📌 At a Glance
Quality Power Electrical Equipments Ltd makes high-voltage power gear—think transformers, coils, and grid tech powering India’s energy transition dreams. After a breakout FY25, the stock surged 3x in a year. But with a 93x P/E, should investors stay grounded or get charged up?
1. 🎬 Introduction with Hook
“Ek taraf Suzlon, doosri taraf QPower. One is wind, the other is wired. But only one has a P/E of 93.”
Quality Power went from obscurity to “trending stock” thanks to back-to-back order wins, Mehru acquisition, and a jaw-dropping FY25 profit growth of +80% YoY.
But here’s the twist:
This isn’t just a story of profit. This is a full-blown Bharat Infra + Renewables + Manufacturing cocktail.
2. ⚙️ WTF Do They Even Do? (Business Model)
QPower operates in critical energy transition infra — they make:
- 🧲 High-voltage electrical coils
- ⚡ Transformer components
- 🏭 Power grid substation gear
- 🛰️ FACTS (Flexible AC Transmission Systems)
- 📦 Automation & distribution products via Nebeskie Labs
Clients? Indian utilities, international infra EPCs, and renewable integrators.
FY25 milestone:
- Bought 51% of Mehru Electricals for ₹120 Cr
- Now acquiring Sukrut Electric (global transformer components play)
- Building a ₹750 Cr mega coil factory in Sangli (operational by Dec 2026)
3. 💸 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY24 | FY25 | YoY Growth |
|---|---|---|---|
| Revenue | ₹301 Cr | ₹337 Cr | +12% |
| Net Profit | ₹55 Cr | ₹100 Cr | +80% 🚀 |
| OPM | 13% | 19% | Sharp uptick |
| ROCE | 31% | 28% | Slight dip |
| ROE | 24% | 23% | Solid |
👉 Operating leverage kicked in: despite modest sales growth, PAT doubled.
👉 Other income = ₹54 Cr 👀 (keep an eye).
4. 📊 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| Current Price | ₹808 |
| P/E | 93.3x |
| P/B | 14.75x |
| Market Cap | ₹6,260 Cr |
| Book Value | ₹54.8 |
| EV/EBITDA (Est.) | ~40x |
Let’s do a fair value rough cut:
Assuming FY26 EPS of ₹12–13 with 40x–50x exit P/E (mid-cap optimism):
👉 Fair Value = ₹480 to ₹650
Conclusion: Current price = premium zone. The stock has priced in perfection.
5. 🔥 What’s Cooking – News, Triggers, Drama
- ✅ FY25 PAT up 80%, Sales up 12%, OPM jumped to 19%
- ✅ ₹750 Cr Coil Plant capex announced – scale-up mode
- ✅ 51% stake in Mehru acquired (Transformer parts biz)
- ✅ Sukrut Electric acquisition initiated (global footprint)
- ✅ ₹20 Cr export order from Israel secured
- ✅ FY25 dividend declared (₹1/share)
But also:
- ⛔ Debtor Days shot up to 214
- ⛔ Working capital cycle ballooned to 169 days
- ⛔ ₹54 Cr in Other Income raises flags — what’s recurring?
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity Capital | ₹77 Cr |
| Reserves | ₹347 Cr |
| Borrowings | ₹9 Cr ✅ (almost debt-free) |
| Total Assets | ₹814 Cr |
| Fixed Assets | ₹238 Cr (Post capex boost) |
| Investments | ₹37 Cr |
The ₹750 Cr capex will push up asset base and likely increase borrowings in FY26.
7. 💵 Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net Cash Flow |
|---|---|---|---|---|
| FY25 | ₹62 Cr | -₹93 Cr | ₹171 Cr | ₹141 Cr |
- Investing = Capex-heavy.
- Financing = Fresh equity + cash infusion.
- Net cash flow finally positive after 3 years of red ink.
8. 📐 Ratios – Sexy or Stressy?
| Ratio | FY24 | FY25 |
|---|---|---|
| ROCE | 31% | 28% |
| ROE | 24% | 23% |
| Working Capital Days | 12 | 169 ❗ |
| CCC | 22 | 232 😱 |
| Inventory Days | 43 | 185 |
Verdict: Profits look sexy. But operations need a reality check. Cash conversion cycle ballooned = ⚠️
9. 💸 P&L Breakdown – Show Me the Money
- FY25 sales = ₹337 Cr
- Gross Margin expansion led to ₹65 Cr EBITDA
- Net Profit = ₹100 Cr (thanks to ₹54 Cr other income)
Without other income, core PAT = ₹46 Cr → EPS drops to ₹5
That’s a core P/E of ~160x 😐
10. ⚔️ Peer Comparison – Who Else in the Game?
| Company | P/E | ROE | OPM | Market Cap |
|---|---|---|---|---|
| ABB | 66x | 28.8% | 18.9% | ₹1.2 Lakh Cr |
| Siemens | 60x | 17.6% | 12.0% | ₹1.1 Lakh Cr |
| CG Power | 112x | 27.6% | 13.3% | ₹1.06 Lakh Cr |
| QPower | 93x | 23.2% | 19.4% | ₹6,260 Cr |
QPower’s valuation rivals industry giants without scale. It’s the small cap with mega-cap hopes.
11. 🧪 Miscellaneous – Shareholding, Promoters
| Holder | Stake |
|---|---|
| Promoters | 73.91% ✅ |
| FIIs | 3.99% |
| DIIs | 8.76% |
| Public | 13.35% |
| No. of Shareholders | 81,106 |
Strong promoter skin in the game. Institutions starting to nibble.
12. 🎭 EduInvesting Verdict™
What we like:
- 🔋 Clean balance sheet
- 📈 80% PAT growth in FY25
- 🌍 Acquisitions = global footprint strategy
- 🏭 ₹750 Cr capex shows ambition
What we don’t:
- 🚨 93x P/E with only ₹337 Cr sales?
- ⚠️ Working capital stress + debtor pile-up
- 🧮 Other income dominance in PAT
Verdict: Looks like Tesla, but runs on transformer oil. Enjoy the rally, but don’t forget your grounding wire.
FV Range = ₹480 – ₹650 based on core EPS growth + realistic P/E range.
✍️ Written by Prashant | 📅 July 11, 2025
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