Quadrant Future Tek Limited is launching its Initial Public Offering Quadrant Future Tek IPO from January 7 to January 9, 2025, with a price band set between ₹275 and ₹290 per share.
Quadrant Future Tek Details
- IPO Opening Date: January 7, 2025
- IPO Closing Date: January 9, 2025
- Basis of Allotment Finalization: January 12, 2025
- Refunds Initiation: January 13, 2025
- Shares Credit to Demat Accounts: January 14, 2025
- Listing Date: January 15, 2025
- Issue Size: The IPO aims to raise ₹290 crore through a fresh issue of 1 crore shares.
- Lot Size: Investors can bid for a minimum of 50 shares.
- Allocation: 75% of the offer is reserved for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 10% for Retail Individual Investors (RII).
Company Overview:
Quadrant Future Tek specializes in developing advanced Train Control and Signalling Systems, notably contributing to the Indian Railways’ KAVACH project, which aims to enhance rail safety and reliability. The company also operates a specialty cable with an Electron Beam Irradiation Centre.
Financial Highlights:
- Revenue: The company reported revenues of ₹1,528.04 million in FY2023, ₹1,517.56 million in FY2024, and ₹651.37 million for the half-year ending September 30, 2024.
- Profit After Tax (PAT): PAT was ₹139.04 million in FY2023, ₹147.13 million in FY2024, and a loss of ₹121.05 million in the half-year ending September 30, 2024.
- Earnings Per Share (EPS): EPS stood at ₹4.61 in FY2023, ₹4.90 in FY2024, and a negative ₹4.02 (not annualized) for the half-year ending September 30, 2024.
Utilization of Proceeds:
The funds raised will be allocated as follows:
- ₹149.72 crore for long-term working capital requirements.
- ₹24.37 crore for developing an electronic interlocking system.
- ₹23.62 crore for debt repayment.
- The remainder for general corporate purposes.
Strengths:
(1) Focus on Railway Modernization:
- The company specializes in developing advanced Train Control and Signaling Systems and is a key contributor to the KAVACH project, a government initiative for railway safety and automation.
(2) Strong Market Potential:
- Increasing investments in railway infrastructure and modernization projects offer growth opportunities.
(3) Diverse Product Portfolio:
- Operates a state-of-the-art specialty cable manufacturing facility with an Electron Beam Irradiation Centre, which enhances its offerings in safety-critical systems.
(4) Rising Demand for Advanced Safety Solutions:
- With safety and reliability becoming key priorities in transportation, the company’s solutions align well with future trends.
Risks:
(1) Financial Losses:
- The company reported a loss of ₹121.05 million in the first half of FY2025, indicating potential operational challenges.
(2) High Debt Levels:
- Rising debt-to-equity ratio increases financial risk, making the company’s operations more sensitive to economic and market fluctuations.
(3) Competition:
- The sector is highly competitive, with domestic and international players offering similar solutions, potentially affecting market share and margins.
(4) Project Execution Risks:
- Timely completion of large-scale railway projects is critical for revenue generation. Delays or cost overruns could strain financial resources.
Recommendation:
While the company demonstrates strong growth potential in railway modernization, its financial challenges and dependency on government projects pose risks. Investors should carefully assess their risk tolerance, the company’s performance, and broader market conditions before participating in this IPO.
Quadrant Future Tek IPO Returns
At this stage, Quadrant Future Tek Limited has not been listed, so actual returns cannot be calculated. However, we can provide hypothetical return scenarios based on potential listing and market performance post-listing.
| IPO Price Band (₹) | Listing Price (₹) | Gain/Loss Per Share (₹) | Return (%) | Investment for 1 Lot (₹) | Profit/Loss for 1 Lot (₹) |
| 275 (Lower Band) | 350 | 75 | 27.27% | 13,750 | 3,750 |
| 275 | 300 | 25 | 9.09% | 13,750 | 1,250 |
| 275 | 250 | -25 | -9.09% | 13,750 | -1,250 |
| 290 (Upper Band) | 350 | 60 | 20.69% | 14,500 | 3,000 |
| 290 | 320 | 30 | 10.34% | 14,500 | 1,500 |
| 290 | 260 | -30 | -10.34% | 14,500 | -1,500 |
Explanation:
- IPO Price Band: The price at which shares are offered during the IPO (₹275–₹290).
- Listing Price: Hypothetical price at which shares trade on the listing day.
- Gain/Loss Per Share: Difference between listing price and IPO price.
- Return (%): Percentage gain/loss based on the IPO price.
- Investment for 1 Lot: Minimum investment for one lot (50 shares).
- Profit/Loss for 1 Lot: Total profit/loss based on 50 shares.
Key Considerations:
- Upside Potential: Positive sentiment and robust demand could lead to listing gains.
- Risks: Weak market sentiment or company performance could result in listing losses.
- Sector Dynamics: The company’s alignment with railway modernization could drive long-term growth.
Potential Growth Scenarios for the IPO:
| Scenario | Key Drivers | Expected Growth | Impact on Investors |
| High Growth | Strong demand for IPO, government contracts, successful project delivery | High (20-30% return in the first year) | Positive market sentiment, strong listing performance |
| Moderate Growth | Stable demand from government projects, but competition increases | Moderate (10-15% return) | Steady growth with occasional market fluctuations |
| Neutral Growth | Market sentiment stabilizes, steady performance with minimal disruptions | Low or Stable (0-5% return) | Listing price stabilizes, modest returns |
| Decline | Operational delays, poor financial performance, or market downturn | Negative (-5 to -10% or more) | Potential loss if issues impact investor confidence |
Challenges to Growth:
(1) Financial Performance Volatility:
- While the company is focusing on growth areas, it reported a loss in the first half of FY2025, which could indicate financial instability. Any prolonged losses could affect stock prices and investor sentiment.
(2) High Dependency on Indian Railways:
- The company’s reliance on Indian Railways for a significant portion of revenue could be a risk if project delays or policy changes occur.
(3) Industry Competition:
- The sector is competitive, and larger players or global entrants could impact the company’s market share.
(4) Execution Risks:
- Delays in completing key projects or managing cost overruns could lead to financial challenges, limiting growth potential.
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