Quadrant Future Tek IPO opens today: GMP up 72%; Should you subscribe?

The unlisted shares of Quadrant Future Tek were quoted trading at Rs 500 apiece, reflecting a premium of Rs 210 or 72.41 per cent over the upper end of the issue price of Rs 290

Quadrant Future Tek IPO GMP Zooms: The unlisted shares of Punjab-based railway equipment maker Quadrant Future Tek were commanding a solid premium in the grey markets as the company's initial public offering (IPO) is set to open for public subscription today, January 7, 2025. Sources tracking unofficial market activities revealed that the company's shares were quoted trading at Rs 500 apiece, reflecting a grey market premium (GMP) of Rs 210 or 72.41 per cent over the upper end of the issue price of Rs 290.

 

Quadrant Future Tek has also succeeded in getting favorable reviews from several brokerages, including SBI Securities, BP Equities, and Canara Bank Securities for its public offering. However, before we delve into the brokerage calls, here are the key details of the Quadrant Future Tek IPO.   

 

 

Quadrant Future Tek IPO issue size, price band

The company seeks to raise Rs 290 crore from the public offering, which comprises a fresh issue of 1,00,00,000 equity shares. Quadrant Future Tek has announced that it has already raised Rs 130.50 crore from anchor investors on January 6, 2025. 

 

Quadrant Future Tek IPO is available at a price band of Rs 275-290, with a lot size of 50 shares. Thus, investors can bid for a minimum of 50 shares and in multiples thereof. A retail investor would require a minimum of Rs 14,500 to bid for one lot of 50 shares and Rs 1,88,500 to bid for a maximum of 13 lots of 650 equity shares.

 

Quadrant Future Tek IPO allotment, listing schedule

The three-day subscription window to bid for the Quadrant Future Tek IPO is set to close on Thursday, January 9, 2025. Following that, the basis of the allotment of Quadrant Future Tek IPO shares is likely to get finalised tentatively on Friday, January 10, 2025, and the company's shares will be credited into the demat account on Monday, January 13, 2025.

 

Shares of Quadrant Future Tek are slated to list on the BSE and the National Stock Exchange (NSE) on Tuesday, January 14, 2025.

 

Quadrant Future Tek IPO objective

As per the Red Herring Prospectus (RHP), the company will use the proceeds from the IPO for funding long-term working capital requirements and for capital expenditure for the development of an electronic interlocking system. Quadrant Future Tek will further use the proceeds for the prepayment or repayment of all or a portion of the outstanding working capital term loan availed by the company, as well as for general corporate purposes.

 

Quadrant Future Tek IPO registrar, BRLM

Link Intime India serves as the registrar for the Quadrant Future Tek IPO, while Sundae Capital Advisors is the book-running lead manager of the public issue.

 

Quadrant Future Tek financial details

Quadrant Future Tek, in its RHP, has said that its profit rose to Rs 14.71 crore in FY24, up 5.82 per cent from Rs 13.90 crore reported in FY23.

 

Meanwhile, Quadrant Future Tek's revenue from operations jumped to Rs 151.75 crore, up 0.68 per cent from Rs 150.80 crore reported in FY23. On the flip side, the company's expenses dropped to Rs 129.93 crore in FY24, down 2.31 per cent from Rs 133.01 crore reported in FY23.

 

Should you subscribe to Quadrant Future Tek IPO?

 

BP Equities - Subscribe

Brokerage firm BP Equities, in its research report, has assigned a Subscribe rating to the public offering. Among the key favorable factors, the brokerage highlighted that the Indian Train Control System market was valued at USD 159 million in 2023, with projections to rise to USD 208 million in 2024, growing at a CAGR of 12.7 per cent from 2024 to 2030. Meanwhile, in the interim budget of FY2024-25, the FM allocated Rs 2.55 lakh crore to Indian Railways, a 5.8 per cent increase. Moreover, the KAVACH automatic train protection system aims to enhance safety, expanding coverage to 4,500 kilometers next year and targeting 44,000 kilometers over five years. "Additional tenders for 6,000 kilometers are expected soon. A strategic MoU with RailTel Corp and a Rs 978.6 crore order from Chittaranjan Locomotive Works strengthen the company’s position as a leading Original Equipment Manufacturer (OEM)."

 

As per the brokerage, the issue is valued at a price-to-earnings (P/E) ratio of 59.1x on the upper price band based on FY24 earnings, which is deemed fair compared to its peers. "Considering the above compelling factors, we recommend a 'Subscribe' rating for this issue."

 

SBI Securities - Subscribe

Analysts at SBI Securities have also assigned a Subscribe rating to the public offering. As per the analysts, the company is valued at an FY24 P/E multiple of 79.0x at post-issue capital of the upper price band. "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 CY24E-CY30E. 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)," analysts wrote in a research note.

 

Canara Bank Securities - Subscribe for long-term

Analysts at Canara Bank Securities have recommended investors subscribe to the Quadrant Future Tek IPO for the long-term perspective. "QFTL is currently valued at a price-to-earnings (P/E) ratio of 59x based on FY24 earnings, in line with industry peers also at a P/E of 59x, reflecting its growth potential. As QFTL scales operations, enhances integration, and broadens its market reach, the company is well-positioned for sustainable growth," wrote the analysts in a research report. "Despite slower product adaptation by the total addressable market, QFTL has strategic positioning and a robust pipeline; therefore, we recommend Subscribe to QFTL for long-term gains."  About Quadrant Future Tek  Quadrant Future Tek is a research-oriented organisation engaged in developing next generation Train Control and Signalling Systems under the KAVACH project of the Indian Railways. These systems offer the highest level of safety and reliability to rail passengers. The company operates a speciality cable manufacturing facility equipped with an Electron Beam Irradiation Centre. The speciality cables manufactured by the company are used in railway rolling stock and the naval (defence) industry. Additionally, the facility also has an end-to-end infrastructure capabilities for the production of Solar and EV cables. T