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28 October 2023

Updater Services IPO: Transforming the B2B Services Landscape

Introduction:

The Updater Services IPO is making waves in the market, with a substantial issue size of Rs 640.00 crores. This IPO is a blend of a fresh issue comprising 1.33 crore shares, totaling Rs 400.00 crores, and an offer for sale of 0.8 crore shares, aggregating to Rs 240.00 crores. The IPO bidding phase commenced on September 25, 2023, and concluded on September 27, 2023. Allotment of shares was finalized on Thursday, September 28, 2023, and the shares commenced trading on both BSE and NSE on October 4, 2023. The price band for this IPO was set at ₹280 to ₹300 per share, with a minimum lot size of 50 shares and a minimum retail investment of ₹15,000.

Key Players:

The Updater Services IPO received expert management from IIFL Securities Ltd, Motilal Oswal Investment Advisors Limited, and SBI Capital Markets Limited, who acted as the book running lead managers. Link Intime India Private Ltd was the appointed registrar for this offering.

Stock Performance:

As of October 19, 2023, Updater Services Limited's stock was trading at ₹283.70, with a minor decline of 0.35%. The stock opened at ₹283.05, with a daily range between ₹290.70 and ₹281.55. Its previous closing price was ₹284.70, and the total traded value was 1,02,877 shares.

Ownership Structure:

The shareholding pattern of the company stood at 80.58% pre-issue and 58.47% post-issue.

Financial Snapshot:

Updater Services Limited reported robust financial figures. As of March 31, 2023, the company's total assets reached ₹1,216.95 crores. The company demonstrated impressive revenue growth, recording earnings of ₹2,112.09 crores in fiscal 2023. Notably, the company reported a profit after tax of ₹34.61 crores. The net worth of the company was ₹380.89 crores, with reserves and surplus totaling ₹176.54 crores. Total borrowings were reported at ₹176.54 crores.

Key Metrics:

The IPO showcased a Price-to-Earnings (P/E) ratio of 44.31, a Market Capitalization of ₹2001 crores, Return on Equity (ROE) of 9.40%, Return on Capital Employed (ROCE) of 14.17%, Debt/Equity ratio of 0.46, Earnings per Share (EPS) of ₹6.77, and Return on Net Worth (RoNW) of 9.34%.

IPO's Purpose:

The Net Proceeds from the Fresh Issue were intended for the following purposes:

1. Repayment and/or prepayment of certain borrowings availed by the Company.
2. Funding the working capital requirements.
3. Pursuing inorganic initiatives.
4. General corporate purposes.

Expert Opinion:

Updater Services Limited has carved a niche in the services sector, offering a comprehensive range of services under one roof. The company has exciting prospects with high-margin and value-added services backed by cutting-edge technology. While the IPO may seem aggressively priced, it holds promising potential. Informed investors may consider investing for medium to long-term benefits.

Subscription Status:

The Updater Services IPO has garnered substantial interest from investors, achieving an overall subscription rate of 2.96 times as of September 27, 2023. Retail investors showed strong enthusiasm, with a subscription rate of 1.45 times. The issue attracted significant attention from Qualified Institutional Buyers (QIBs) with a subscription rate of 4.50 times.

Conclusion:

The Updater Services IPO presents an opportunity for investors to participate in the growth of a company poised to redefine the B2B services landscape. As with any investment, thorough research and analysis are vital, taking into account the company's growth trajectory and competitive positioning. Diversification and prudent risk management are key principles in the world of stock market investing.

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