What you must know about Esconet Technologies IPO?

Esconet Technologies Ltd was incorporated in the year 2012 to provide high-end supercomputing solutions, and data centre facilities on an outsourced basis. This includes the provision of storage servers, network security, virtualization, and data protection; all as part of the package. As part of its offerings, Esconet Technologies Ltd offers servers and graphics workstations, comprehensive data storage solutions, virtualization software, backup, and disaster recovery solutions (redundancy), data centre and access networks; apart from value added analytics software to complement the offerings.

Apart from the original solution offering to the clients, Esconet Technologies Ltd  also offers additional after-sales services which include hardware installation and configuration. The company also offers deployment and seamless Integration of Diverse IT Infrastructure as well as legacy systems. This includes cloud setup and management, AMC services, managed backup, and redundancy solutions etc. In addition, Esconet Technologies Ltd  also has expertise in disaster recovery solutions, data migration, and specialized consulting. Some of the premium clients of the company include Ministry of Defence, National Informatics Centre (NIC), MEITY, IITs, Bharat Electronics Ltd, ONGC, Engineers India Ltd and Hindustan National Glass & Industries. Esconet Technologies Ltd employs 47 personnel on its rolls.

Key terms of the Esconet Technologies IPO SME

Here are some of the highlights of the Esconet Technologies IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 16th February 2024 and closes for subscription on 20th February 2024; both days inclusive.
   
• The stock of the company has a face value of ₹10 per share and it is a book building issue. The price for the book building issue is set in the price band of ₹80 to ₹84 per share. Being a book built issue, the price will be discovered in the above band.
   
• The IPO of Esconet Technologies Ltd has only a fresh issue component and no offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership.
   
• As part of the fresh issue portion of the IPO, Esconet Technologies Ltd will issue a total of 33,60,000 shares (33.60 lakh shares), which at the upper band of IPO price of ₹84 per share aggregates to fresh fund raising of ₹28.22 crore.
   
• Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Therefore, overall IPO size will comprise of the issue of 33,60,000 shares (33.60 lakh shares) which at the upper band IPO price of ₹84 per share will aggregate to overall IPO size of ₹28.22 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,76,000 shares. SS Corporate Securities Private Ltd will be the market maker to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing.
   
• The company has been promoted by Santosh Kumar Agrawal and Sunil Kumar Agrawal. The promoter holding in the company currently stands at 89.18%. However, post the fresh issue of shares in the IPO, promoter equity share will get diluted to 64.94%.
   
• The fresh issue funds will be used by the company to fund the capex of its subsidiary, ZeaCloud Services Private Ltd and for its own working capital funding purposes. Part of the funds will also be applied towards general corporate purposes.
   
• Corporate Capital Ventures Private Ltd will be the lead manager to the issue, and Skyline Financial Services Private Ltd will be the registrar to the issue. The market maker for the issue is SS Corporate Services Private Ltd.

IPO allocation and minimum lot size for investment

Esconet Technologies Ltd has already announced the market maker allocation at 1,76,000 shares as inventory for market making. The net offer (net of market maker allocation) will be divided between the QIB investors, retail investors and the HNI / NII investors. The breakdown of the overall IPO of Esconet Technologies Ltd in terms of the allocation to various categories are captured in the table below.

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹1,34,400 (1,600 x ₹84 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 3,200 shares and having a minimum lot value of ₹2,68,800. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Key dates to be aware of in the Esconet Technologies IPO (SME)

Esconet Technologies IPO opens on Friday, 16th February 2024 and closes on Tuesday, 20th February 2024. The Esconet Technologies Ltd IPO bid date is from 16th February 2024 at 10.00 AM to 20th February 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 20th February 2024.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on February 22nd 2024, will be visible to investors under the ISIN Code – (INE0RQZ01017).

Financial highlights of Esconet Technologies Ltd

The table below captures the key financials of Esconet Technologies Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

It must be noted here that the company has only disclosed one year financial data for FY23 and the half year data for the first half of FY25 ended September 2024. However, with such limited data, it is tough to take a valuation call. However, the business model is robust and the company does have a premium clientele, which will stand the company in good stead. Investors will have to take a view purely on the business model in the absence of financial data for a minimum of 3 years for the company.