Quadrant Future Tek IPO to open on January 7; check price band, business model, financials & more

Quadrant Future Tek Ltd is set to launch its initial public offering (IPO) to raise ₹290 crore from the primary market. The producer of train control and signaling systems for Indian Railways is scheduled to launch its IPO on Tuesday, January 7, 2025. The price range has been fixed at ₹275-₹290 a unit.

The mainboard issue will be available for subscription till January 9, 2025. Quadrant Future Tek IPO will be a completely fresh issue of shares without any offer-for-sale (OFS) component.

Here are some noteworthy details about Quadrant Future Tek IPO:

Quadrant Future Tek IPO price band, lot size

Quadrant Future Tek IPO will comprise a complete fresh issue of shares having a face value of ₹10 each. The price band has been set at ₹275 to ₹290 per share. An investor can bid for a minimum of 50 shares, needing an investment of ₹14,500.

The company has proposed to reserve 75% of the net issue for Qualified Institutional Buyers (QIBs) and 15% for Non-Institutional Investors (NIIs). The remaining 10% will be allocated to the retail category.

Quadrant Future Tek IPO opening date

Quadrant Future Tek IPO subscription will remain open from January 7, 2025, to January 9, 2025. The IPO share allotment status is likely to be finalised on January 10. After the share allotment, refunds will be initiated for unsuccessful bidders on January 13. The successful bidders will also receive shares in their demat accounts the same day.

Quadrant Future Tek Ltd. shares are tentatively scheduled to be listed on the NBE and BSE on January 14.

Quadrant Future Tech: Key financials

For the quarter ended September 30, 2024, the company’s revenue from operations stood at ₹65.14 crore. The company reported a net loss of ₹12.10 crore in Q2FY25.

Quadrant Future Tek’s revenue from operations dipped marginally by 0.6% to ₹151.75 crore in FY24 compared to ₹152.8 crore in FY23. The company posted a net profit of ₹14.88 crore in FY24, increasing nearly 8% compared to a net profit of ₹13.8 crore in FY23.

Quadrant Future Tek business model

Quadrant Future Tek is primarily engaged in developing Train Control and Signaling Systems for the Indian Railways' KAVACH project. The company classifies its business operations under two focussed business divisions, namely - ‘Speciality Cable Division’ and ‘Train Controls & Signalling Division’.

While the first model is used in a diverse portfolio, including Naval Defence, Renewable Energy Cables, Electric Vehicles, and Railway rolling stock, the other model has ventured into Railway Traffic Management Solutions and come up with its solution called ‘Train Collision Avoidance System (TCAS)’, which is a collision-avoidance system, under the Atmanirbhar Bharat programme.

Quadrant Future Tek has invested huge human and financial capital in software development to build Automatic Train Protection Systems. According to the company’s Red Herring Prospectus (RHP), the field is an evolving landscape in the safety-critical operations envisaged by Indian Railways in the long run.

As part of its strategies, Quadrant Future Tek intends to pursue expansion opportunities outside India in the long run. Competing successfully in international markets requires additional management attention and resources to customise the company’s services to suit different requirements in each new country.

In the speciality cables segment, the company faces competition from other suppliers to the Indian Railways like Apar Industries Limited, Poly Cab Limited and Radiant Corporation Private Limited. On the other hand, Medha Servo Drives Private Limited, HBL Power Systems Limited and Kernex Microsystems (India) Limited are the company's direct competitors. They are approved players for supplying equipment for the KAVACH system to the Indian Railways.

Quadrant Future Tek IPO: Key strengths

• The company has undertaken innovative and technological development for building Automatic Train Protection Systems.
• It has entered into an exclusive Memorandum of Understanding with RailTel to deliver specific, targeted opportunities related to KAVACH in India and other countries’ Railways.
• The company has in-house design and product development capabilities, powering its Rail Signalling Products & Solutions, as per the RHP.
• It has advanced manufacturing facilities and a diverse range of power and control cables, with a focus on innovation and cost competitiveness.

Quadrant Future Tek IPO: Key risks

• The company’s business is dependent on only a single manufacturing facility. Any slowdown or shutdown in its manufacturing operations could impact its operations, financial condition, and future growth.
• Rapid changes in customer preferences, technology, and cost pressures in the industries the company serves could disrupt its business and financial performance.
• The company recently expanded its operations into Train Control Systems, which means its performance here is uncertain. It has also not yet secured contracts in this segment.
• Quadrant Future Tek received a purchase order worth ₹ 978.6 crore in December 2024. According to the RHP, failure to meet the obligations of this order from Chittaranjan Locomotive Works could severely affect the company’s financial performance and future business prospects.
• Errors in past financial statements and sudden profit fluctuations raise concerns about the company's financial stability and regulatory compliance. Any regulatory action by SEBI or the Registrar of Companies (RoC) will lead to financial penalties.

The company’s promoters are Mohit Vohra, Amit Dhawan, Amrit Singh Randhawa, Rupinder Singh, Vishesh Abrol and Vivek Abrol, Aikjot Singh and Rajbir Singh Randhawa. The promoters together hold 93.33% shareholding of the company pre-issue. The promoter shareholding post-issue is not known yet.