Issue price: Rs 195-206
Issue size: up to Rs 215 crore
Implied market cap: Up to Rs 858 crore
Face value: Rs 10Retail portion: 35%Lot size: 72 sharesOrient Technologies, which provides IT infrastructure, cloud management and related services, plans to raise Rs 120 crore through fresh equity to fund capital expenses and buy office premises. It will also raise up to Rs 95 crore through an offer for sale from the promoter group. Its stake will be reduced to 73% after the IPO of 97%.
Apart from the integration of central systems businessThe company has expanded its products into other related areas such as IT facility management, network operations center (NOC), cybersecurity, and data management. These additional offerings provide Orient with an edge over its peers in a highly competitive market. It has paid dividends in each of the three years through fiscal 2024. On the other hand, its operating margin and return on capital (RoE) have fallen over the past three years. Taking these factors into account, long-term investors with a higher risk appetite may consider going public.
Business
Founded in 1997, Mumbai-based Orient Technologies operates across three business verticals: IT Infrastructure Products (contributed 52% in FY24) revenue), IT-enabled services (22%) and data and cloud management (26%). The company has a presence in seven cities in India and a branch in Singapore to facilitate dollar billing for some of the clients. It had an order book worth Rs 101 crore as of the end of June 2024, of which nearly a third was from the government and public sector undertakings (PSUs), and 20% from banking, financial services and sure (BFSI).
Finance
Revenue grew 13.6% year-on-year between FY22 and FY24 to Rs 602.9 crore, while net profit rose 11.3% to Rs 41.5 crore. Trade Accounts receivable grew at a faster pace of 28% per annum over the three years compared to the revenue growth rate, implying an expansion of accounts receivable days to 95 from 75. Operating margin before depreciation and amortization (EBITDA margin) fell 40 basis points to 9.4% over the three-year period. Further, ROE declined to 27.3% in FY24 from 43.1% in FY22. The company does not have any long-term debt.
Valuation
The company is demanding a price-earnings multiple of up to 20.7. Larger peers, including Dynacons Systems and Solutions and Allied digital services They are trading at a trailing 12-month P/E of around 31 and 26 respectively.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.