Incorporated in 1994,
Exicom Tele-Systems is a power management solutions provider specializing in
power systems, electric vehicle (EV) charging, and other related solutions.
The company has two
business verticals: (1) Critical power solutions business: designs, manufactures
and services DC power systems and li-ion based energy storage solutions to
deliver overall energy management at telecommunications sites and enterprise
environments in India and overseas; and (2) EV supply equipment solutions
business: providing smart charging systems with innovative technology for
residential, business, and public charging use in India.
In the critical power
business, the DC power systems are typically customized to customers’
specifications for use cases at telecommunications sites, including at large
central offices, renewable hybrid sites, base station sites (independent or
shared) and small cell/Wi-Fi sites. As on 20 February 2024, the company had
deployed its DC power systems across 15 countries in South-East Asia and
Africa.
Li-ion batteries
provide back-up power in case of power grid interruptions or intermittent
renewable energy supply and are based on modular and parallelable platforms
supported by proprietary battery management system (BMS). As of September 30,
2023, the company had deployed 470,810 li-ion batteries for application in the
telecommunications sector, equivalent to a storage capacity of over 2.10 GWH.
The company occupies a
market share of 16% in the DC power systems market and is recognized in the
market for li-ion batteries for application in the telecommunications sector, with
a market share of approximately 10% as of March 31, 2023.
The company’s EV charger
business provides slow charging solutions, i.e., AC chargers primarily for
residential use, as well as fast charging solutions, i.e., DC chargers for
business and public charging networks in cities and on highways to a diverse
customer base, including established automotive OEMs (passenger cars as well as
EV buses), charge point operators (CPOs), and fleet aggregators.
The company is among
the first entrants in the EV chargers manufacturing segment in India. It’s EV
charging products are compliant with global standards such as CE, as well as
with Indian certification requirements such as the regulatory compliances set
by Automotive Research Association of India (ARAI). As of September 30, 2023,
the company had deployed over 61,000 EV chargers across 400 locations in India.
As of March 31, 2023, the
company had a market share of 60% and 25% in the residential and public
charging segments, respectively.
In the six months ended
September 30, 2023, the critical power business products contributed 60.66% of
the total revenue, the critical power business services 9.4%, and the EV charger
business 29.94%.
The company has two
dedicated R&D centres and three manufacturing facilities in India at Solan,
Himachal Pradesh, and at Gurugram, Haryana, with an annual capacity of 12,000
DC power systems and 44,400 AC chargers and DC fast chargers.
The company intends to
continue to expand its existing production capabilities by utilizing a
substantial portion of the net proceeds from the offer towards setting up a
manufacturing facility in Telangana.
The company intends to
build an extensive portfolio of solutions to cater to the growth across all EV
segments. It has plans to augment its product portfolio by introducing high
power EV charging of approximately 480+kW to support use cases of distributed
charging and scalable vehicle charging.
The company aim to be
an impact business contributing to the sustainable energy transition by enabling
electrification of transportation, and energy stability of digital
communication infrastructure.
Offer and its objects
The IPO comprises fresh
issue of equity shares worth up to Rs 329 crore and an offer for sale of
70,42,200 equity shares aggregating up to Rs 100 crore by NextWave
Communications.
The price band of the
IPO is Rs 135 to Rs 142 per equity share of face value Rs 10 each.
The objectives of the fresh issue include Rs 145.7
crore for part-financing the cost to set up production and assembly lines at
the planned manufacturing facility in Telangana, Rs 50.2 crore for repayment
and pre-payment, of certain borrowings, Rs 69 crore to part-fund incremental
working capital, Rs 40 crore for investment in R&D and product development,
and the remaining amount for general corporate purposes.
The promoters of the company
are NextWave Communications and Anant Nahata. The promoters and promoter group
hold an aggregate of 91,100,208 equity shares, aggregating to 93.29% of the pre-offer
issued and paid-up equity share capital. The post IPO shareholding is expected
to be around 69.57%.
The issue, through the book-building process,
will open on 27 February 2024 and will close on 29 February 2024.
Strengths
The company has grown its revenue from Rs 512.90
crore in FY2021 to Rs 707.93 crore in FY2023, representing CAGR of 17.48%.
Additionally, the company received robust orders worth Rs 603.36 crore for the
critical power business and Rs 133.94 crore for the EV charger business in H1
FY2024.
