Exicom Tele-Systems IPO – Comprehensive Overview

Exicom Tele-Systems Limited, a renowned player in the power systems and electric vehicle (EV) charging solutions sector, is set to launch its Initial Public Offering (IPO) from February 27, 2024, to February 29, 2024. This article aims to provide investors with a detailed insight into the Exicom Tele-Systems IPO, company financial summary, IPO objectives, positive aspects of investing, risk factors, and a concluding review.

Introduction to Exicom Tele-Systems IPO

Exicom Tele-Systems IPO is a book-built issue of Rs 429.00 crores, comprising a fresh issue of 2.32 crore shares amounting to Rs 329.00 crores and an offer for sale of 0.7 crore shares totaling Rs 100.00 crores. The IPO opens for subscription on February 27, 2024, and closes on February 29, 2024, with the allotment expected to be finalized on Friday, March 1, 2024. The listing on BSE and NSE is tentatively scheduled for Tuesday, March 5, 2024. The price band for the IPO is set at ₹ 135 to ₹ 142 per share, with a minimum lot size of 100 shares.

About Exicom Tele-Systems Limited

Incorporated in 1994, Exicom Tele-Systems Limited specializes in power systems and EV charging solutions. The company operates under two main verticals: Power Systems and EV Charging Solutions. Exicom provides uninterrupted power solutions for digital communication networks and has also ventured into the EV charging segment, deploying over 6,000 AC and DC chargers in India and Southeast Asia. As of September 30, 2023, the company has installed more than 61,000 EV chargers across 400 locations in India.

Exicom Tele-Systems IPO - Review and Conclusion

Financial Summary

Exicom Tele-Systems Limited’s revenue decreased by -14.79% while the profit after tax (PAT) rose by 24.07% between the financial years ending March 31, 2023, and March 31, 2022.

As of September 30, 2023, the company’s market capitalization stands at Rs 1715.71 Cr, with key performance indicators including ROE of 13.38%, ROCE of 10.92%, and P/BV of 5.63.

IPO Objectives

The IPO objectives contains both OFS and fresh issue. The OFS amount of Rs 100 Crores would go to selling share holders and company would not get anything.

For fresh issue of Rs 329 Crores, company aims to utilize the net proceeds from the IPO for several objectives including part-financing the cost towards setting up production/assembly lines at the planned manufacturing facility in Telangana, repayment/pre-payment of certain borrowings, part-funding incremental working capital requirements, investment in R&D and product development, and general corporate purposes.

Exicom Tele-Systems IPO – Positive Aspects of Investing

Here are the reasons to consider investing:

  1. Established Player in a Fast-Growing Market: The company is a well-established player in the Indian EV Charger market, which is experiencing rapid growth. They have a significant market share, with 60% in the residential segment and 25% in the public charging segment as of March 31, 2023.
  2. Extensive Portfolio of EV Charging Products: The company offers a wide range of EV charging products, including both slow-charging (AC chargers) and fast-charging (DC fast chargers) options, catering to residential, business, and public use cases.
  3. Strong Customer Base and Partnerships: The company has supplied EV chargers to over 70 customers, including automotive OEMs, national CPOs, and fleet aggregators. They have partnerships with key players in the industry such as Reliance BP Mobility Limited and Mahindra & Mahindra Limited.
  4. Early-Mover Advantage in the EV Industry: Being among the first entrants in the EV Charger manufacturing segment in India, the company has gained an early-mover-and-learner advantage, positioning itself to benefit from the significant growth expected in the EV industry in India and globally.
  5. High Entry Barriers in the EV Charger Industry: The EV Charger industry is characterized by high entry barriers, including technology evolution, performance requirements, grid infrastructure compatibility, partnerships, alliances, and service setup, which can act as a competitive advantage for established players like the company.
  6. Vertical Integration and R&D Capabilities: The company’s vertically integrated operations, R&D capabilities, and diversified product portfolio enable it to adapt to evolving technologies and changing customer requirements, ensuring continued innovation and product development.
  7. Track Record of Growth and Deployment: The company has experienced significant growth in the sale of EV chargers across categories in recent years, with a Compound Annual Growth Rate (CAGR) of 318.89% over the last three financial years.
  8. Experienced and Qualified Leadership Team: The company is led by a qualified and experienced management team with a track record of success in the power electronics industry, supported by capable and motivated managers and employees.
  9. Long-Standing Relationships with Customers: The company has a track record of long-standing relationships with an established customer base, providing customer-centric solutions and value-added products and services.
  10. Financial Performance and Operational Metrics: The company’s key financial and operational metrics demonstrate consistent growth and profitability, indicating a strong performance and potential for future expansion and revenue generation.

