 per cent of the net offering. Remaining 10 per cent of the net offer shall be allocated towards retail investors of the issue.

Monarch Networth Capital, Unistone Capital and Systematix Corporate Services are the book running lead managers of the Exicom Tele-Systems IPO, while Link Intime India is the registrar for the issue. Shares of the company are likely to be listed on both BSE and NSE on Tuesday, March 5. Here's what a host of brokerage firms say about the IPO of Exicom Tele-Systems:

SBICAP Securities
Rating: Subscribe for long-term
Exicom Tele is valued at FY24 annualized P/E multiple of 31.2 times at the upper price band on post-issue capital. The company is expanding its manufacturing facility for EV chargers, DC power systems and Lithium-ion battery assembly in Telangana which will add to the topline, said SBICAP Securities.

"The company also plans to reduce its debt from the fresh issue, which will improve the profitability. The growth for the EV industry looks very attractive going ahead in India, as well the need of telecommunication infrastructure for 5G network will give an edge to the company’s growth in future," it added with a 'subscribe for long-term' recommendation.

Nirmal Bang Securities
Rating: Subscribe
Telecom is a mature industry, Government’s thrust on setting up telecom infra in rural and border areas could provide growth in the critical power business. The EV Charging Business benefits from structural tailwinds in the EV charging industry which is estimated to grow Rs 9,000 crore by FY28E, providing a huge tailwind for Exicom, said Nirmal Bang Securities, with a 'subscribe' tag.

Canara Bank Securities
Rating: Subscribe
Exicom Tele-Systems makes a very strong offer. The company was among the pioneers in India's EV charger manufacturing industry. At 60 per cent and 25 per cent of the home and public charging markets, respectively, it commands a sizeable market share, said Canara Bank Securities.

"The company’s top line increased at a CAGR of 11.4 per cent from FY 21. For FY23, the Ebitda and PAT margins are to be 7.41 per cent and 4.38 per cent, respectively. For FY23, ROE and ROCE are 13.38 per cent and 10.92 per cent, respectively. The company’s P/E is valued at 42.014 times for FY23. We recommend to subscribe for listing gains and long term," he said.

Reliance Securities
Rating: Subscribe
Exicom Tele has successfully evolved from a telecom power solution provider to new age business  like energy storage and EV charging over the last few years and garnered a significant market share with product range from 3.3Kw to 360Kw having a market share of 60 per cent in EV residential chargers and 25 per cent market share in public chargers, said Reliance Securities with a 'subscribe' tag.

"It is expanding the product portfolio for existing and new customers capitalizing on EV charging industry tailwinds. Exicom long standing customer relationships with global customers in both segments of business, experienced management team, new manufacturing facility to drive higher asset turnover, higher entry barriers, and improved financials are the key advantages," it said.

Arihant Capital Markets
Rating: Subscribe
The company has strategically expanded its operations into the EV charger and critical power businesses, leveraging its extensive experience in power conversion and energy management. It intends to capitalise on the growing market opportunities in the electric vehicle charging infra and telecom power sectors by focusing heavily on innovation and product quality, said Arihant Capital.

"The company's commitment to R&D, combined with its recognition of sustainable energy solutions, positions it well to capitalise on the accelerating shift toward electrification and rising demand for dependable power solutions," it added with a 'subscribe' rating.

StoxBox by BP Equities
Rating: Subscribe
Positioned within the future-oriented segments of green energy and green mobility, the company is poised to benefit from heightened demand and market dynamics. However, the sustainability of net margins and ROE will be pivotal in determining the company's long-term growth trajectory, said StoxBox by BP Equities.

"The issue is priced at a P/E of 23.8 times on the upper price band and based on the annualized FY24E earnings, which we feel is fairly valued considering the high valuations awarded to other industry participants. Therefore, we assign a 'subscribe' rating to the issue," it added.

Globe Capital Market
Rating: Subscribe for long term
Exicom Tele is the first mover in power management solution and EV charging infrastructure. It has 60 per cent market share in the EV charging segment and is poised for bright prospects ahead with the shift from conventional fuel to EV vehicles globally, said Globe Capita. "However, considering the rising opportunities and timely expansion plans, investors may subscribe for the long term."

 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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