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Business News/ Markets / Stock Markets/  Exicom Tele-Systems IPO: From financials to peer group, 10 must-know points from RHP
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Exicom Tele-Systems IPO: From financials to peer group, 10 must-know points from RHP

Exicom Tele-Systems' ₹429 crore IPO's subscription window opened on Feb 27 and the offer was fully subscribed within hours, receiving 10.02 times subscription on the first day.

Exicom Tele-Systems is an Indian-based provider of power management solutions. The company operates across two primary business segments.Premium
Exicom Tele-Systems is an Indian-based provider of power management solutions. The company operates across two primary business segments.

The 429 crore initial public offering (IPO) of Exicom Tele-Systems was opened for subscription on Tuesday, February 27 and remains open till Thursday, February 29. The IPO received a stellar response as it was subscribed 10.02 times on the first day of issue after being fully subscribed within hours of opening, led by solid demand from retail investors.

IPO Details

The IPO comprises a fresh issue of equity shares totaling up to 329 crore and an Offer for Sale (OFS) component of up to 70.42 lakh equity shares by promoter NextWave Communications.

Ahead of the issue opening, Exicom Tele-Systems has raised 178.05 crore from anchor investors. The company has also undertaken a pre-IPO placement of 52.59 lakh equity shares at an issue price of 135 per share, aggregating to 71 crore.

Also Read: Exicom IPO Day 2: Check latest GMP, subscription status, more. Apply or not?

The minimum amount of investment required by retail investors is 14,200. The company has reserved not less than 75% of the issue for qualified institutional buyers (QIB), not more than 10% for retail investors, and not more than 15% for non-institutional investors (NII).

Company Overview

Founded in 1994, Exicom Tele-Systems is an Indian-based provider of power management solutions. The company operates across two primary business segments:

Critical Power Solutions Business: Under this vertical, Exicom designs, manufactures, and services DC Power Systems and Li-ion-based energy storage solutions. These offerings are aimed at providing comprehensive energy management solutions for telecommunication sites and enterprise environments both within India and internationally.

Also Read: Sadhav IPO allotment to be out soon; here's how to check allotment status

EV Charger Business: Exicom's EV Charger Solutions business focuses on providing smart charging systems equipped with innovative technology. These charging systems cater to residential, commercial, and public charging needs across India.

Strong Market Presence

The company is among the first entrants in the EV charger manufacturing segment in India, and as of March 31, 2023, it had a market share of 60% and 25% in the residential and public charging segments, respectively.

Moreover, in its critical power business, the company boasts a significant 16% market share in the DC power systems market. It is also renowned for its Li-ion batteries tailored for telecommunications applications, holding a commendable market share of approximately 10% as of March 31, 2023, according to the company's RHP report. 

Also Read: Bharat Highways IPO opens today: Check GMP, review, key dates. Apply or not?

As of September 30, 2023, the company has deployed over 61,000 EV chargers across 400 locations in India, by way of sale to OEMs, EV owners (primarily through such OEMs), CPOs for public charging stations, and fleet aggregators for captive charging stations.

Clientele Overview

The Charger Business caters to a diverse clientele, including major national CPOs like Reliance BP Mobility Limited (JioBP) and Fortum Charge & Drive India Private Limited. Additionally, fleet aggregators such as BluSmart Mobility and Lithium Urban Technologies, along with established automotive OEMs like Mahindra & Mahindra Limited, MG Motors Limited, and JBM Limited, are among its valued customers.

Since the commencement of commercial sales in the financial year ending March 31, 2019, its EV Charger Business has served over 70 customers. “This includes supplying EV chargers to 15 automotive OEMs, 32 national and regional CPOs, and four fleet aggregators, reflecting our commitment to serving a broad spectrum of clients in the electric vehicle ecosystem," its RHP showed. 

Objectives of the Issue 

The company proposes to utilise the funds raised from the fresh issue towards setting up production lines at the manufacturing facility in Telangana, investment in R&D as well as product development, and payment of debt to support working capital requirements and for general corporate purposes.

Manufacturing Capability

The company boasts vertically integrated operations, encompassing the entire product development process from concept creation to design, engineering, and prototype testing. Backed by two specialised R&D centers, it maintains extensive in-house manufacturing capabilities across three facilities in India. 

These facilities, located in Solan, Himachal Pradesh, and Gurugram, Haryana, boast an annual capacity of 12,000 DC power systems and 44,400 AC and DC EV chargers. In total, its manufacturing infrastructure spans 134,351.95 square feet.

Key Risks

The following are the key reasons listed by the company in its RHP report: 

The EV supply equipment business is correlated with and dependent upon the continuing rapid adoption of, and demand for electric vehicles. The potential profitability and growth are dependent upon the continued adoption of EVs by businesses, end-users, and fleet operators, support from regulatory programs and in each case, the use of the company's EV chargers, any of which may not occur at the levels they currently anticipate or at all.

The company is dependent on the top five customers based on revenue contribution under the critical power solutions business, who contributed over 50% of their revenue from operations for the six months that ended September 30, 2023, and in each of the last three financial years. 

The customers include government entities and public sector undertakings. The loss of any of these customers or a reduction in purchases by any of them could adversely affect the business, results of operations, and financial condition.

The company is dependent on global suppliers for the supply of raw materials and key inputs and may not be able to reduce its dependency on such imports. If critical components or raw materials become scarce or unavailable, then the company may incur delays in manufacturing and delivery of their products and in completing the development programs, which could damage their business.

Peer Group

The company's listed peers include Servotech Power Systems and HBL Power Systems, currently trading at prices of 81 and 488.95 per share, respectively.

Also Read: Tata Electric Vehicle Unit eyes $1-2 billion IPO in FY25-26, says report

Financials Overview

The company primarily derives the majority of its revenue from the Critical Power Business, which accounted for 70% of the total revenue, while the remaining portion comes from the EV Charger Business. 

In FY23, the company recorded a total revenue of 7,079 crore, compared to 8,428 crore in FY22 and 5,129 crore in FY21.

The profit after tax (PAT) for FY21 was reported at 127 crore, increasing to 304 crore in FY22 and 310 crore in FY23. For the first half of FY24, the company reported revenue and PAT of 4,550 crore and 275 crore, respectively, as per the company's RHP. 

Rise of Electric Vehicles in India

The global shift towards electrification in transportation, fueled by energy transition initiatives and declining manufacturing costs, has propelled the electric vehicle industry forward. In recent years, technological advancements and supportive government policies have accelerated the evolution of the global EV sector.

India's EV industry stands out as one of the fastest-growing markets worldwide, with remarkable growth despite the absence of FAME demand incentives, albeit from a lower starting point.

Also Read: Ford may return to Indian market with focus on EVs: Report

The EV passenger vehicle (PV) market in India surged at a remarkable CAGR of 127% from FY2019 to FY2023, witnessing sales of 47,512 electric cars in FY2023 alone. Projections indicate a continued growth trajectory, with an estimated CAGR of 50–60% from FY2024 to FY2028, targeting an EV penetration of 9–12% by FY2028.

Meanwhile, the electric bus market also experienced significant growth, boasting a CAGR of 128% from FY2019 to FY2023, with 2,006 electric buses sold by FY2023. Forecasts suggest further expansion, aiming for a penetration rate of 16%–18% by FY2028, with an anticipated CAGR of 40–50% by the same year, as per the company's RHP report. 

 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 28 Feb 2024, 02:09 PM IST
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