Risk Factors in Exicom Tele-Systems IPO

Here are the risk factors associated with investing in the IPO based on the information provided:

  1. Dependency on EV Adoption: The success of the electric vehicle supply equipment business is closely tied to the adoption and demand for electric vehicles. Any slowdown or decline in the adoption of EVs could negatively impact the company’s profitability and growth prospects.
  2. Market Volatility and Uncertainty: The EV industry in India is at a nascent stage, characterized by rapidly changing technologies, consumer preferences, and government regulations. Market volatility and uncertainties may affect the demand for EVs and associated charging infrastructure.
  3. Dependency on OEMs and Consumer Adoption: The company’s ability to gain market share in the EV chargers market relies on the development and sale of EVs by automotive OEMs and consumer willingness to adopt EVs. Delays or failure in the introduction of new EV models may affect market demand for EV chargers.
  4. Dependency on Top Customers: The company’s critical power solutions business depends heavily on its top five customers, who contribute a significant portion of revenue. Any loss of these customers or reduction in purchases could adversely affect the company’s financial performance.
  5. Dependency on Global Suppliers: Importing raw materials and key inputs from global suppliers, particularly from countries like China, exposes the company to supply chain risks. Scarcity or unavailability of critical components may lead to delays in manufacturing and delivery.
  6. Research and Development Challenges: The company’s success depends on its ability to continually innovate and develop new products to meet evolving industry trends and customer preferences. Failure to keep up with technological advancements and market demands may adversely affect its competitiveness.
  7. Operational Risks: Disruption, shutdown, or breakdown of operations at manufacturing facilities could have a significant adverse effect on the company’s business and financial condition. Managing operational risks, including equipment failure and industrial accidents, is essential for sustained operations.
  8. Quality Accreditations and Certifications: Failure to maintain quality accreditations and certifications may damage the company’s brand and reputation, impacting customer trust and confidence.
  9. Lack of Long-Term Customer Arrangements: The absence of long-term arrangements with customers and firm commitments on quantity or price of products may lead to uncertainty in revenue generation and business continuity.
  10. Regulatory Actions and Compliance: Regulatory actions against members of the Promoter Group and compliance issues with regulatory authorities such as SEBI and stock exchanges pose risks to the company’s reputation and operations.
  11. Dependency on Specific Sectors: A significant portion of revenue comes from customers in the Indian telecommunication sector. Any adverse changes in this sector could adversely impact the company’s financial performance.
  12. Historical Operating Losses: Recording operating losses in the past raises concerns about the company’s ability to generate profits in the future, which may affect the value of equity shares and investor confidence.

Exicom Tele-Systems IPO – Conclusion and Review

Exicom, a leader in the Indian EV charger market, commands a significant market share, fostering confidence in its expertise and market position. With over 61,000 EV chargers deployed across 400 locations, the company demonstrates robust growth potential in a rapidly expanding industry. The surge in EV adoption across various vehicle segments promises sustained demand for Exicom’s diversified portfolio of EV charging products. Additionally, its vertically integrated operations and R&D capabilities position it well to capitalize on the evolving EV landscape in India and globally.

This IPO comes with risks too including regulatory uncertainties, technological advancements, and market competition within the dynamic electric vehicle sector. The industry’s high barriers, such as evolving technology standards and grid infrastructure compatibility, present ongoing challenges. Furthermore, the company’s success depends on the continued growth of the EV market, which may be influenced by government policies and consumer trends.

Investors should carefully assess these risk factors before considering investment in Exicom’s IPO.

Suresh KP

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