Archives: Ipos

QPEEL is a technology-driven company specializing in power products and solutions across the power generation, transmission, distribution, and automation sectors. It provides high-voltage electrical equipment and solutions for electrical grid connectivity and energy transition. The energy transition equipment and power technologies market is poised for significant growth in the coming decades. As governments and businesses around the world intensify their efforts to decarbonize the energy sector, the demand for energy transition equipment is expected to expand steadily. QPEEL’s global presence across the energy transition and power technology industry, spanning 100 countries, positions it well to capitalize on this sectoral growth and increase its sales. The company’s large customer base in different segments and its comprehensive product portfolio reinforce its position in an industry characterized by high trade barriers. On the financial front, QPEEL’s operational revenue grew at a CAGR of 28.3% from FY22 to FY24. Profit after tax rose from Rs. 422 million in FY22 to Rs. 555 million in FY24, while return on equity (ROE) improved slightly from 26.3% to 29.1%. The company is valued at a PE ratio of 81.9x on the upper price band based on FY24 earnings, which is lower than its peers. Given its strong financial growth, diverse product portfolio and global customer base, the company is well-positioned to achieve sustained growth within the sector. Therefore, we recommend a “SUBSCRIBE” rating for medium to long-term investment.

Hexaware Technologies has undergone significant evolution over the past decade, expanding its service offerings, diversifying its customer base, enhancing its global delivery capabilities, and placing a stronger emphasis on innovation and technology. The company serves a wide array of clients, including 31 organizations from the Fortune 500 list. The global enterprise technology services market is projected to reach approximately Rs. 343 trillion (US$ 4,107.5 billion) in CY2029E from Rs. 266 trillion (US$ 3,109.4 billion) in CY23, with IT services expected to grow at a compound annual growth rate (CAGR) of around 7.2%, while business process services are anticipated to grow at a CAGR of roughly 2.5% during the period from CY24 to CY29E. The company has a global delivery presence across India, UAE, USA, Mexico, Europe and South East Asia that enables the company to offer innovative and cost-effective solutions to its customers. Additionally, its strategic partnerships contribute to expanded service capabilities and market reach. Hexaware’s adjusted cash conversion percentage reached 89.9% for CY23, up from 56.0% in CY22. This demonstrates the company’s strong cash generation capabilities and efficient working capital management. Hexaware’s track record of robust revenue growth, improving margins, and strong cash generation positions it well for continued success, underscoring its commitment to delivering value to stakeholders. The issue is valued at a price-to-earnings (P/E) ratio of 43.1x on the upper price band based on CY23 earnings, which is relatively cheaper compared to its peers. Considering the above compelling factors, we recommend a “SUBSCRIBE” rating for this issue.

Ajax Engineering Ltd. is a leading concrete equipment manufacturer with a diverse product portfolio that includes SLCMs, batching plants for concrete production, transit mixers for concrete transportation, boom pumps, concrete pumps, self-propelled boom pumps for concrete placement, slip-form pavers for concrete paving, and 3D concrete printers for depositing concrete. The company holds an approximate 75% market share in SLCMs in India and has sold the largest number of manufacturing equipment, which also commands the highest resale value among its peers. The concrete equipment market in India, particularly for SLCMs, is experiencing significant growth driven by several factors, including increasing cement consumption and rising public and private capital expenditure in infrastructure, irrigation, housing, and renewable power projects, leading to higher demand for construction materials and equipment. Ajax Engineering has established a robust dealer-led distribution and service model, comprising 51 dealers across 23 states, and serves a diverse base of end customers across specialized sectors such as transportation infrastructure, irrigation, and large-scale infrastructure projects. On the financial front, the company has delivered strong performance, with revenue growing at a CAGR of 51% from FY22 to FY24. During the same period, its EBITDA and PAT grew at an impressive CAGR of 74.5% and 84.4%, respectively. The issue is priced at a P/E ratio of 32.1x at the upper price band based on FY24 earnings, which is comparatively lower than its industry peers. Given the company’s strong financial performance, favorable industry growth drivers, and attractive valuation, we recommend a “SUBSCRIBE” rating for this issue.

