Orient Technologies IPO: A Deep Dive into Financials and Market Position

Orient Technologies, a leading figure in the IT solutions industry, has been attracting interest with its upcoming IPO. The firm, known for its diverse IT offerings like IT Infrastructure and cloud services, is prepared to attract significant investor interest. The orient technologies IPO will start  subscription from 21st and will end by 23rd August 2024, comprising an Offer for Sale (OFS) and a Fresh Issue. Investors have the opportunity to engage in Orient Technologies' growth through trading its shares on both BSE and NSE.

Company Overview 

Orient Technologies, founded in 1997, has a robust popularity for its technologically advanced solutions. The company collaborates with technology partners to design revolutionary products tailored to client needs such as, IT Infrastructure that offers information Centre Solutions (DCS), End-User Computing (EUC), and Hyper-Converged Infrastructure (HCI).  IT Enabled Services (ITeS): Includes Managed Services, Multi-Vendor Support, IT Facility Management, and Cloud and Data Management Services that covers IaaS, PaaS, SaaS, and specialized services.

Notably, the ITeS segment grew at a CAGR of 29.51% between FY22 and FY24, even as cloud and data management revenue grew by a CAGR of 62.92% throughout the same period. Orient Technologies has cast strategic alliances with a number of the world’s main technology companies, which includes Dell, Fortinet, and Nutanix.

Orient Technologies IPO Details 

The public issue includes Offer for Sale (OFS) of 46,00,000 Equity Shares and a Fresh Issue aggregating to INR 120 crore. Retail investors will be allotted 35% of the total shares, QIBs can get up to 50% of the offer, and non-institutional investors (NIIs) are allocated at least 15% and hence, individual investors could be major contributors. 

Utilization of IPO Proceeds

The proceeds from Orient Technologies' IPO will support a range of crucial initiatives. The company plans to use some of the funds for meeting the vital capital expenditure requirements aimed at enhancing its operational capabilities. Additionally, Orient Technologies intends to acquire workspace in Navi Mumbai to reinforce its presence in a key business hub.  The remaining funds will be allocated towards the company's general requirements, providing the company with the financial flexibility to pursue opportunities for expansion and manage operational costs effectively.

Strengths: 

1.   Financial Performance 

   
   

The company has recorded steady performance in the last 2 years with a revenue CGAR of ~14% between FY22 and FY24. For the last three fiscals (FY22-FY24), the company has posted an average EPS of Rs. 11.14 and an average RoNW of 27.66%

Financials (in ₹ Crore) ​	FY22	FY23	FY24
Revenue	469	542	606
PAT	33	38	41
Profit Margins (%)	7	7	6
Borrowings	2	13	5
Assets	176	215	311

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There are other valuation indicators which offer additional insight on the Orient Technologies financials to making sound investment decisions based on the following;

Key Metrics	FY22	FY23	FY24
ROE (%)	43	34	27
ROCE (%)	45	31	28
EBITDA Margin(%)	9	9	9
Debt/Equity	0.02	0.10	0.03

B)  Order book value: It had orders on hand worth Rs. 101+ cr. as of June 30, 2024.

C)  Dividends: The company has paid dividends of 2.23% (FY22), 22.86% (FY23), and 17.14% (FY24) It has already adopted a dividend policy in October 2023, based on its financial performance and future prospects.

Key Players in the IPO

Elara Capital (India) has been appointed as the sole book-running lead manager for the IPO, ensuring that the offering is managed with the highest degree of professionalism and understanding. Link Intime India has been designated as the registrar of the offer.

Market Position and Future Prospects

Orient Technologies has built a stable market presence through forming strategic partnerships and emphasizing innovation. The organization's robust financial overall performance and persevered growth in a competitive market make it an appealing investment opportunity. The company is operating in a highly competitive and fragmented segment of IT solutions and related services providing. The funds accumulated from the IPO will play an important function in advancing Orient's upcoming growth stage, as it continues increasing its range of products and enhancing its market presence.

Conclusion

The Orient Technologies IPO gives a promising investment opportunity, mainly for investors looking to the rapidly growing IT services sector. The company's stable financial overall performance, collaborations with global tech giants, and targeted increase techniques have placed it properly for future expansion. The funds from the IPO can be utilized for critical needs together with obtaining sparkling office places and backing capital expenditure, showcasing the company's commitment to improving its operational capabilities.

However, prior to making a decision, potential investors must thoroughly evaluate the company's financial metrics, market position, and overall financial performance as they would with any investment. Even though the IPO shows great potential for investment due to its steady revenue growth and partnerships, it is important to consider this in relation to overall market trends and personal risk tolerance. In general, investing in the Orient Technologies IPO could enhance a diversified investment portfolio, but it is important to do thorough research or seek advice from a financial advisor to match your investment objectives.