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The IPO will close for subscription on August 23.
Ahead of the issue opening, the company has raised ₹64.43 crore from anchor investors. Marquee names including Pine Oak Global Fund, Saint Capital Fund, SB Opportunities Fund, Elara Capital (Mauritius), and Rajasthan Global Services participated in the anchor round.
Orient Technologies IPO preview
Analysts have advised investors to ‘Subscribe’ to the IPO as the valuations appear fairly priced and the company has demonstrated consistent growth in their financial performance.
Anand Rathi: Subscribe
At the upper end of the price band, the company is valuing at a price-to-earnings of 20.7 times with a market capitalisation of ₹858 crore post-issue of equity shares and a return on net worth of 27.2%.
On the valuation front, the brokerage believes that the company is fairly priced. Thus, it recommended a ‘Subscribe’ rating to the IPO.
Geojit: Subscribe
Considering its expansion to other related areas including IT facility management, network operations centre (NOC), cybersecurity, data management, Daas services and positive industry tailwinds, the brokerage has assigned a ‘Subscribe; rating to the issue on a short to medium term basis.
“At the upper price band of ₹206, OTL is available at a P/E of 20.7 times (FY24), which appears to be attractively priced compared to its peers,” it said.
Competitive strengths
– Marquee customer base across diverse Customer Industries.
– Wide-ranging and diversified IT solutions and offerings.
– Strong Promoters and Board of Directors supported by an experienced senior management team.
Key concerns
– Heavily reliant on top 10 customers, and the loss of such customers or a significant reduction in purchases by such customers will have a material adverse impact on the business.
– Depend on a few customer industries for the majority of the revenue from operations. Loss of customers in these customer industries may adversely affect the business, revenue from operations and financial conditions.
– Delays or defaults in customer payments and receivables may have an adverse impact on the profits and cash flows.
– The company has incurred negative net cash from operating activities, investing activities and financing activities in the past.
Orient Technologies IPO price, GMP
The company’s shares are trading with a premium of ₹30 in the unlisted market today. This compares with an IPO pricing of ₹195-206 per share, which translates to a listing gain of around 15% if the trends are sustained.
However, its premium in the unofficial market stood at ₹55 on August 20. The then GMP signalled up to 27% listing pop for the investors.
Investors can bid for one lot size of 72 shares and in multiples of that thereafter.
Orient Technologies IPO other details
The IPO is a combination of fresh issuance of shares worth ₹120 crore and an offer-for-sale of 46 lakh equity shares worth ₹94.76 crore by promoters.
Under the OFS, promoters Ajay Baliram Sawant, Umesh Navnital Shah, Ujwal Arvind Mhatre and Jayes Manharlal will be offloading their part stakes.
Promoters of Orient Technologies are the selling shareholders within the OFS component, after which, their stake in the company will fall to 73%.
Orient Technologies IPO structure
As much as 50% of the issue size has been set aside for Qualified Institutional Bidders (QIB), and 35% for non-institutional shareholders, while the remaining 15% has been reserved for retail shareholders.
Orient Technologies IPO objective
Out of the ₹120 crore that the company will raise through the fresh issue of shares, ₹79.6 crore will be utilised for capex, while another ₹10.35 crore will be used to acquire an office premise in Navi Mumbai.
About the company
Orient Technologies Ltd. offers data centre solutions, servers, storage, active and passive networking components like switches, routers, access points etc., collaboration solutions and security solutions.
The company also offers end-user computing involves desktop management, end-user support and mobile device management.
Cloud and Data Management Services, along with IT-enabled services, including migration of workload from data centres to cloud among other services.
Financials
For the financial year 2024, Orient Technologies posted a revenue of ₹603 crore, compared to a topline of ₹535 crore in the financial year 2023 and ₹467 crore in the financial year 2022.
The company’s net profit at the end of FY24 stood at ₹41.4 crore as against ₹38 crore in FY23 and ₹33.5 crore in FY22.
Orient’s margins though have remained in between the 9% to 10% range over the last three years at 9.4%, 9.1% and 9.8% respectively, with the first one being that of FY24.
Elara Capital (India) is the book-running lead manager to the IPO, while Link Intime India is the registrar.
The allotment for the Orient Technologies IPO will likely be finalised on August 26, 2024. Orient Technologies IPO will be listed on BSE, and NSE with a tentative listing date fixed as August 28, 2024.
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