Dr Agarwal’s Health Care Ltd (DACHL) is India’s largest eye care service provider, offering a comprehensive range of eye care services and products. Recognised for its comprehensive and end-to-end ophthalmic services, including embedded pharmacies and optical product counters, DAHCL has built a trusted, quality-driven brand. Known for its efficient, asset-light, hub-and-spoke model, DAHCL has expanded rapidly and supports high patient volumes through effective resource utilisation, solidifying its market position and continuous growth. On the economic front, the Indian eye care industry is projected to grow at a CAGR of 12% to 14% from FY24 to FY28 to reach a market size of ₹550-650 billion. The growth in the industry is led by factors such as the high prevalence of eye-related disorders in India, rise in income levels, shifting age demographics, lifestyle changes, emerging eye care service chains, and government and non-government organisation initiatives to promote awareness about eye health in India. With a substantial market share in the organized eye care segment, we believe the company is well-positioned to be a key beneficiary of economic growth and capitalize well on the emerging trends in the segment. On the financial front, the company reports revenue/EBITDA/PAT at a CAGR of 38.3%/41.0/48.4%. The company has substantially been able to improve its D/E from 3.3 in FY22 to 1.0 in FY24. It exhibits an ROE of 6.9% and an ROCE of 8.2%, which is below the industry average. The company trades at a P/E of 128x, based on its FY24 earnings we believe is overvalued compared to its listed peers. Driven by inconsistent financial performance, rich valuation and higher concentration of OFS in the Issue, we remain largely cautious of the listing. We thus recommend an AVOID rating for the issue and will reassess our rating in future following sustained business performance in upcoming quarters. 

Denta Water and Infra Solutions Ltd. operates in the Indian water and wastewater treatment industry, which is projected to reach USD 23.9 billion by 2033. The company, a key player in this industry, is set to benefit from this growing trend due to its strong track record, including 32 successful execution of water management projects, particularly in groundwater recharge (GWR) and wastewater management with projects like Byrapura and Hiremagaluru LIS. Currently, the company has an outstanding order book of Rs. 7,524.5 million, mainly from the government of Karnataka. Additionally, the company is focusing on diversifying its geographic footprints in high-potential regions like Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh, which will reduce the reliance on Karnataka. The company follows an efficient, asset-light model that enhances project execution through joint ventures and development management. This approach reduces the capital expenditure and improves return ratios, resulting in the debt-equity ratio of the company for H1FY25 being 0. With the growing focus of the government on water reuse and recycling, Denta Water plans to leverage its expertise to capitalise on these trends and expand its participation in water conservation and infrastructure development projects. The company’s expanding portfolio, including ventures in railways and highways, further strengthens its position in the infrastructure sector, positioning it well for continued growth amidst evolving market conditions. Financially, the company has registered a revenue CAGR of 41.3% from Rs. 1,196 million in FY22 to Rs. 2,386 million in FY24. EBITDA grew at a CAGR of 23.4% from Rs. 518 million in FY22 to Rs. 791 million in FY24. Overall, Denta Water’s strategic focus on water management projects, growing market opportunities, and strong order book positions it well for future growth in water management and infrastructure sectors. Considering its valuation with a PE ratio of 9.5x based on FY24 earnings, we recommend a “SUBSCRIBE” rating for medium to long term investment. 

Stallion India is engaged in refrigerating and industrial gases. It has created a niche in the segment with quality and economical products. The company’s gases find application in various industries/segments such as air conditioners & refrigerators, fire-fighting, semiconductor manufacturing, automobile manufacturing, pharma and medicals, glass bottle manufacturing, aerosols and spray foam. With over two decades of experience in fluorochemicals debulking bottling & distribution, the company specializes in refrigerant gases by blending two or more gases to create new formulations. In refrigerant and other gases, where precision, quality and reliability are essential, Stallion India’s supply chain distinguishes itself by its ability to promptly meet market demands with changing market dynamics. They prioritize implementing quality control measures, ensuring that gases adhere to the highest industry standards. This commitment to supply chain excellence results in providing high-quality refrigerant and other gases, sustaining a competitive edge in the market. The company reported a revenue CAGR of 12.0% on the financial front during the FY2022-24 period.  The company concentrated on expanding the facility to other domestic locations that capture the market and demand from various industry concentrations in these areas. In addition, they are committed to increasing the reach of products to broaden its customer base and enhance revenue. This approach allows for the efficient utilization of processing facilities and increased cash flows. Additionally, with a significant shift in expanding its offerings, it has focused on high-margin products. With its planned strategy, the management is confident of improving its earnings. Based on its recent financial performance, the issue appears reasonably priced at a P/E of 35.4x on the upper price band based on FY24 earnings. Therefore, we recommend a SUBSCRIBE rating for the issue. 

