Quality Power Electrical Equipments Ltd IPO

Status: Closed

Overview

IPO date

14 Feb 2025 to 18 Feb 2025

Face value

₹ 10 per share

Price

₹ 401 to ₹425 per share

Issue Size

20,204,600 shares
(aggregating up to ₹ 858.7 Cr)

Allotment Date

20 Feb 2025

Listing at

NSE

Issue type

Book Building

Sector

Capital Goods - Electrical Equipment

Objectives of Quality Power Electrical Equipments Ltd IPO

Initial public offering of 20,204,600* equity shares of face value of Rs. 10/- each ("Equity Shares") of Quality Power Electrical Equipments Limited ("the Company" or the "Issuer") for cash at a price of Rs. 425.00* per equity share (including a premium of Rs. 415.00 per equity share) ("Offer Price") aggregating to Rs. 858.70* crores ("Offer") the offer comprises of a fresh issue of 5,294,100 equity shares aggregating to Rs. 225.00 crores (the "Oresh Issue") and an offer for sale of 14,910,500 equity shares aggregating to Rs. 633.70* crores by Chitra Pandyan (the "Promoter Selling Shareholder") (the "Offer for Sale") the offer will constitute 26.09 % of the post-offer paid-up equity share capital. The face value of the equity share is Rs. 10/- each and the offer price is 42.50 times the face value of the equity shares * Subject to finalization of the basis of allotmen.

Objectives of Quality Power Electrical Equipments Ltd IPO

Quality Power Electrical Equipments Ltd IPO Strategy

About Quality Power Electrical Equipments Ltd

Quality Power Electrical Equipments Limited was originally incorporated as 'Quality Power Electrical Equipments Private Limited' pursuant to a Certificate of Incorporation dated September 20, 2001, issued by the Registrar of Companies, Pune, Maharashtra. The Company name subsequently changed to 'Quality Power Electrical Equipments Limited', upon the conversion of status to Public Company on June 14, 2024 by the Registrar of Companies, Pune. Quality Power Electrical Equipments Limited are an Indian player serving global clients in critical energy transition equipment and power technologies. They provide high voltage electrical equipment and solutions for electrical grid connectivity and energy transition. They are a technology-driven company specializing in provision of power products and solutions into power generation, transmission, distribution, and automation sectors. Additionally, they offer equipment and solutions for emerging applications such as large-scale renewables. The manufacturing operations in India are spread across two locations, including Sangli, Maharashtra, and Aluva, Kerala. As part of global expansion, the Company acquired 51% stake in Endoks Enerji Dagitim Sistemleri Sanayi Ithalat Ve Ihracat Limited Sirketi, Turkey in 2011 and Endoks became an indirect subsidiary of the Company. The Company further acquired S&S Transformers & Accessories Private Limited in 2019. The Company, through the Takeover Deed, has acquired the running business of Electrical Power Equipment Company, Bangalore in February, 2022. Apart from this, the Company is among the few global manufacturers of critical high voltage equipment for High Voltage Direct Current (HVDC) and Flexible AC Transmission Systems (FACTS) networks. These equipment and networks form key components for energy transition from renewable sources to traditional power grids. With over two decades of experience in the energy transition space, it provide products crucial for effective power transmission and advanced power automation including reactors, transformers, line traps, instrument transformers, capacitor banks, converters, harmonic filters, and reactive power compensation systems. The Company is planning a Fresh Issue of Equity Shares by raising funds through IPO from public aggregating upto Rs 225 Crore and by issuing 12,000,000 equity shares through Offer for Sale.

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Strengths vs Risks of Quality Power Electrical Equipments Ltd

Know the pros & cons

Strengths

Global energy transition and power technology player catering to diverse industry segments and poised to benefit out of global shift towards decarbonisation and adoption of renewable energy.
Demonstrated track record of growth and financial performance for the six-month period ended September 30, 2024 and the last three fiscals.
Diversified customer base of global businesses with long lasting relationships.
Comprehensive product portfolio in the energy transition equipment and power technologies sector in India and abroad with high trade barriers.
Demonstrated record of strategic acquisitions along with enhanced order book contributing to sustainable growth.
Research and development capabilities to offer future ready solutions.
Management team with domain experience.

