Updater Services IPO opens for subscription. Should you bid?
BNP Paribas, Societe Generale, Citigroup Global Markets, and Nomura Singapore are foreign investors that participated in the anchor round.
The company plans to raise about Rs 640 crore through the IPO, which closes on September 27.
Analysts are dividend on the company's prospects. While they believe the company has successfully created a niche through marque clients, past acquisitions and operational efficiency, they remain concerned over the valuations.
«The company has aimed for high margin through value-added services with the support of the latest technology in its portfolio.
On the valuation front, we believe that the company is fairly priced. Thus, we recommend a Subscribe – Long Term rating to the IPO,» Anand Rathi said.
The issue comprises a fresh equity of Rs 400 crore and an offer for sale (OFS) of 80 lakh shares by the promoter and other selling shareholders.
The company has fixed the price band at Rs 280-300 per share and investors can bid for a minimum of 50 shares in one lot and in multiples thereafter.
About 75% of the offer is set aside for qualified institutional buyers (QIBs), 15% is reserved for non-institutional investors (NIIs) and 10% for retail investors.
Net proceeds will be used towards funding working capital requirements, repayment of debt, pursuing inorganic initiatives and other general corporate purposes.
«If we attribute FY23 earnings to the post-IPO fully diluted paid-up equity capital of the company, the asking price is at a P/E of 44.8x, and we believe it to be priced aggressively.
We, therefore, recommend an “Avoid” rating for the issue. However, we would reassess the company on improvement in financial metrics over a sustained period,» said Stoxbox.
Updater Services is a leading
