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  • Feb 21, 2024 - This EV Charging Company is Set to Make its Dalal Street Debut Soon

This EV Charging Company is Set to Make its Dalal Street Debut Soon

Feb 21, 2024

This EV Charging Company is Set to Make its Dalal Street Debut Soon

In the past decade, electric vehicles (EVs) have gone from a rare, peculiar sight on even the busiest freeways to an increasingly affordable and preferable alternative for the average vehicle buyer.

With each passing day, EV companies are making headlines, indicating their increasing prominence and acceptance across the globe.

As the world gradually shifts towards green and renewable fuel, the EV market and top stocks making significant strides in the space are poised to experience growth.

This growth has catalyzed a race to build enough public charging stations to meet ever-increasing demand and ultimately aid in meeting carbon emission reduction targets.

This hype has piqued the interest of investors, intensifying the focus on EV IPOs as they eagerly anticipate opportunities in this thriving industry.

In alignment with this trend, EV charger manufacturer Exicom Tele-System is set to hit the market soon.

IPO Date 27 February to 29 February 2024
Face Value Rs 10 per share
Price (Tentative( Rs 140 per share at the upper end
Fresh Issue Shares worth Rs 3.3 billion
Offer for Sale 40.4 lakh shares
Issue Type Book Built Issue IPO
Listing At BSE, NSE
Share holding pre issue 9,23,96,244
Data Source: RHP

#1 About Exicom Tele-System

Incorporated in 1994, Exicom Tele-Systems Limited specializes in power systems, electric vehicle (EV) charging, and other related solutions.

It operates under two business verticals - the EV charger business, where it provides smart charging systems for residential, business, and public charging use in India.

The other one is the critical power solutions business, wherein it designs, manufactures, and services critical digital infrastructure technology to deliver overall energy management at telecommunications sites and enterprise environments in India and overseas.

Exicom has deployed over 6,000 AC and DC chargers in India and Southeast Asia. Their EV charging solutions are designed to withstand harsh environmental and electrical conditions.

The company is looking to raise over Rs 4.3 bn through its initial public offering, of which Rs 3.3 bn is earmarked for the fresh issuance of shares.

#2 Factors Setting this IPO Apart

  • Exicom Tele-systems operates in the specialised niche of the EV charging market. This focus on niche applications allows them to command premium pricing and establish strong customer relationships.
  • The company was amongst the first entrants in the EV chargers manufacturing segment. As of 31 March 2023, it had a market share of 60% and 25% in the residential and public charging segments and further, it has deployed over 35,000 EV chargers across 400 locations in India.
  • The company has a strong track record of fostering long-standing relationships with an established customer base.

#3 A Look at its Financials

Exicom Tele-Systems has witnessed fluctuating top-line performance in recent years. The company reported a revenue of Rs 7,234 million (m) in FY23, which was 14.8% lower from Rs 8,489.6 m in FY22.

Revenue has grown at a rate of 11.3% CAGR since FY21.

Despite this volatility, the company has demonstrated a steady bottom-line performance, with the net profit growing by 23.9% from Rs 51.4 million in FY22 to Rs 63.7 million in FY23.

The net profit has achieved a commendable 22.6% CAGR since FY21.

Exicom Tele-Systems Financial Snapshot (2021-23)

Particulars 31-Mar-21 31-Mar-22 31-Mar-23
Revenues (Rs in m) 5,243.60 8,489.60 7,234.00
Revenue Growth (%) - 61.9 -14.8
Net Profit (Rs in m) 34.5 51.4 63.7
Net Worth (Rs in m) 2,134.40 2,215.70 2,320.00
Data Source: Company's Red Herring Prospectus (RHP)

RoCE came down to 10.9% in FY23 from 17.7% in FY22. In FY23, overseas customers contributed 8.8% to total revenue from operations.

The revenue from the CPS business dipped to 68.3% in FY23 from 91.6% in FY22. While revenue from the EV charger business rose to 31.7% from 8.4% in the same period.

The company intends to broaden its presence in Southeast Asia and Europe market.

#4 Peer Comparison

As per the company's red herring prospectus, these are the industry peers of Exicom Tele-Systems.

Peer Comparison

Company Revenue from Operations (2023) EPS (Basic) (in Rs) Return on Net Worth (%)
(Rs in m)
Exicom Tele-Systems 7,079.30 3.4 13.4
Servotech Power Systems 2,784.80 0.6 13.5
HBL Power Systems 13,686.70 3.5 10.4
Data Source: Company's Red Herring Prospectus (DRHP)

#5 Risk Factors

  • Its electric vehicle supply equipment business (EV charger business) is correlated to the ongoing and robust adoption of electric vehicles. The success of this segment relies heavily on the sustained demand for EVs in the market.
  • Within the Critical Power Solutions business (critical power business), the company faces dependence on its top five customers, consistently contributing over 50% of revenue in each of the last three financial years.

    The potential loss of these key customers or a reduction in their purchases poses a significant risk to the overall business, financial condition, and operational results.
  • A substantial portion (over 50%) of the company's revenue in each of the last three financial years is derived from customers in the Indian telecommunications sector. Adverse changes in the Indian telecommunications industry could have detrimental effects on the company's business, financial condition, and operational results.

Conclusion

The Indian EV industry is one of the fastest-growing markets in the world. EV stocks have been surging after Finance Minister Nirmala Sitharaman highlighted the government's plan to expand the EV ecosystem in the country.

EV penetration is expected to grow across vehicle segments - two-wheelers, three-wheelers, passenger vehicles, buses, and commercial vehicles.

To keep things smooth and running, the EV charging network needs to be ramped up. The projected total addressable market for EV charging products is estimated to reach Rs 86 bn by FY28.

Globally, the EV charging market for public chargers is forecasted to experience remarkable growth, escalating from an estimated 2.61 m units in 2022 to 16.39 m units by 2027, reflecting a compelling CAGR of 44.4%.

The heightened emphasis on expanding the charging infrastructure network throughout India, with installations in cities, highways, and commercial areas, coupled with the increasing adoption of fast charging technologies such as DC fast charging, underscores the industry's forward momentum.

Exicom Tele-Systems positions itself strategically by designing and manufacturing EV chargers for residential, business, and public use, contributing to the development of essential infrastructure required to meet the escalating demands of EV ownership in India.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions.

Ensure that the investment aligns with your financial objectives and matches your risk tolerance level.

For more information on IPOs, check out the list of upcoming IPO's.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

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