The initial public offering (IPO) of Quadrant Future Tek continued to attract a strong response from the investors during the third and final day of the bidding process. The issue was overall subscribed more than 7.5 times on day one and ended day two with about 52 times bidding.
The Quadrant Future Tek is selling its shares in the price band of Rs 275-290 apiece. Investors can apply for a minimum of 50 shares and its multiples thereafter. It is looking to raise Rs 290 crore via IPO, which is entirely a fresh share sale of 1,00,00,000 equity shares.
According to the data, the investors made bids for 49,57,66,400 equity shares, or 85.48 times, compared to the 57,99,999 equity shares offered for the subscription by 12.55 pm on Thursday, January 09, 2025. The three-day bidding, which kicked off on Tuesday, January 07, shall conclude today.
The allocation for retail investors was subscribed 189.97 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 164.55 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed 11.11 times as of the same time.
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 grey market premium (GMP) of Quadrant Future Tek has remained firm amid the rising volatility, thanks to the strong bidding for the issue. Last heard, the company was commanding a premium of Rs 210 per share in the unofficial market, suggesting a listing pop of over 72 per cent for the investors.
Brokerages are mostly positive on the issue suggesting investors to subscribe to it citing its strong financial performance, recent order wins, experience management, rising demand of the specialized solutions. However, dependence on a single manufacturing unit, dependence on top 5 customers and negative cash flows in the recent past dent the sentiments.
Quadrant Future Tek is valued at an EV/EBITDA of 33.9 times which is undervalued in comparison to 39 times of Polycab (Specialty Cable) and 36 times of HBL Engineering (TCAS) on FY24 basis. Till date, it has generated revenue through its Specialty Cables division, said Indsec Research.
“Their indigenously designed and developed TCAS (KAVACH System) has received necessary approval from Indian Railway / RDSO to be deployed and accordingly the company has attracted orders worth Rs 16.86 crore and Rs 978.61 crore from CLW under India Railway. Their MoU with RailTel also boosted their ability to secure TCAS orders from Indian Railways,” it said ‘subscribe’ tag.
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. 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 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. It shall command a total market capitalization close to Rs 1,160 crore.
Quadrant Future Tek has secured a strong order book, including a notable Rs 979 crore contract for KAVACH implementation, which highlights its robust revenue visibility. Strategic partnerships, such as with RailTel for KAVACH deployment, bolster its position in domestic and international markets, said Nirmal Bang Securities.
“With favourable industry tailwinds and increasing demand for its offerings, Quadrant is well-positioned for sustained growth. Based on peer comparison, Quadrant Future Tek stands out with a healthy 24 per cent Ebitda margin and impressive returns. Its EV/order book ratio is reasonable at 1.3 times,” it added with a ‘subscribe’ rating
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 on both BSE and NSE with January 14, Tuesday as the tentative date of listing.
