What you must know about the Vertexplus Technologies IPO

Vertexplus Technologies IPO is a certified IT services company incorporated in the year 2010 with an operating history of nearly 13 years. The company is currently engaged in the business of consulting, outsourcing, infrastructure, digital solutions and digital services. Over the years, the company has positioned itself as a solutions provider to meet the end-to-end needs of its client companies. Broadly, Vertexplus Technologies Ltd has adopted five delivery models to clients viz. offshore model, onsite model, hybrid model, global model and the strategic partnership model. Over the years, the company brings to the table, more than 1250 years of combined manpower experience, over 1,000 services and project in flow. It has a team of over 350 specializes in the IT and related fields and services over 700 clients.

The client has a roster of clients which inter alia includes names like Airtel, Paytm, Nokia, MTS, Hindustan Power, Perkin Elmer, CII, Borosil, FIITJEE, Fab India and Best Western. Among the IT services it offers, include strategy & architecture, digital transformation, security & risk management, enterprise mobility, application engineering and integration services. On the emerging technologies front, Vertexplus Technologies Ltd offers machine intelligence, extended reality, visual analytics, video analytics, AI, IOT and blockchain. On the solutions front, Vertexplus Technologies Ltd offers video intelligence, HR systems, POS system, ecommerce solutions, asset lifecycle management, digital office management systems and expense management systems.

Understanding NSE-Emerge IPO issue of Vertexplus Technologies Ltd

The total size of the IPO of Vertexplus Technologies Ltd is not yet known since the number of shares to be issued in the IPO is yet to be announced. However, it will be a book building issue and the price band has already been announced. The price band for the IPO will be between Rs91 and Rs96 and the size of the issue will be known only once the number of shares to be issued are also known. While Beeline Capital Advisors Private Ltd will be the lead manager to the IPO, Skyline Financial Services Private Limited will be the registrar to the issue. Normally, it is the upper end of the price band that is taken as the reference rate, subject to the ratification by the merchant bankers post the completion of the issue.

As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyer (QIB), 15% for the HNI / NII investor while the balance 35% is reserved for the retail investors. The minimum lot size will be 1,200 shares. The retail segment can apply for a minimum lot of 1 lot comprising of 1,200 shares with an investment value of Rs115,200 assuming the peak price of the band determined. That will also be the maximum that the retail investors can put in as an application. For HNIs, they can apply for minimum of 2 lots of 2,400 shares with an investment value of Rs230,400 at the peak price of the band. There are no such limits for the QIB component.

The issue opens for subscription on 02nd March 2023 and closes for subscription on 06th March 2023 (both days inclusive). The basis of allotment will be finalized on 10th March 2023 and the refunds will be initiated on 13th March 2023. In addition, the demat credits are expected to happen on 14th March 2023 and the stock will list on 15th March 2023 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated.

Quick look at the financials of the IPO of Vertexplus Technologies Ltd

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

Data Source: Company DRHP filed with SEBI (# - annualized 6 months data)

There are few key takeaways from the financials of Vertexplus Technologies Ltd which can be enumerated as under

1. The net margins have been in single digit which is quite low for an IT company. However, the good news is that this margin has been steadily picking up momentum in the last 3 years. That is also evident from the growth in profits at a quicker pace than the sales.
    

2. Like the net margins, even the return on net worth or the RONW has shown a consistently increasing trend over the last 3 years. The debt levels are already quite low and the issue will make the debt equity ratio more favourable going ahead.
    

3. One area of concern is that the company may not be really sweating its asset base too effectively, which is evident from the gradually falling asset turnover ratio. That should be an area of observation for the company.

The company will be using the proceeds of the public issue for meeting its working capital needs and also for general corporate purposes.