Solid financials, new IPO: Should this be your next investment?
Renowned customers of the company include Coal India, Mazagon Dock Shipbuilders, Jyothy Labs, D’décor, and Tradebulls Securities.
About the Issue
Orient Technologies Ltd is geared up to launch its Initial Public Offering (IPO) for equity shares. Below are the issue details:
| IPO Details |
| IPO Opening Date |
August 21, 2024 |
| IPO Closing Date |
August 23, 2024 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 10 per equity share |
| IPO Price |
Rs 195 to Rs 206 per equity share |
| Min Order Quantity |
72 shares |
| Listing At |
BSE, NSE |
| Total Issue |
10,425,243 shares of FV Rs 10* |
| (Aggregating up to Rs 214.76 Cr)* |
| Fresh Issue |
5,825,243 shares of FV Rs 10* |
| (Aggregating up to Rs 120.00 Cr)* |
| Offer for Sale |
4,600,000 shares of FV Rs 10* |
| (Aggregating up to Rs 94.76 Cr)* |
| QIB Shares Offered |
50% of the Offer |
| Retail Shares Offered |
35% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
1. Acquisition of office premises at Navi Mumbai
2. Funding capital expenditure requirements for:
a. Purchase of equipment for setting up of Network Operating Centre (NOC) and Security Operation Centre (SOC) at Navi Mumbai property
b. Purchase of equipment and devices to offer Devise-as-a-Service (DaaS) offering
3. General corporate purposes.
Promoter holding
Ajay Baliram Sawant, Jayesh Manharlal Shah, Umesh Navnitlal Shah and Ujwal Arvind Mhatre are the promoters of the company. The promoters and promoter group currently hold a pre-issue shareholding stake of 97.96 per cent in the company.
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Company profile
Orient Technologies Ltd, an IT solutions provider headquartered in Mumbai, Maharashtra, was founded in 1997. It operates across several business verticals, including:
IT Infrastructure: Offering products and solutions such as Data Centre Solutions and End-User Computing.
IT Enabled Services (IteS): Providing services like Managed Services, Multi-Vendor Support Services, IT Facility Management, Network Operations Centre Services, Security Services, and Renewals.
Cloud and Data Management Services: Specializing in the migration of workloads from data centres to the cloud.
The company's business operations focus on technologically advanced solutions, achieved through collaborations with a diverse range of technology partners, including Dell International Services India Pvt Ltd and Fortinet, Inc. Renowned customers of the company include Coal India, Mazagon Dock Shipbuilders, Jyothy Labs, D’décor, and Tradebulls Securities.
As of June 30, 2024, the company's order book stands at Rs 101 crore, with a significant portion coming from government and PSU contracts.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
| Revenue |
469.12 |
542.01 |
606.86 |
| Profit before tax (PBT) |
44.55 |
51.95 |
54.91 |
| Net Profit |
33.49 |
38.30 |
41.45 |
The company has demonstrated consistent growth over the past few years, achieving a Compound Annual Growth Rate (CAGR) of 13.74 per cent in revenue and 11.25 per cent in net profit from FY22 to FY24. In FY24, the company achieved an impressive Return on Equity (RoE) of 27 per cent and a Return on Capital Employed (RoCE) of 28 per cent.
Valuation and outlook
| Company Name |
P/E |
P/B |
RoE (%) |
| Orient Technologies Ltd |
17 |
4 |
27 |
| Listed Peers |
| Dynacons Systems & Solutions Ltd |
34 |
11 |
39 |
| HCL Technologies Ltd |
28 |
6 |
24 |
| Wipro Ltd |
25 |
4 |
15 |
| LTIMindtree Ltd |
37 |
8 |
26 |
| Allied Digital Services Ltd |
25 |
2 |
8 |
| Dev Information Technology Ltd |
26 |
5 |
24 |
| Tech Mahindra Ltd |
63 |
6 |
9 |
The issue is priced with a P/BV ratio of 4.21 times, calculated using its Net Asset Value (NAV) of Rs 48.95 as of March 31, 2024. When calculating the PE ratio for the company based on FY24 earnings relative to the fully diluted paid-up equity capital, the resulting PE ratio stands at 17. Considering both valuation and returns, the company has significantly outperformed its listed peers.
India's IT industry is rapidly expanding, with strong demand for IT Infrastructure, IT Enabled Services (IteS), and Cloud and Data Management Services. IT Infrastructure supports business operations through data centres and networks, while ITeS provides essential managed services. The shift to Cloud and Data Management is driving digital transformation, positioning India as a key player in the global market.
The company has a broad range of offerings, a diversified customer base across various industries, and a strong track record of financial performance. Thus, we recommend that investors consider subscribing to the issue with a long-term outlook.