The company is among the first entrants in the EV
charger manufacturing segment in India, providing it with an early-mover
advantage. It had a market share of approximately 60% and 25% in the
residential and public charging segments, respectively, as of March 31, 2023.
The company is well placed to benefit from
accelerated shift towards electrification. The Indian EV industry is one of the
fastest growing markets in the world, with a growth of over 130% in FY2023. To
support this shift towards EVs, the EV charging network will need to ramp up
its capacity, presenting a significant, industry-wide market opportunity for EV
charging products. The EV charging market for public chargers is projected to
grow from an estimated 2.61 million units in 2022 to 16.39 million units by
2027, at a CAGR of 44.40%.
The company has nearly three decades of domain
experience and know-how in power conversion, energy management, battery pack
and BMS development, supported by continued R&D efforts and customer
relationships.
Three manufacturing units are vertically
integrated, helping to provide solutions from concept to design engineering to
prototype testing in-house.
The company has significant product development
and engineering capabilities. It had a dedicated R&D team of 145 employees,
as of September 30, 2023, housed at its two R&D centres located in
Gurugram, Haryana, and Bengaluru, Karnataka. In H1 FY2024, expenditure on R&D was 1.96% of sales.
The company is led by a qualified and experienced
management team. Anant Nahata, Managing Director and CEO, has over 14 years of
relevant experience in the power electronics industry, including the critical
Power business and the EV charger business.
The company has long-standing relationships with an
established customer base. In the six months ended September 30, 2023 and FY
2023, the company served a diverse customer base of 450 and 350, respectively,
through its critical power business and the EV charger business.
The company has robust plans to expand its
customer base to overseas market in the EV charger business capitalizing on the
growing EV adoption in Southeast Asia and Europe and for which it commenced
setting up local sales and distribution networks in such regions.
Weaknesses
The company is dependent on the top five
customers for majority of its revenue. In the six months ended September 30,
2023, the top five critical power business customers contributed 57.1% to total
revenue. Loss of any of these customers, or reduction in purchases by any of
them, could adversely affect the business.
The company imports raw materials and key inputs
such as li-ion cells and battery packs, semi-conductors, rectifier modules, and
other critical components required for manufacturing from global suppliers
(mainly China). In the six months ended September 30, 2023, global suppliers
contributed 66.8% to the total cost of materials. Non-availability or
volatility in prices of critical components could adversely impact the business.
The company derived 46.31% of its revenue from
customers in the Indian telecommunication sector in the six months ended
September 30, 2023. Any adverse changes in the Indian telecommunications sector
could adversely impact business.
The company derives 38.92% of its revenue from
exports. Volatility in currency exchange rates and competition from local
competitors could adversely affect the export business.
The company reported negative cash flows from
operating activities in FY2021 and in the six months ended September 30, 2022.
The company’s profitability hinges on
unpredictable EV adoption. Despite India’s rapid EV market growth,
uncertainties in technology, regulations and reversal of government schemes pose
risks potentially harming business and financial prospects.
Report of the company’s current statutory auditors
contains other matter and emphasis of matter paragraphs. Additionally, the company’s
(Auditor’s Report) Order, 2020 and Companies (Auditor’s Report) Order, 2016,
contain certain adverse remarks.
The company’s business requires significant
working capital in connection with manufacturing of products, financing
inventory and purchase of critical components, which may be adversely affected
in case there is any change in terms of credit or payment.
Valuation
Consolidated sales
were up by 110.72% to Rs 455.04 crore in H1 FY 2024 as compared to H1 FY2023. The
OPM increased by 708 bps to 9.11%, which led to 844.68% increase in OP to Rs
41.46 crore. OI increased 133.21% to Rs 12.17 crore, while interest cost
increased 37.07% to Rs 9.37 crore and depreciation increased 7.46% to Rs 8.35
crore. PBT stood at Rs 35.91 crore as compared to loss of Rs 5 crore. Tax
expenses was of Rs 8.45 crore as compared to tax expense of Rs 1.78 crore. Net
profit stood at Rs 27.46 crore as compared to loss of Rs 27.55 crore.