Risks

The company derives majority of its revenue from international markets, which contributed to more than 74.00% of its total revenue during the six-month period ended September 30, 2024 and in each of the last three Fiscals. The company plan to further expand into new geographical regions and may be exposed to significant liability and could lose some or all of its investment in such regions, as a result of which the company business, financial condition and results of operations could be adversely affected.
The company is dependent on the performance of the market for High-Voltage Direct Current ("HVDC") and Flexible Alternating Current Transmission Systems ("FACTS"), which in turn is dependent on a range of social, economic and regulatory factors beyond its control. Any adverse trend in such markets could have a material adverse effect on its business, financial condition, results of operations and cash flows.
Any disruption, breakdown or shutdown of its operating facilities may have a material adverse effect on the company business, financial condition, results of operations and cash flows.
Any shortages, delay or disruption in the supply of the raw materials the company use in its operating process may have a material adverse effect on its business, financial condition, results of operations and cash flows. Further, the costs of the raw materials that the company use in its operating process are subject to volatility. Increases or fluctuations in raw material prices, may have a material adverse effect on its business, financial condition, results of operations and cash flows.
The Company regularly deals in foreign exchange. its inability to handle foreign currency fluctuation risks associated with the company export sales could negatively affect its sales to customers in foreign countries, as well as the company operations and representations in such countries, and its overall profitability.
The company does not have long-term agreements with any of its customers. In order to retain some of the company existing customers its may also be required to offer terms to such customers which the company may place restraints on its resources. The company inability to maintain its customer network in India and globally, and attract additional customers may have a material adverse effect on its results of operations and financial condition.
The company is dependent on its top 10 customers who contribute to more than 52.66% of the company total revenue from operations during the six-month period ended September 30, 2024 and in each of the last three Fiscals and the loss of any of these customers or a significant reduction in purchases by any of them could adversely affect its business, results of operations and financial condition.
Acquisitions, strategic alliances and investments could be difficult to integrate, disrupt its business and lower the company results of operations.
The company is subject to strict quality requirements and any product defect issues or failure by it or the company raw material suppliers or its customers to comply with quality standards may lead to the cancellation of existing and future orders, recalls or exposure to potential product liability claims.
Some of its operating facilities, and the company Registered Office are located on leasehold lands and rental basis. If the company is unable to renew existing leases or relocate its operations on commercially reasonable terms, there may be a material adverse effect on its business, financial condition and operations.
If the company is unable to anticipate product trends and consumer preferences and develop successful new products, its may not be able to maintain or increase the company revenues and profits.
The company is highly dependent on its skilled personnel for the company day-to-day operations. The loss of or its inability to attract or retain such persons have a material adverse effect on its business performance.
The company is highly dependent on Thalavaidurai Pandyan, Chitra Pandyan and Bharanidharan Pandyan, its Promoters and Directors for the company business. The loss of or its inability to attract or retain such persons could have a material adverse effect on its business performance.
Objects of the Offer for which the funds are being raised have not been appraised by any bank or financial institutions. Any variation in the utilization of its Net Proceeds as disclosed in this Red Herring Prospectus would be subject to certain compliance requirements, including prior Shareholders' approval.
There have been certain instances of delays in payment of statutory dues by the Company in the past. Any delay in payment of statutory dues by the Company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company's business, financial condition, results of operation and cash flows.
There is a lack of specificity around one of the proposed objects of the Offer and the company has not specifically earmarked the use of the Net Proceeds under the head of the objects of the Offer.
Improper storage, processing and handling of its raw materials, work products and products could damage the company inventories and, as a result, have an adverse effect on its business, results of operations and cash flows.
Its financing agreement with Axis Bank Limited to meet the company working capital requirement contains covenants that limit its flexibility in operating the company business. If its not in compliance with certain of these covenants and are unable to obtain waivers from the respective lenders, its lenders may accelerate the repayment schedules, and enforce their respective security interests, leading to a material adverse effect on its business and financial condition.
If the company is unable to maintain and enhance its brand, including its ability to protect the company brand through intellectual property, the sales of its products will suffer, which would have a material adverse effect on its results of operations.
pro-forma financial information included in this Red Herring Prospectus may not accurately reflect its future results of operations, financial position and cash flows.
The company has certain contingent liabilities and commitments, which, if they materialize, may adversely affect its results of operations, financial condition and cash flows.
Significant differences exist between Ind AS and other accounting principles, such as Indian GAAP, IFRS and U.S. GAAP, which may be material to investors' assessments of its financial condition, result of operations and cash flows.
The company regularly work with hazardous materials and activities in its operation which can be dangerous and could cause injuries to people or property. This may have an adverse effect on its business, cash flows and results of operations.
There are certain proceedings involving the Company, its Promoters, the company Directors, its Subsidiaries which if determined against it, may have an adverse effect on the company business, cash flows and results of operations.
The Company is subject to various laws and extensive government regulations and if the company fails to obtain, maintain or renew its statutory and regulatory licenses, permits and approvals required in the ordinary course of its business, including environmental, health and safety laws and other regulations, the company business financial condition, results of operations and cash flows may be adversely affected.
There are certain of its historical corporate and secretarial records are not traceable. The company cannot assure you that regulatory proceedings or actions will not be initiated against it in the future which may impact its financial condition and reputation and we will not be subject to any penalty imposed by the competent regulatory authority in this regard.
The company success depends on its ability to execute its growth strategies. If the company is unable to sustain or manage its growth, the company business, results of operations, cash flows and financial condition may be adversely affected.
The company is exposed to compliance and internal control related risks. Any such risk could cause operational errors and have an adverse effect on its business, cash flows and results of operations.
Industry information included in this Red Herring Prospectus has been derived from an industry report exclusively commissioned and paid for by it for the purposes of the Offer.
The company failures to maintain optimum inventory levels could adversely affect its business, financial condition, results of operation and cash flow.
Information relating to capacity utilization of the company operating facilities included in this Red Herring Prospectus is based on various assumptions and estimates. Under-utilization of capacity of its operating facilities and an inability to effectively utilize the company operating facilities may have an adverse effect on its business and future financial performance.
Failures or disruption of its information technology systems may adversely affect the company business, financial condition, results of operations, cash flows and prospects.
The company suppliers and customers may engage in certain transactions in or with countries or persons that are subject to international economic sanctions. This may have an adverse effect on its business, cash flows and results of operations.
The company insurance coverage may not be adequate to protect it against all potential losses, which may have a material adverse effect on its business, financial condition, cash flows and results of operations.
The company Promoters and Promoter Group will continue to retain a majority shareholding in the Company after the Offer which will allow them to exercise significant influence over it.
The company has issued Equity Shares by way of a bonus issue on January 13, 2024, at a price that may be lower than the Offer Price. The company cannot assure you that its will not issue Equity Shares in the future at a price lower than the Offer Price.
Its ability to pay dividends in the future will depends on the company future cash flows, working capital requirements, capital expenditures and financial condition.