February 12, 2025
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Quality Power IPO Review by Paresh Gordhandas, CA & Research Analyst at
ChanakyaNiPothi.com, A legacy of 31 Years. India`s The Oldest Investment & IPO website.
Quality Power Equipment: A Global Leader in Energy Transition Solutions
Quality Power Equipment is an Indian company that caters to global clients with critical energy transition technologies and power solutions. The company specializes in providing power products and solutions across the power generation, transmission, distribution, and automation sectors. Additionally, it offers tailored equipment and solutions for emerging sectors, such as large-scale renewable energy applications.
The company’s manufacturing facilities meet the stringent quality standards demanded by its global clientele, including Fortune 500 companies.
As one of the few global manufacturers of essential high-voltage equipment for High Voltage Direct Current (HVDC) and Flexible AC Transmission Systems (FACTS) networks, Quality Power Equipment plays a pivotal role in the energy transition from renewable sources to traditional power grids. The HVDC sector is expected to grow at a remarkable 80% rate over the coming years, vastly outpacing the normal 9% growth rate. According to CareEdge Research, the global HVDC and FACTS market is projected to expand at a compound annual growth rate (CAGR) of 75-80%, from USD 23,791 million to USD 249,744 million. In India, this market is expected to grow at a CAGR of 60-65%. HVDC technology is particularly suited for long-distance electricity transmission, including cross-border power trading, and is essential for connecting remote renewable energy sources, such as offshore wind farms, to the grid. As renewable energy generation continues to grow, effective integration into existing power grids is crucial, and HVDC equipment is key to this process.
In India, the HVDC equipment market is competitive, with five main players, with Quality Power Equipment being the most prominent. The company’s compound annual growth rate (CAGR) of 28.30% is the highest among its peers, driven by robust export sales.
Strong Financial Performance
In H1FY25, Quality Power Equipment posted the highest EBITDA margin in its peer group, at 20.16%, while its competitors recorded EBITDA margins ranging from 6.66% to 13.85%. In FY24 and H1FY25, the company also achieved the highest return on equity (ROE) among its peers, reflecting its strong financial momentum and consistent outperformance.
The company leads its peers in export sales, increasing its export share from 74.30% in FY22 to 80.70% in FY24.
Financial Strength and Growth Outlook
Quality Power Equipment has a robust balance sheet, with financial assets of Rs. 139.05 crore as of March 31, 2024, and no debt. Based on the strong performance in H1FY25, I anticipate an earnings per share (EPS) of Rs. 9-10 for the full year, with shares priced attractively at a PE multiple of 47/42.
While the secondary market may see some selling pressure, this IPO is expected to offer solid returns over the medium to long term, positioning Quality Power Equipment as a potential multibagger.
Conclusion: Must Apply for the IPO
Review by Paresh Gordhandas CA and Research Analyst, INH00000750
+ from fundamental angle: Must Apply
+ from grey market angle: Apply
