Quadrant Future Tek to Raise Rs 290 Crore in IPO for Growth in Railways and EV Sectors
Quadrant Future Tek, a rising player in the cable manufacturing and signalling industries, is preparing to raise Rs 290 crore through an Initial Public Offering (IPO). The company plans to use the funds to reduce its debt, support capital expenditure, and boost its working capital. The IPO also signals the company’s commitment to expanding its footprint in the electric vehicle (EV) and renewable energy sectors, while continuing to serve its major clients in the railway and navy sectors.
Founded in 2015, Quadrant Future Tek is based in Punjab and has established itself as a key supplier of specialty cables used in critical sectors like the navy, railways, and solar power. Its cables, known for their lightweight and fire-resistant properties, are integral to the functioning of naval ships, submarines, trains, and even fuel-cell EVs. The company’s focus on high-quality, performance-oriented cables has attracted a significant customer base, with Indian Railways being its largest client, contributing nearly half of its total revenue in recent years.
The company’s signalling business is poised to grow further, especially with its involvement in India’s Kavach project aimed at enhancing railway safety. Quadrant has already secured a purchase order worth Rs 978.6 crore from Chittaranjan Locomotive Works (CLW) to supply on-board Kavach equipment. This order, which will be completed over the next 12 months, strengthens the company’s position in the railways sector. The order includes a four-year warranty, after which Quadrant will receive annual maintenance contracts worth 3% of the total capital cost for 11 years. However, the company faces some challenges due to its expanding signalling business, which has put pressure on its financials. In the six months leading up to September 2024, the costs associated with signalling projects resulted in a significant dip in margins, and the company reported a net loss. Despite this, the long-term growth prospects for its signalling and cable businesses remain strong, with further orders expected in the coming quarters.
Quadrant’s financials have shown considerable improvement in recent years. In FY24, its revenue grew to Rs 151.8 crore, up from Rs 104.3 crore in FY22. Its net profit also rose sharply to Rs 14.7 crore, compared to Rs 1.9 crore in the previous fiscal year. However, the impact of the signalling business in the current fiscal year has brought the margin down to just 1.3%, leading to a net loss of Rs 12 crore. Despite these challenges, the company’s future growth prospects have been reflected in its high IPO valuation. The company’s price-earnings (P/E) multiple of 78 is notably higher than that of Polycab India, a leading cable manufacturer, which trades at a P/E of 59. Investors with a high-risk appetite may find the IPO appealing, given the company’s potential for growth in the EV, renewable energy, and railway sectors. Quadrant Future Tek’s expansion into new sectors, coupled with its strong presence in the railways and navy industries, positions the company as a promising player in the infrastructure and manufacturing space. The IPO marks a key milestone in its journey to diversify and scale its operations, with a focus on long-term growth and value creation for investors.
