Quality Power Electrical Equipments Ltd.
Electrifying returns – Strategic moat in HVDC and FACTS
Quality Power (QPOWER) has positioned itself as a market leader in key segments of the Transmission & Distribution (T&D) equipment industry. Its products (reactors, STATCOM) cater to High Voltage Direct Current (HVDC), Flexible AC Transmission System (FACTS), Instrument Transformer and other HV/MV/LV equipment markets, supporting voltages up to 765kV AC and 800kV DC. It plans to organically expand capacity by 9x, 2x and 0.45x across its three facilities in India over next two years. In addition, its recent entry into the GIS segment (partnership with global GIS leader Hyosung) positions it well to scale in both domestic and export markets for GIS equipment. Supported by a robust order book of Rs 7.75bn (during 1QFY26), comfort on demand runway, capacity expansion and margin accretion levers, we estimate ~6x and ~4x revenue and PAT growth over FY25-28E. Initiating a BUY with a target price of Rs 1,550, based on 30x FY28E EPS of Rs 51.8.
HVDC and FACTS – Benefiting from structural industry tailwinds
HVDC and FACTS have emerged as critical technologies in enabling and accelerating renewable power generation across global markets. Based on key announced projects, global HVDC and FACTS market could scale at 15% CAGR to USD 100-120bn over FY25-29E. QPOWER is strategically positioned to capture a share of the growth opportunities, given its proven presence in the HVDC (reactors, instrument transformers etc.) and FACTS (STATCOM, SVC, reactors) market.
Sole maker of >220kV HVDC/FACTS coils; huge GIS opportunity via Hyosung tie-up
QPOWER is the only company that manufactures coil products for HVDC and FACTS applications (>220 kV), as stated in its FY25 annual report. This positions the company uniquely in a niche, high-entry-barrier segment, where technology validation and testing capabilities are critical. Its customer base includes global OEMs such as Siemens, GE Vernova T&D, and Hitachi Energy. The recently announced co- development partnership with global GIS leader Hyosung opens door for significant GIS opportunity in both domestic and export markets.
Organic capacity expansion of >9x by 2QFY27
QPOWER intends to expand capacity across Sangli (9x), Kochi (2x) and Mehru (1.45x) facilities over next 6-9 months, thereby enhancing its manufacturing capacity in coil products, instrument transformers and specialty transformers. With an overall capex of ~Rs 2.3bn, QPOWER projects peak revenue of at least Rs 20bn by FY28.
High entry barriers in HVDC and FACTS provide structural advantages
High entry barriers in HVDC, FACTS, 400 kV AC, 765 kV AC and UHV provide structural advantages to QPOWER. Utilities typically mandate five to ten years of proven operating experience, prior to approving suppliers at these voltage levels, given the extremely high cost of grid shutdowns. Unlike lower-voltage equipment, where the entry barrier is comparatively low, the UHV space requires long qualification cycles and type-test history, insulating incumbents like QPOWER from fresh competition.
Initiate with BUY; TP of Rs 1,550
QPOWER is well positioned to capture strong tailwinds in HVDC, FACTS and GIS markets with revenue and PAT expected to grow 6x and 4x over FY25-28. Initiate QPOWER with BUY, TP of Rs 1,550 (30x FY28E EPS).
