Quadrant Future Tek or the Capital Infra Trust InvIT IPO?
Quadrant Future Tek vs Capital Infra Trust InvIT IPO – Are you torn between investing in the Quadrant Future Tek IPO or the Capital Infra Trust InvIT IPO? Before making a decision, it’s crucial to understand all the details.
The IPO frenzy is in full swing, with Quadrant Future Tek and Capital Infra Trust InvIT IPOs now open for bidding until January 09. Quadrant Future Tek aims to raise Rs 290 crore from the primary markets, while Capital Infra Trust InvIT targets raising Rs 1578 crore. Which one is the better choice for you? Let’s delve into the specifics of both IPOs to help you make an informed decision:
Quadrant Future Tek IPO
Based in Punjab, Quadrant Future Tek specializes in manufacturing specialty cables for railway rolling stock and the naval (defense) industry. Their focus is on electron beam-irradiated cables for high-performance, fire safety, and lightweight applications. The company has also diversified its portfolio by developing an automatic train protection system using RFID technology to prevent train collisions under the RDSO’s Kavach project.
Financials: In FY24, the company’s revenue increased to Rs 151.8 crore from Rs 104.3 crore in FY22, representing a compound growth rate of 20.6% year-on-year. Net profit for FY24 was Rs 14.7 crore, compared to Rs 1.9 crore in FY22. The company boasts an EBITDA margin of 24.1% and a profit margin of 9.7% in FY24. However, Quadrant Future Tek reported a loss of Rs 12.1 crore in the first half of FY25.
Valuation: At the upper price band of Rs 290, the company is trading at a P/E of 78.8x (FY24), which may seem expensive compared to its peers, according to Geojit Financial Services. Despite concerns over negative PAT and limited experience in Train Control Systems, the company’s entry into
Objective: The Quadrant Future Tek issue presents a unique opportunity as all funds raised through the IPO will directly benefit the company. The company has outlined its plans to utilize the funds for various purposes, including the purchase of machinery, long-term working capital for the speciality cable division (Rs 149.7 crore), capital expenditure (Rs 24.4 crore), loan repayment (Rs 23.6 crore), and general corporate needs.
Risk factors: The company’s reliance on a single manufacturing facility exposes it to potential risks in the manufacturing process. Any disruptions or slowdowns in manufacturing operations could have a significant impact on the company’s business, financial health, and overall performance.
Capital Infra Trust InvIT (Capital Infra Trust) IPO
Capital Infra Trust InvIT, a one-year-old infrastructure investment trust sponsored by Gawar Construction, offers investors the opportunity to participate in infrastructure projects. These projects, such as highways and power transmissions, are financed through pooled investments, with investors receiving interest payments and dividends in return. Gawar Construction, the sponsor, has 26 road projects with NHAI, 11 of which are already completed.
Financials: In FY24, the InvIT reported a net profit of Rs 125.76 crore, compared to Rs 497.2 crore in FY23 and Rs 125.55 crore in FY22, showing a slight growth of 0.16% between FY22 and FY24. For the first half of FY25, the InvIT earned a net profit of Rs 115.43 crore on a total income of Rs 792.27 crore.
Expert’s take: Bajaj Broking noted in an IPO analysis that this investment opportunity is ideal for informed investors seeking long-term rewards. The InvIT offers potential for dividend distribution, partial redemption, and capital appreciation over time.
Objective: The company aims to raise Rs 1,578 crore through a combination of a fresh issue and an offer for sale. Of this amount, Rs 1,077 crore will be allocated to the company, while Rs 501 crore will go to the selling shareholders and promoters. The company plans to utilize the funds to provide loans to the project SPVs for the repayment of external borrowings.
Risk Factor: The Trust is a newly established entity with no established operating history, making it challenging to accurately assess future growth prospects.
Experts have expressed concerns about Quadrant Future Tek due to the losses incurred in the last two quarters of FY25. Despite this, the IPO was fully subscribed on day 1, with the retail portion oversubscribed by 41.65 times. As for the other IPO, Capital Infra Trust, experts believe that the investment may yield long-term benefits.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.