The transmission and distribution (T&D) sector—long the unsung hero of energy infrastructure—has suddenly stepped into the limelight. As countries race to modernize their grids and integrate renewable energy, high-efficiency, high-resilience technologies like high voltage direct current (HVDC) and flexible alternating current transmission systems (FACTS) are now at the center of the investment spotlight. India, in particular, is witnessing an unprecedented boom, with the domestic HVDC and FACTS market expected to grow from $1.4 billion in 2024 to $9 billion by 2028, a staggering 60–65% CAGR.
Amid this transformation, Quality Power has emerged as a quiet yet potent force, blending product innovation, aggressive capacity expansion, and a disciplined financial strategy to carve out a leadership position in the high-voltage power and power quality space.
The Rise of HVDC & FACTS: Tailwinds Too Strong to Ignore
HVDC technology enables efficient long-distance electricity transmission with minimal loss, while FACTS improves grid stability and power flow control. These technologies are no longer niche—by 2028, the global HVDC and FACTS market is projected to hit $250 billion, up from $24 billion in 2024.
India’s share in this boom is expanding rapidly, creating a unique opportunity for specialized manufacturers like Quality Power. This demand surge is being driven by grid digitization, renewable integration, and inter-state power corridor development.
Quality Power’s IPO: A Springboard for Growth
Founded 24 years ago, Quality Power has positioned itself as a key enabler of high-voltage and power quality solutions. In February 2025, the company launched a ₹859 crore IPO to fund its next growth phase. Although the stock saw initial volatility—dropping from ₹432 to ₹274 within weeks—it rebounded sharply, rising 182% to ₹773 by July, reflecting renewed investor confidence.
Key allocations from the IPO proceeds included:
- ₹117 crore for acquiring Mehru
- ₹27 crore for machinery expansion
- ₹61 crore reserved for future M&A
Strong FY25 Performance and Profitability Surge
In FY25, Quality posted:
- Revenue: ₹337 crore (12% YoY growth)
- EBITDA: ₹65 crore (up 67%)
- Net Profit: ₹100 crore (up 81%)
Margins soared from 13% to 19%, driven by high-margin coil products used in HVDC and FACTS. These products alone now account for ₹160 crore in revenue and 20–25% profit margins.
Importantly, despite a near sevenfold increase in fixed assets—from ₹34 crore in FY22 to ₹219 crore in FY25—return on capital employed (RoCE) remained robust at 30%. Return on equity (RoE) held steady at 26%, reflecting efficient capital utilization even amid expansion.
Balance Sheet: Lean, Liquid, and Growth-Ready
The company’s balance sheet remains strong:
- Borrowings dropped from ₹38 crore to ₹9 crore
- Free cash flow rose to ₹48 crore in FY25
- Cash reserves reached ₹210 crore
This solid financial base gives Quality Power the muscle to execute large orders, invest in new plants, and explore further acquisitions without overleveraging.
Mehru Acquisition: Gateway to Global Expansion
The acquisition of Mehru in March 2025 added significant scale and international reach. Mehru, which specializes in instrument transformers up to 500kV, posted ₹256 crore in FY25 revenue. However, only ₹18 crore was consolidated into Quality’s FY25 earnings due to the March acquisition date.
Key benefits of the Mehru deal:
- Expanded presence in 50+ countries
- Order book contribution of ₹350 crore out of ₹750 crore total
- New peak revenue potential of ₹500 crore post-expansion
Quality has already launched a 45% capacity expansion at Mehru’s Bhiwadi unit to meet surging demand, with new capacity going live within five months.
Sangli: Future Global Hub for HVDC Coils
Quality’s Sangli plant—India’s only facility producing coils rated at 220kV+—is running near full capacity. To meet global demand, the company is undertaking a 9x capacity expansion, which could yield ₹1,500 crore in peak annual revenue. The facility is expected to go live by H2FY27, backed by a bid pipeline of ₹1,000 crore.
Additional upgrades include:
- Doubling capacity at the Cochin plant by Q3FY26
- Setting up a medium-voltage testing lab for quality control
Revenue Ambitions: Doubling Down for FY26 and Beyond
With the full-year impact of Mehru and capacity expansions underway, Quality expects:
- FY26 Revenue: ₹700–850 crore
- FY26 Net Profit: ₹112–153 crore
- Peak Revenue Potential by FY29: ₹2,000 crore annually
The company plans to hire 1,000 new employees over the next two years, tripling its current workforce. Though near-term margins will compress due to Mehru’s lower profitability (12–13% PAT margin), the company expects to recover to 20% margins over time.
Valuation Watch: Premium Pricing, Justified by Potential?
Quality Power trades at a lofty P/E of 90x—well above industry peers like:
- ABB: 65x
- Siemens: 59x
- Transformers & Rectifiers: 71x
Only GE Vernova trades higher at 98x. While the valuation is rich, investors seem willing to pay a premium for:
- Access to high-growth HVDC/FACTS markets
- A well-capitalized balance sheet
- Expanding international footprint
- Strong execution track record
Final Thoughts: A Compelling Play on the Grid of Tomorrow
Quality Power is not just riding the T&D wave—it’s helping shape it. With proprietary high-voltage technologies, a focused acquisition strategy, and a bullish capacity ramp-up, the company is well-placed to lead the grid modernization narrative in India and beyond.
Short-term margin pressures aside, the long-term trajectory looks promising—especially for investors betting on the backbone of the clean energy revolution.
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Disclaimer
This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.