Orient Technologies IPO

Orient Technologies IPO: 10 Key Things to Know Before You Subscribe

Orient Technologies, an IT solutions provider, is set to launch its Initial Public Offering (IPO) from August 21, 2024, to August 23, 2024. Here are 10 crucial details from the Red Herring Prospectus (RHP) to consider before subscribing.

1. Subscription Details:

• IPO Dates: Opens on August 21, 2024, and closes on August 23, 2024.
• Price Range: ₹195 to ₹206 per share.
• Minimum Lot Size: 72 shares.
• Minimum Investment: ₹14,832 for retail investors.

2. Objectives of the Issue:

• Total Valuation: ₹214.76 crores.
• Offer for Sale: 0.46 crore shares valued at ₹94.76 crores.
• Fresh Issue: 0.58 crore shares totaling ₹120.00 crores.
• Use of Proceeds:
  • Purchase of office space at Plutonium Business Park, Navi Mumbai.
  • Equipment purchases for Network Operating Center (NOC) and Security Operation Center (SOC) setup.
  • Equipment for Device-as-a-Service (DaaS) offering.
  • General corporate purposes.

3. About the Company:

• Established: 1997.
• Headquarters: Mumbai, Maharashtra.
• Business Areas: IT Infrastructure, Cloud, IT Enabled Services (IteS), Data Management Services.

4. Key Risks:

• Customer Dependency: Heavy reliance on the top 10 customers; loss or reduction in their business could significantly impact revenue.
• Industry Focus: Dependence on a few customer industries for the majority of revenue; loss of key customers in these industries could adversely affect the company’s financial health.

5. Financials:

• Profit After Tax (PAT): Increased by 8% in FY24.
• Sales: Increased by 12% in FY24 compared to FY23.

6. Promoters:

• Promoters: Ajay Baliram Sawant, Jayesh Manharlal Shah, Umesh Navnitlal Shah, and Ujwal Arvind Mhatre.

7. Registrars and Book Running Managers:

• Book Running Lead Manager: Elara Capital (India) Private Limited.
• Registrar: Link Intime India Private Ltd.

8. Allotment and Listing Details:

• Allotment Date: Expected on August 26, 2024.
• Listing Date: Tentatively August 28, 2024, on BSE and NSE.

9. Peers and Comparisons:

• Peers: Dynacons Systems & Solutions, LTIMindtree Limited, HCL Technologies Ltd, Wipro Ltd, Allied Digital Services, Dev Information Technology Limited, Tech Mahindra.
• Price-to-Earnings Ratio: 16.46 to 37.51 times FY23 earnings for peers.
• Earnings per Share: ₹10.94 for Orient Technologies.

10. Grey Market Premium (GMP):

• GMP: Currently stands at 0, indicating no premium is being assigned to Orient Technologies shares in the grey market.

Advantages

• Growth Potential: With the increasing demand for IT infrastructure and cloud solutions, Orient Technologies has substantial growth potential.
• Experienced Management: The promoters and management team have extensive experience in the IT sector, which may translate into effective leadership and strategic direction.
• Strong Clientele: The company has a significant client base, which includes major players across various industries, providing a steady revenue stream.
• IPO Proceeds Utilization: The funds raised are being directed towards strategic expansion plans, which can lead to long-term growth and enhanced service offerings.

Disadvantages

• Customer Dependency: The company’s heavy reliance on its top 10 customers is a significant risk. Losing any of these clients could severely impact its revenue and profitability.
• Industry Concentration: Dependency on a few customer industries for the majority of its revenue exposes the company to industry-specific risks, which can adversely affect its financial performance.
• Competition: The IT sector is highly competitive, with several well-established players like LTIMindtree, HCL Technologies, and Wipro. This competition could limit growth opportunities for Orient Technologies.
• GMP Concerns: The zero GMP indicates a lack of premium in the grey market, which might suggest low investor confidence or market interest.

Conclusion:

Orient Technologies IPO offers a promising opportunity, especially considering its steady financial growth and established presence in the IT solutions industry. However, potential investors should carefully evaluate the key risks, particularly the company’s heavy reliance on a few major customers and industries. The lack of a grey market premium might also suggest cautious investor sentiment.

FAQs

1. What is the subscription period for the Orient Technologies IPO?

1. • The IPO opens for subscription on August 21, 2024, and closes on August 23, 2024.

2. What is the price range for Orient Technologies’ IPO?

1. • The price range is ₹195 to ₹206 per share.

3. What is the minimum investment required for retail investors?

1. • Retail investors need to invest a minimum of ₹14,832, which equates to a lot size of 72 shares.

4. What will the company do with the proceeds from the IPO?

1. • The funds will be used for purchasing office space in Navi Mumbai, setting up the Network Operating Center (NOC) and Security Operation Center (SOC), equipment purchases for their Device-as-a-Service (DaaS) offering, and for general corporate purposes.

5. When is the expected listing date for Orient Technologies’ shares?

1. • The shares are expected to be listed on the BSE and NSE on August 28, 2024.

6. Who are the lead managers and registrars for this IPO?

1. • Elara Capital (India) Private Limited is the book running lead manager, and Link Intime India Private Ltd is the registrar.

7. What are the key risks associated with Orient Technologies’ IPO?

1. • The key risks include heavy reliance on top 10 customers and dependency on few industries for the majority of its revenue.

8. What is the Grey Market Premium (GMP) for the Orient Technologies IPO?

1. • As of now, the GMP for Orient Technologies IPO is zero, meaning no premium is currently being assigned.

Orient Technologies IPO

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