Consolidated sales
fell 16% to Rs 707.93 crore in FY 203 as compared to FY2022. The OPM decreased
by 59 bps to 7.41%, which led to 22.22% decrease in OP to Rs 52.44 crore. OI increased
151.45% to Rs 15.47 crore, while interest cost increased 2.51% to Rs 19 crore and
depreciation increased 7.83% to Rs 16.47 crore. PBT decreased 18.42% to Rs
32.44 crore. Tax expenses were Rs 1.41 crore as compared to tax expense of Rs
9.37 crore in FY2022. Loss from
discontinued operations was Rs 24.66 crore as compared to loss of Rs 25.26
crore. Net profit increased 24.03% to Rs 6.37 crore.
The TTM EPS on post-issue equity works out to Rs
5.08. At the upper price band of Rs 142, P/E works out to 28.
As of 23 February
2024, its listed peers such as Servotech Power Systems traded at TTM P/E of 144,
HBL Power Systems at TTM P/E of 60 and Exide Industries trades at TTM P/E of 32.
In FY2023, Exicom Tele-Systems OPM and ROE stood at 7.41% and 13.38%,
respectively, as compared to 6.74% and 13.46% for Servotech Power Systems,
11.06% and 10.36% for HBL Power Systems, and 10.54% and 7.39% for Exide
Industries, respectively.
Exicom
Tele-Systems: Issue highlights
|
For Fresh Issue Offer size (in no of shares )
|
|
- On lower price band
|
2,43,70,370
|
- On upper price band
|
2,31,69,015
|
Offer size (in Rs crore)
|
329
|
For Offer for Sale Offer size (in Rs crore)
|
|
- On lower price band
|
95.07
|
- On upper price band
|
100
|
Offer size (in no of shares )
|
70,42,200
|
Price band (Rs)
|
135-142
|
Minimum Bid Lot (in no. of shares )
|
100
|
Post issue capital (Rs crore)
|
|
- On lower price band
|
122.02
|
- On upper price band
|
120.82
|
Post-issue promoter & Group shareholding (%)
|
69.57
|
Issue open date
|
27-02-2024
|
Issue closed date
|
29-02-2024
|
Listing
|
BSE, NSE
|
Rating
|
47/100
|
Exicom Tele-Systems:
Restated Consolidated Financials
|
|
2103 (12)
|
2203 (12)
|
2303 (12)
|
2209 (6)
|
2309 (6)
|
Sales
|
512.91
|
842.81
|
707.93
|
215.95
|
455.04
|
OPM (%)
|
5.75%
|
8.00%
|
7.41%
|
2.03%
|
9.11%
|
OP
|
29.52
|
67.43
|
52.44
|
4.39
|
41.46
|
Other inc.
|
11.46
|
6.15
|
15.47
|
5.22
|
12.17
|
PBIDT
|
40.97
|
73.58
|
67.91
|
9.61
|
53.63
|
Interest
|
14.06
|
18.53
|
19.00
|
6.84
|
9.37
|
PBDT
|
26.91
|
55.04
|
48.91
|
2.77
|
44.26
|
Dep.
|
14.08
|
15.27
|
16.47
|
7.77
|
8.35
|
PBT
|
12.83
|
39.77
|
32.44
|
(5.00)
|
35.91
|
Share of Profit/(Loss) from Associates/JV
|
-
|
-
|
-
|
-
|
-
|
PBT before EO
|
12.83
|
39.77
|
32.44
|
(5.00)
|
35.91
|
Exceptional items
|
-
|
-
|
-
|
-
|
-
|
PBT after EO
|
12.83
|
39.77
|
32.44
|
(5.00)
|
35.91
|
Taxation
|
0.15
|
9.37
|
1.41
|
1.78
|
8.45
|
PAT
|
12.68
|
30.40
|
31.03
|
(6.78)
|
27.46
|
Profit/(Loss) from discontinued operations
|
(9.23)
|
(25.26)
|
(24.66)
|
(20.77)
|
-
|
Net Profit
|
3.45
|
5.14
|
6.37
|
(27.55)
|
27.46
|
EPS (Rs)*
|
0.29
|
0.43
|
0.53
|
#
|
#
|
* EPS is annualized on post issue equity capital of Rs 120.82 crore of
face value of Rs 10 each
|
|
|
# EPS is not annualised due to seasonality of business
|
|
|
|
|
EO: Extraordinary items. EPS is calculated after excluding EO and
relevant tax
|
|
|
|
Figures in Rs crore
|
|
|
|
|
|
Source: Capitaline Corporate Database
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|
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