Quadrant Future Tek IPO will remain open for public bidding till Thursday, January 9, 2025
The public issue of Quadrant Future Tek, Punjab-based railway equipment maker, opened for public bidding today. The Rs 290 crore issue is fully a fresh issue of 1 crore equity shares with a price band of Rs 275-290 per share. On Monday, the Punjab-based firm raised Rs 130.5 crore from 15 institutional investors via anchor book on January 6, a day before the IPO opening.
Bengal Finance and Investment, along with Shine Star Build Cap, are the leading institutional investors in the anchor book. Bengal Finance purchased 6.2 lakh equity shares worth Rs 17.98 crore, while Shine Star Build Cap acquired 6.08 lakh shares for Rs 17.63 crore.
Whiteoak Capital bought 5.25 lakh shares through its four schemes for Rs 15.2 crore and Kotak Manufacture India Fund purchased 4.75 lakh shares for Rs 13.77 crore.
In addition to these investors, the Quadrant Future Tek IPO also saw investments from LIC Mutual Fund, Bank of India Mutual Fund, Citigroup, Ashoka Whiteoak ICAV, Shubhkam Ventures, Capri Global Capital, PGIM India, Sundaram Alternative Opportunities Fund, The Argan Fund, Niveshaay Hedgehogs Fund, and Vijit Growth Fund through the anchor book.
The issue will remain open for public bidding till Thursday, January 9, 2025. The allotment of shares is expected to be finalized on January 10. The company’s shares are scheduled to list on January 14 on both the NSE and BSE platforms.
The company has fixed a price band of Rs 275-290 per share and investors can apply for a minimum of 50 shares and in multiples thereof. Retail investors need to invest a minimum amount of Rs 14,500. For small non-institutional investors (NIIs), the minimum investment required is 14 lots or 700 shares, totaling Rs 2.03 lakh. On the other hand, large non-institutional investors are required to invest in at least 69 lots or 3,450 shares, which amounts to Rs 10 lakh.
The company has reserved 75 per cent of the shares for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and up to 10 per cent for retail individual bidders. The allocation process will be carried out through book-building.
The proceeds from the issue will be used to fund the company’s long-term working capital requirements: Specialty Cable Division (Rs 149.70 crore); capital expenditure for development of the Electronic Interlocking System (Rs 24.40 crore); prepayment or repayment of all or a portion of outstanding working capital term loans (Rs 23.6 crore); and general corporate purposes.
Sundae Capital Advisors Private Limited is the sole book-running lead manager, and Link Intime India Private Limited is the registrar of the issue.
The Grey Market Premium (GMP) for Quadrant Future Tek's IPO is currently Rs 210 as of January 7, 2024, at 7:00 AM. With the price band set at Rs 290, the expected listing price of the IPO is Rs 500 (calculated by adding the GMP to the cap price). This suggests an estimated gain of 72.41 per cent apiece on the listing day.
SBI Securities assigned a “Subscribe” rating to the Quadrant Future Tek IPO. The company is valued at FY24 P/E multiple of 79.0x at post-issue capital of the upper price band, the brokerage firm said.
According to analysts, the industry forecast indicates 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 the CY24E-CY30E period.
“Additionally, the strategic MoU signed with RailTel Corp. to provide KAVACH coupled with a recent order win from Chittaranjan Locomotive Works (CLW) of Rs 978.6 crore, solidifies the company’s position as a premier Original Equipment Manufacturer (OEM). Given these compelling factors, we recommend the investors to subscribe to the issue,” analysts said in a research note.
DR Choksey has assigned a “Subscribe’ rating to the Quadrant Future Tek IPO, citing the company's strong market position and robust growth prospects. The firm specializes in specialty cables and advanced train control and signaling systems, such as the KAVACH project for Indian Railways, and utilizes cutting-edge technologies like Electron Beam Cross-Linked polymers to enhance product durability and performance. With significant infrastructure developments and government initiatives like the Rs 557 crore funding for the KAVACH project, Quadrant is well-positioned within its industry.
Quadrant's valuation, with a PE ratio of 79x and an EV/EBITDA of 34x, is higher than some of its peers but is justified by its solid financial performance, evidenced by a strong ROE of 33 per cent.
“The premium valuation is further underpinned by its large addressable market and significant project wins, specifically in KAVACH, which enhances its growth potential and ensures sustainable growth prospects., the brokerage firm said.
Quadrant Future Tek Ltd, founded in 2015 and headquartered in Mohali, Punjab, is a research-oriented company developing next-generation train control and signaling systems under the KAVACH project for the Indian Railways. It also runs a specialty cable manufacturing facility with an Electron Beam Irradiation Centre, producing cables for railway rolling stock and the naval defense industry. The facility supports the end-to-end production of Solar and EV cables and includes areas for manufacturing, testing and developing specialty cables and hardware for the Train Control and Signalling Division.