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Exicom Tele-Systems

By Geetanjali Kedia
about 10 months ago

IPO Size: Rs. 429 cr

  • Rs. 329 cr is fresh issue for (i) Rs. 146 cr capex (ii) Rs. 50 cr debt repayment (Rs. 73 cr gross debt, Rs. 7 cr net debt), (iii) Rs. 69 cr working cap, (iv) Rs. 40 cr R&D
  • Rs.100 cr offer for sale (OFS) by the promoter (93% to drop to 70%)

Price band: Rs. 135-142 per share

  • Rs. 71 cr raised via pre-IPO placement at Rs. 135 per share (lower end) on 3.1.24, to Rare Enterprises, FPI Belgrave Investment among others

M cap: Rs. 1,716 cr, implying 25% dilution

IPO Date: Tue 27th Feb to Thu 29th Feb 2024, Listing Tue 5th Mar 2024

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

Power Solutions Company

Exicom Tele-Systems is a 30 year old company, operating under 2 business segments:

  1. Critical Power Business supplies DC power system and li-ion based energy storage solution, enjoying 16% and 10% market share respectively. This segment accounts for 70% of H1FY24’s Rs. 455 cr revenue.  
  2. EV Charger division supplies electric vehicle smart charging equipment for residential (slow charging) and public (fast charging) segments, commanding market leadership with 60% and 25% market share respectively.

 

Greenfield plant to Nearly Double Capacity

Company has 3 existing plants in Gurugram and Solan. It is setting up a greenfield plant at Telangana with Rs. 171 cr investment over the next 13 months, which will almost double the current capacity. IPO proceeds will part-fund Rs. 146 cr of this capex, which is significant, given current net fixed assts stand at Rs. 64 cr.

 

Strong Order Inflow

Order inflow of Rs.737 cr in H1FY24 rose 44% YoY and is higher than total inflow of Rs.717 cr of FY21. EV charging segment account for nearly 18% of this order inflow, taking order backlog to Rs. 581 cr as of 30.9.23. This gives very healthy growth visibility as FY23 revenue stood at Rs. 708 cr. It spends nearly 2% of annual revenue on R&D.

 

Growing Financials

While FY23 revenue dropped YoY due to semi-conductor shortage, H1FY24 revenue of Rs. 455 cr, more than doubled from H1FY23’s Rs. 216 cr. Excluding other income, EBITDA margin is 9% with net margin of 6% in H1FY24, on PAT of Rs. 27 cr.

 

Inexpensive Valuation

Anualising H1FY24 EPS of Rs. 3 per share, leads to a PE multiple of less than 24x on current year estimates, which is seen attractive for sector’s future outlook, 18% RoE at present and a cash rich balance sheet.