The domestic market for these segments is expected to grow at an annual rate of 60-65%, expanding from $1.4 billion in 2024 to $9 billion by 2028. Separately, the high-voltage power and power quality market is projected to grow at 18% annually over the same period.<\/p>\n
https:\/\/www.datawrapper.de\/_\/31zgV\/<\/p>\n
Amid this surge in demand for advanced grid infrastructure, companies are scrambling to scale. Among the more compelling success stories is Quality Power, a relatively low-profile but fast-growing player in high-voltage equipment and power quality systems.<\/p>\n
To fuel its next phase of growth and capture market share in this booming segment, Quality Power launched its \u20b9859 crore initial public offering (IPO) in February 2025. The stock debuted at \u20b9432 on 24 February but dropped to \u20b9274 by 9 April. Since then, it has soared 182% in just three months, closing at \u20b9773.<\/p>\n
So, what\u2019s driving this rally\u2014and can it sustain?<\/p>\n
High-voltage play with strong tailwinds<\/p>\n
Founded 24 years ago, Quality Power manufactures high-voltage electrical equipment and advanced power quality solutions critical for grid connectivity and energy transition. Its products are used in sectors including power, renewables, oil and gas, cement, chemicals, and automobiles. The company also benefits from green energy tailwinds.<\/p>\n
Its portfolio includes coil products, transformers, capacitor banks, and shunt reactors. With a global footprint across over 100 countries and a client base of more than 210, Quality has grown through both product expansion and acquisitions. Past acquisitions include Endoks, S&S Transformers, EPEC, Nebesky, and, most recently, Mehru.<\/p>\n
Out of the \u20b9859 crore raised via IPO, \u20b9225 crore was earmarked for business expansion\u2014 \u20b9117 crore for the Mehru acquisition, \u20b927 crore for machinery purchases, and \u20b961 crore for future M&A. Market interest intensified after the company laid out aggressive revenue targets tied to these inorganic efforts and its capacity expansion pipeline.<\/p>\n
Strong FY25 performance<\/p>\n
Quality\u2019s financials reflect momentum, boosted by industry demand.<\/p>\n
In FY25, revenue rose 12% year-on-year to \u20b9337 crore, with power products contributing \u20b9185 crore (55%) and power quality systems \u20b9152 crore (45%). The domestic and export mix stood evenly at 50:50.<\/p>\n
Within power products, coil products, used in HVDC and FACTS, saw significant traction, generating 20-25% margins. As a result, operating margins expanded by 600 basis points to 19% in FY25, up from 13%. Net profit surged 81% to \u20b9100 crore.<\/p>\n
This growth was underpinned by rising investment in fixed assets, which grew from \u20b934 crore in FY22 to \u20b9219 crore in FY25. Despite the capital investment, return on capital employed (ROCE) remained strong at 30%, down from 49% in FY22. Return on equity held steady at 26%.<\/p>\n
The company\u2019s balance sheet also reflects financial discipline. Borrowings dropped 77% from \u20b938 crore in FY24 to \u20b99 crore in FY25. Free cash flow rose from \u20b96 crore in FY22 to \u20b948 crore in FY25. As of now, the company holds cash reserves of \u20b9210 crore.<\/p>\n
Mehru adds scale and reach<\/p>\n
With a strong balance sheet and momentum in core operations, Quality also made a strategic acquisition to expand product depth and international footprint.<\/p>\n
In March, Quality acquired a 51% stake in Mehru for \u20b9120 crore using IPO proceeds. Mehru, a manufacturer of instrument transformers (up to 500 kV), has a strong export presence in Southeast Asia and Africa. The deal expands Quality\u2019s portfolio and client base to more than 50 countries and positions it to deliver integrated grid and renewable solutions.<\/p>\n
In FY25, Mehru posted revenue of \u20b9256 crore\u201476% of Quality\u2019s consolidated topline. However, since the acquisition closed on 6 March, only \u20b918 crore was consolidated into FY25 earnings. As of Q4FY25, Quality\u2019s order book stood at \u20b9750 crore, with Mehru contributing \u20b9350 crore (47%). The order book is expected to be executed over the next 15 months.<\/p>\n
Given the full-year consolidation in FY26, Quality expects revenue to double to \u20b9700-850 crore. However, Mehru\u2019s lower PAT margin (12-13%) is expected to drag down consolidated Ebitda margins to 16-18%, from 30% in FY25. FY26 net profit is projected at \u20b9112-153 crore. The company expects margins to revert to 20% in a few years.<\/p>\n
Demand is already outpacing supply. Mehru had to forgo orders worth \u20b9150 crore recently. To meet rising demand, Quality has launched a capacity expansion at Mehru\u2019s Bhiwadi facility within a month of acquisition.<\/p>\n
The expansion includes four new autoclaves and relocating non-critical storage to a warehouse. Capacity will rise 45%, with new capacity online in five months. Order bookings are expected to pick up within six months, with a bid pipeline of \u20b9400 crore and peak revenue potential of \u20b9500 crore.<\/p>\n
Sangli plant to become global coil hub<\/p>\n
The Sangli unit\u2014Quality\u2019s coil manufacturing hub for HVDC and FACTS\u2014operates near full capacity. Notably, Quality is the only Indian firm that manufactures coil products rated at 220 kV and above, a segment with strong demand.<\/p>\n
These coils currently contribute \u20b9160 crore to revenue. To capitalise, the company is expanding capacity 9x at Sangli, positioning it among the world\u2019s largest coil factories. The new facility is expected to go live in H2FY27 and could deliver peak revenue of \u20b91,500 crore. Quality\u2019s bid pipeline, including Sangli, stands at \u20b91,000 crore, with bookings expected to begin in 6\u20139 months.<\/p>\n
Quality is also doubling capacity at its Cochin plant by Q3FY26 to meet HVDC\/FACTS demand. A medium-voltage testing lab will be added to enhance quality control and validation.<\/p>\n
With these expansions, Quality aims to reach peak annual revenue of \u20b92,000 crore in four years\u2014 \u20b9500 crore from Mehru alone, assuming no further acquisitions. The workforce is also set to triple in two years, with 1,000 new hires planned soon. Near-term margin pressure is expected due to fixed cost absorption, though the company believes pricing power and demand will offset most of the impact.<\/p>\n
Valuations rich\u2014but tailwinds strong<\/p>\n
Quality currently trades at a price-to-earnings (P\/E) multiple of 90x\u2014rich by industry standards. By comparison, peers like ABB (65x), Siemens (59x), and Transformers & Rectifiers (71x) trade lower. Only GE Vernova trades higher at 98x.<\/p>\n