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Industry : Capital Goods

Exicom Tele-Systems View all IPOs

Price Band

Rs. 135 – Rs. 142

Exicom Tele Systems is going public with a fresh issue and an offer for sale. The issue opens on 27th February 2024.

MOJO CALL

Why

Avoid

MOJO CALL

Avoid

Neutral

Client Concentration and decline in revenue

Exicom Tele Systems specializes in Control Power Systems providing power distribution and EV charging. The Control Power systems business contributes to 70% of the company’s revenue while the rest is derived from EV.
The company’s financials haven’t grown that well in the last two years with revenue declining in FY23 as compared to FY22 numbers. None of its peers experienced such a decline in FY23 revenue, in fact they saw revenue growth. The company also struggles with a very low net profit margin of less than 1% which will seem very unattractive to investors.
The company’s top 5 customers make up 57% of the revenue which poses risk on the business as it could lead to significant business losses in case one of those companies decides to not continue.
Another concern is that the company has been generating volatile cash flow from operations which doesn’t ensure stability in the firm.

Valuations

As per FY23, the company is asking for a PE of 270x and a market cap-to-sales of 2.3x. Despite the company made significant profit in H1FY24, we are using FY23 numbers for valuation as we do not know how sustainable this profit is. Hence, we recommend avoiding this IPO.

Issue Details

Issue Opens	27th Feb 2024
Issue Closes	29th Feb 2024
Price Band	Rs. 135 – Rs. 142
Issue size (Upper Band)	Rs. 429 Cr
Issue Type	FRESH ISSUE & OFFER FOR SALE
Market cap (based on upper band)	Rs. 1716 Cr
Sales- March 2023 (Rs./Crs)	723 Cr
Net Profit - March 2023 (Rs./Crs)	6 Cr
Industry	Capital Goods
Promoters	NEXTWAVE COMMUNICATION
Lead Manager	UNISTONE CAPITAL

Objective of the Issue

Details

Objectives of the Issue – Fresh Issue & Offer for Sale – Rs. 429 cr

The Objectives of the Offer are for:
1. Financing the cost of planned manufacturing facility in Telangana
2. Repayment of borrowings
3. Funding working capital requirements
4. Investing in R&D
5. General corporate purposes

List of Shareholders Selling Their Stake

Name	Type	Number of Shares	% of OFS
Nextwave Communications	Promoter	7,042,200	100%

Business Operations

About Company

Established in 1994, Exicom Tele Systems stands as a pioneering force in the realm of power management solutions, with its headquarters nestled in India. With a steadfast commitment to innovation and sustainability, the company operates across two distinct business verticals, each dedicated to driving positive change in the energy landscape.

The first vertical, the Critical Power Solutions business, epitomizes Exicom Tele Systems' expertise in designing, manufacturing, and servicing DC Power Systems and cutting-edge Li-ion based energy storage solutions. These offerings play a pivotal role in delivering comprehensive energy management solutions to telecommunications sites and enterprise environments, both within India and abroad.

In parallel, Exicom Tele Systems' Electric Vehicle Supply Equipment (EV Charger) solutions business exemplifies its foresight and innovation in enabling the transition towards sustainable transportation. As one of the earliest entrants into the EV Chargers manufacturing segment in India, the company has not only pioneered groundbreaking technologies but also captured a significant market share. As of March 31, 2023, its market dominance stood at an impressive 60% in the residential charging segment

Segment Revenue Breakup

Revenue Breakdown by Segment:
Segment	H1FY24	FY23	FY22	FY21
Critical Power Business	70%	67%	92%	91%
EV Charger Business	30%	32%	8%	9%

Financials

Financial Overview

The company’s revenue has grown at 17% over the last two years and net profit at 36%

In FY23, The company’s Return on Capital Employed in FY23 was 11%

The Net profit margin of the company is 1% in FY23

The company has consistently generated positive cash flow from operations but the cash generation has been very volatile as the company reported CFO of Rs 69 crores in FY22 and then reported Rs 7 crores in FY23

The company has a debt of Rs 73 crore

Financial Performance (Rs/crore)

Rs./Crs	H1FY24	FY 23	FY 22	FY 21
Sales	467	723	849	524
Net Profit	27	6	5	3