As of September 2024, Laxmi Dental is among the few vertically integrated players globally and India’s only vertically integrated company. The company has been trying to establish ‘Illusion’ as a well-recognized brand. Its established market presence and experience in manufacturing quality products will help it build and scale future brands. The company also operates through a B2B2C model and has established a sizeable dental network of over 22,000 dental clinics, dental companies and dentists. Further, the company has catered to domestic and global demand by selling its products across 320 Indian cities and 95+ countries between FY2022-H1FY25. Laxmi Dental’s strong relationship with dentists, clinics, and dental companies is a strong entry barrier for new entrants to the Indian dental market. On the financial front, the company reported Revenue/EBITDA CAGR of 18.9%/109.6% during the FY2022-24 period, respectively. Laxmi Dental has also witnessed margin improvement from 4.0% in FY22 to 19.5% in H1FY25, driven by operational efficiencies. The reduction in interest cost following debt repayment is likely to improve profitability further. The issue is valued at a P/E of 89.2x on the upper price band based on FY24 earnings. However, we believe that factors such as the shift from the unorganized to the organized segment, greater awareness and adoption of dental aesthetics and a shift towards metal-free products are likely to drive growth for the company. Therefore, we recommend a SUBSCRIBE rating for the issue.

Capital Infra Trust (erstwhile National Infrastructure Trust) is an infrastructure investment trust sponsored by Gawar Construction Ltd (GCL), a leader in India’s road and highway development. The Sponsor has an established track record of efficient project management and execution involving trained and skilled manpower, efficient deployment of equipment and an in-house integrated business model. These attributes have enabled the company to complete projects on or before the scheduled completion period. The in-house supply chain management ensures that key construction materials are delivered promptly to the facilities and construction sites, enabling the Sponsor to manage its processes effectively and maintain its key raw material inventory optimally. The infrastructure sector is responsible for propelling India’s overall development and enjoys intense focus from the government on initiating policies that would ensure the time-bound creation of world-class infrastructure in the country. Additionally, over time, experienced sponsors build strong relationships with stakeholders such as government authorities, local communities, and financial institutions. Capital Infra Trust intends to leverage the Sponsor’s experience and expertise to gain a competitive advantage within the road infrastructure industry. The Investment Manager intends to expand the initial portfolio by identifying and acquiring additional road projects that meet the investment objectives by the provisions of the Trust Deed. The Investment Manager will be selective concerning new projects it acquires in the future and will rely on the relevant policies of the Trust to make investment decisions in road projects. Based on the FY24 book value, the current issue is valued at a P/BV multiple of 0.31x. Given the positive growth in India’s infrastructure, particularly in roads and highways, we advise investors to “Subscribe” to the issue.

Quadrant Future Tek Ltd. is a research-focused company developing advanced Train Control and Signalling Systems for the Indian Railways under the KAVACH project. It has two main divisions: The Specialty Cables Division and the Train Control and Signalling Division. It also has a manufacturing facility featuring an Electron Beam Irradiation Centre. The domestic speciality cable market was valued at USD 536 million in 2023 and is expected to reach 589 million in 2024. 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% from 2024 to 2030. In the interim budget of FY2024-25, the FM allocated Rs. 2.55 lakh crore to Indian Railways, a 5.8% increase. The KAVACH automatic train protection system aims to enhance safety, expanding coverage to 4,500 kilometres next year and targeting 44,000 kilometres over five years. Additional tenders for 6,000 kilometres are expected soon. Financially, the company’s revenue from operations grew from Rs. 1,042.5 million in FY22 to Rs. 1,518.2 million in FY24, marking a CAGR of 20.6%. Its EBITDA increased from Rs. 95 million to Rs. 366.6 million during the same period. A strategic MoU with RailTel Corp. and a Rs. 78.6 crore order from Chittaranjan Locomotive Works strengthen the company’s position as a leading Original Equipment Manufacturer (OEM). 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.