Orient Technologies IPO: A Comprehensive Overview
The initial public offering (IPO) of Orient Technologies Ltd, a prominent player in the information technology solutions sector, is set to capture the attention of investors starting today, August 21, and will continue until August 23. Based in Mumbai, Orient Technologies has already garnered ₹64.43 crores from anchor investors, signaling strong initial interest ahead of its public offering.
IPO Details
The price band for the Orient Technologies IPO has been established between ₹195 and ₹206 per equity share, with a face value of ₹10. The public issue is structured to allocate shares as follows:
- Qualified Institutional Buyers (QIB): 50%
- Non-Institutional Investors (NII): 15%
- Retail Investors: 35%
The share allocation basis is expected to be finalized by August 26, with refunds processed starting August 27. Shares will be credited to the allottees’ demat accounts on the same day, and the listing on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) is anticipated on January 29.
Company Background
Founded in 1997, Orient Technologies specializes in a range of IT solutions, including IT Infrastructure, IT Enabled Services (IteS), Cloud, and Data Management Services. Over the years, the company has developed a robust portfolio aimed at delivering innovative products and solutions to its clientele.
Financial Metrics
The price-to-earnings (P/E) ratio based on diluted earnings per share (EPS) for 2024 at the upper end of the price band is 17.46 times. This is notably lower than the average industry peer group P/E ratio of 29.87 times. Comparatively, some of the company’s listed peers have the following P/E ratios:
- Dynacons Systems & Solutions Ltd: 29.47
- HCL Technologies Ltd: 26.93
- Wipro Ltd: 23.39
- LTIMindtree Ltd: 34.56
- Allied Digital Services Ltd: 26.05
- Dev Information Technology Ltd: 29.01
- Tech Mahindra Ltd: 55.17
- Silicon Rental Solutions Ltd: 14.41
Subscription Status
On the first day of bidding, the IPO has seen a subscription rate of 6.65 times overall. The retail portion was particularly strong, being subscribed 10.50 times, while the NII segment was subscribed 6.17 times. The QIB portion, however, saw a lower subscription rate of 2%.
Analyst Insights
StoxBox Analysis
Research Analyst Prathamesh P Masdekar from StoxBox highlights that Orient Technologies primarily operates within India, generating most of its revenue domestically. Despite serving multinational companies and having a presence in Singapore, the company has not significantly expanded its international operations. The Indian IT Services industry is predominantly export-focused, with 85% of total revenue coming from international markets, particularly North America and Europe.
Masdekar notes that the company has demonstrated consistent revenue, EBITDA, and PAT growth at compound annual growth rates (CAGR) of 13.7%, 12.9%, and 11.2% respectively from FY2022 to FY2024. The anticipated growth in financial performance is expected to stem from an expanding product and services portfolio, long-term customer relationships, and collaborations with technology partners. Given the valuation at a P/E of 20.7x on the upper price band based on FY24 earnings, he recommends a "SUBSCRIBE" rating for the issue.
Master Capital Service Ltd Perspective
Master Capital Service Ltd emphasizes that Orient Technologies has recently ventured into "Device as a Service (DaaS)," adopting a subscription-based pricing model. This initiative aims to broaden its consumer base and geographic reach, particularly in the trade of computer equipment, including servers and network devices. The firm has already established a branch in Singapore, indicating its intent to expand internationally.
IPO Financial Overview
The Orient Technologies IPO is valued at ₹214.76 crores, comprising a fresh issue of ₹120 crores and an offer-for-sale (OFS) of 46 lakh equity shares by the promoters. Key figures involved in the OFS include Ajay Baliram Sawant, Umesh Navnitlal Shah, Ujwal Arvind Mhatre, and Jayesh Manharlal Shah. The net proceeds from the IPO will be utilized for general corporate purposes, including capital expenditures and the purchase of an office building in Navi Mumbai.
The book-running lead manager for the IPO is Elara Capital (India) Private Limited, while Link Intime India Private Ltd serves as the registrar.
Grey Market Premium (GMP)
As of today, the grey market price for Orient Technologies shares is trading at a premium of ₹30. This suggests a potential listing price of ₹236 per share, which is 14.56% higher than the upper end of the IPO price band. The upward trend in the GMP over the past 13 sessions indicates strong market sentiment and investor readiness to pay above the issue price.
Conclusion
The Orient Technologies IPO presents a compelling opportunity for investors, particularly given its competitive pricing and strong growth potential. However, as with any investment, it is advisable for investors to conduct thorough research and consult with certified experts before making any decisions. The upcoming days will be crucial in determining the market’s reception of this IPO, and its performance could set the tone for future offerings in the IT sector.