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BACKGROUND

Exicom Tele-Systems operates in 2 key business areas of (i) Critical Power (70% of revenue) wherein it supplies DC Power Systems (16% market share) and Li-ion based energy storage solutions (10% market share) to telecom companies; and (ii) Electric Vehicle Chargers (30% of revenue) where it commands a market share of 60% and 25% in the residential and public charging segments, respectively.

Objects and Details of the Issue:

Total issue size is Rs. 429 Cr comprising of Rs. 329 Cr from Fresh Issue and Rs. 100 Cr from Offer For Sale. Net Proceeds from the Fresh Issue shall be utilized towards:

* Production lines at the facility in Telangana (Rs. 146 Cr).

* Repayment of borrowings (Rs. 50 Cr).

* Incremental working capital requirements (Rs. 69 Cr).

* Investment in R&D and product development (Rs. 40 Cr).

Investment Rationale:

* Proxy on high growth EV industry witnessing strong tailwinds.

* Established player with an early-mover-and-learner advantage in the Indian EV Charging market.

* The EV Charging industry is characterized by high industry barriers.

* Stable growth outlook for telecommunications power systems & energy storage market in India.

* Demonstrated track record of robust growth in EV charger business; Acceleration in combined revenue for H1FY24.

Valuation and Recommendation:-

Although Telecom is a mature industry, Government’s thrust on setting up telecom infra in rural and border areas could provide growth in the Critical Power Business. The EV Charging Business benefits from structural tailwinds in the EV charging industry which is estimated to grow from Rs. 1300 Cr in FY24E to Rs. 9000 Cr by FY28E thereby providing a huge tailwind for Exicom. Thus we are positive on Exicom’s listing prospects and recommend to Subscribe to the IPO.

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