Business Overview:
Quadrant Future TEK offers Products & solutions in the following four verticals: Speciality Cables; Cable Assemblies & Interconnect Solutions; electrical/Electronic Systems & Displays and End to End Solutions in Train Control & Signalling Solutions. Most of the manufacturing is based out at Mohali in Punjab

Segments:

Specialty Cables Division – offers Speciality Cables for the industrial usage and other applications where fire and safety, light weight and long term performance are of utmost importance
Company has a wide product portfolio which includes railways rolling stock cables, naval defence, marine cables, solar PV cables, automotive cables, and connectors & junction boxes. They also provide provide end to end solutions for electrical connectors and wiring harness with the complex arrangement of various wires and cables as per the demand of the client
They have an installed capacity of 1,887.60 metric tonnes. Current Capacity utilization is around 57%

Train Control & Signalling Division – Company has dedicated Railway Signalling & Embedded System Design centre for the development of Train Control Products & Solutions and is working towards development of Train Collision Avoidance System and Electronic Interlocking System under KAVACH project
After successful testing in 2023, this company has been awarded technical clearance for deployment of its KAVACH system and order has been received from Indian Railway for installation of the same at 5 railway stations, 10 trains / locomotives and 5 units of Remote Interface Unit besides the track on a stretch of 43.6 km at “Moula-Ali (Excluding) – Raghunathapalli section of South Central Railway – Reach 2” covering 5 stations and 10 train sets. The said order is for an aggregate value of ₹ 16.86 crore
Company has also received purchase order on December 12, 2024 from CLW for the supply, installation, testing, and commissioning of On-board Kavach equipment in 1,200 locomotives for an aggregate value of ₹ 978.60 crore
They had an installed capacity of 4,492 Station TCAS, 2,264 Locomotive TCAS and 3,744 Remote Interface Unit

SWOT Analysis:

Strengths
Operating in niche specialty cables market which needs high expertise
Qualified 4th supplier out of total 5 shortlisted firms for implementation of KAVACH project by Indian Railways

Weakness
Indian Railways contribute 41% of revenue
And another 34% revenue comes from related parties namely 4 promoter groups

Opportunity
Expanding beyond promoter group and adding more business in defence sectors
Expanding in industries like EV and solar, which requires more specialised power cables which company can serve
Additional opportunities in Electronic Interlocking Systems for Indian Railways
Entered into an exclusive MoU with RailTel for delivering the specific targeted opportunities related to KAVACH in Indian Railways and other Countries Railways

Threats
No long standing customer relationships. Most of the work in project based. So company has to continuously apply for tenders and win projects
Small player is cables industry which is dominated by international firms and even big Indian firms like PolyCab, HBL Power Systems

My take:
– Quadrant Future is coming with upper price band of Rs 290 per share and that means a PE of ~59 (at its FY24 EPS of 4.9), which seems expensive when compared with listed peers
-Higher debt to equity ratio is a concern for this firm with currently small scale. Company is betting too much on revenue growth anticipated from Kavach project which could materialize well or could fail as well
– My take is to avoid the IPO as the promoter are not leaving much for the investors for listing gains. However we could revisit this stock for long term investment after its yearly results to check what revenue finally the company generates from Kavach project and how the order book is built for coming years

For complete analysis please check the attached report