Quadrant Future Tek IPO GMP Review: Hello friends! Hope you’re all doing well. Today, let’s dive into an exciting topic – the review of the second IPO of the year. The first one was from Standard Glass Lining, and now we have the Quadrant Future Tek IPO, open from January 7 to January 9. This IPO has garnered significant attention because of its association with the Railway KAVACH system. But does it really deserve the hype? Let’s find out.
In this article, we’ll review the IPO in detail. We’ll cover its grey market premium (GMP), anchor list, company details, and financials. By the end, you’ll have a clear picture of whether to apply for this IPO for listing gains or long-term investment.
Also Read : Capital Infra Trust InvIT IPO Review: Should You Apply or Skip?
Understanding the Grey Market Premium (GMP)
The grey market premium gives an idea about the listing gains potential of an IPO. For Quadrant Future Tek, the GMP opened around ₹60 per share, showing decent demand. This indicates positive market sentiment. However, GMP alone cannot guarantee success. It’s just one indicator to consider.
About Quadrant Future Tek: What Does the Company Do?
Quadrant Future Tek was incorporated in 2015, making it a decade-old company in 2025. It operates primarily in the cable manufacturing sector, supplying to various industries like:
- Railways – Cables for signaling and other purposes.
- Defense – Specialized cables for naval applications.
- Automotive Industry – Wire harnessing solutions.
- Solar Energy – PV cables for solar installations.
The company is also linked to the Railway KAVACH system, a train collision avoidance system. However, here’s the catch – only 4% of its revenue comes from this segment, as per its RHP (Red Herring Prospectus). Most of its income, over 90%, is generated from cables and wires. This makes it primarily a cable company, not a KAVACH-focused entity, despite the hype.
Financial Performance: Growth or Challenges?
Revenue
The company’s revenue grew from ₹105 crores in 2022 to ₹151 crores in 2024. However, the growth has been inconsistent, with a slight dip in some quarters. As of September 2024, its two-quarter revenue stood at ₹65 crores. While projections suggest it could double to ₹130 crores for the full year, actual performance will depend on new orders.
Profitability
Quadrant Future Tek’s profit has seen improvement. It grew from ₹1.94 crores in 2022 to around ₹14 crores in 2024. The profit margin ranges between 9-10%, which is commendable for a small company.
Debt
The company has a significant debt burden of ₹98 crores, resulting in a high debt-to-equity ratio of 1.86. While the IPO proceeds will be used to repay ₹23.6 crores of debt, a considerable amount will still remain, posing a risk.
Net Worth and Reserves
Net worth has shown growth, but reserves have decreased. This indicates that the company is relying more on borrowed funds than internal accruals, which isn’t ideal.
Valuations: Fair or Overpriced?
The IPO price band is set at ₹275-₹285 per share, with a lot size of 50 shares. At this valuation, the company’s market cap stands at ₹1,160 crores, making it a small-cap entity.
Compared to peers, the valuation is moderate. It’s not cheap, but it’s not overly expensive either. Return on Net Worth (RoNW) is decent, but considering the high debt, a slightly lower price would have been more attractive.
Positives of the IPO
- Sector Potential
The company operates in growing industries like railways, defense, and solar energy. Demand in these sectors is expected to rise. - Fresh Issue
The entire IPO is a fresh issue, meaning funds raised will directly aid the company’s growth and debt reduction. - Profit Growth
Despite challenges, the company has managed to improve its profitability over the years. - Unique Market Position
The cable manufacturing sector has limited competition, offering growth opportunities.
Negatives of the IPO
- Overhyped Railway KAVACH Connection
While the KAVACH system has created buzz, it contributes only 4% of the revenue. The company’s primary business is cables, making the hype somewhat misleading. - Debt Burden
High debt is a significant concern. Even after partial repayment, the debt-to-equity ratio will remain elevated. - Revenue Dependency
Over 40% of the company’s revenue comes from a single client. Such dependency poses a risk in case of client loss. - Inconsistent Growth
While profits have improved, revenue growth has been inconsistent, raising concerns about the company’s ability to sustain growth.
Should You Apply for the IPO?
For Listing Gains
The grey market premium indicates good listing potential. If the GMP holds up and anchor investors show interest, short-term investors could consider applying. However, keep an eye on subscription numbers and anchor allocations.
For Long-Term Investment
Long-term investment depends on how the company addresses its financial weaknesses, such as high debt and inconsistent revenue growth. If these improve, the company has potential. For now, it’s advisable to watch its performance post-listing.
Key IPO Details
- Open Dates: January 7–9, 2025
- Price Band: ₹275–₹285 per share
- Lot Size: 50 shares
- Issue Size: ₹116 crores (all fresh issue)
- Listing Date: January 14, 2025
Final Thoughts
Quadrant Future Tek’s IPO has both pros and cons. While the sector and profitability trends are promising, the high debt and over-reliance on a single revenue source are concerns. This IPO is worth watching post-listing for better insights into its financial health and growth trajectory.
If you’re planning to apply, consider your risk appetite and investment horizon. And don’t forget to share your thoughts in the comments!