The shares of this microcap company surged around 5 percent in Thursday’s trading session after its subsidiary filed a draft red herring prospectus (DRHP) for an initial public offering (IPO). The shares have delivered around 40 percent return to its shareholders in just one month.
Price Movement:
With a market capitalization of Rs. 368 crores, the shares of Dev Information Technology Ltd started Thursday’s trading session on a flatter note at Rs. 156.50 compared to its previous close of Rs. 157.94. During the trading session, the shares hit a high of Rs. 169.70, gaining around 5 percent and are currently trading at Rs. 162 apiece.
What Happened:
Such a positive movement in the share price was observed after the company in an exchange filing announced that its promoted venture, i.e. Dev Accelerator Limited (DevX), filed a draft red herring prospectus (DRHP) for an IPO aimed at raising capital to expand its coworking space operations.
Dev IT is a promoter and one of the largest shareholders of DevX, one of the largest flex space operators in terms of operational flex stock, in Tier 2 markets.
The IPO will consist solely of a fresh issue of shares, totalling 2.47 crore shares with a face value of Rs. 2 each, without any offer-for-sale component.
This capital infusion will enable DevX to expand its footprint in major cities, including Mumbai, Gurugram, Noida, Pune, Chennai, GIFT City, Ahmedabad, Vadodara, Rajkot, Surat, Goa, and Jaipur.
As of August 31, 2024, DevX operated 25 centres across over 10 cities, including Ahmedabad, Vadodara, Hyderabad, Delhi, and Udaipur. The expansion funded by the IPO proceeds will strengthen its status as a key player in the managed office space sector, allowing it to serve a broader client base.
Financials:
Looking at the company’s financial performance, the revenue decreased by 18 percent from Rs. 43.44 crores during the March quarter to Rs. 35.46 crores in the June quarter. On the other hand, the net profits declined by around 13 percent from Rs. 4.28 crores to Rs. 3.71 crores during the same period.
Recent Development:
Prime Minister Narendra Modi recently inaugurated the Single Window IT System (SWIT), a significant initiative developed by Dev Information Technology (Dev IT), aimed at enhancing the operational efficiency of businesses in India’s International Financial Services Centres (IFSC).
SWIT is designed to streamline bureaucratic processes for companies looking to establish operations in IFSCs. It aims to improve transparency and facilitate faster approvals from various regulatory bodies, including the International Financial Services Centres Authority, Special Economic Zones authorities, GSTN, RBI, SEBI, and IRDA.
Order Book:
The company’s current order book stands at approximately Rs. 30 crores, with a mix of government contracts and private sector clients.
Future Outlook:
The company is concentrating on enhancing its intellectual property and creating distinctive solutions for SMEs and mid-sized businesses.
Additionally, Dev Information Technology aims to expand its cloud services and digital transformation offerings, especially in the rapidly growing Indian SME sector, which is experiencing over 100 percent annual growth.
Important Financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 16.74 percent and a return on capital employed (RoCE) of 21.57 percent for the period spanning FY22-23. Additionally, the net profit margin stood at 5.79 percent during the same timeframe.
Company Profile:
Incorporated in 1997, Dev Information Technology Ltd (DEV IT) is a global IT services provider that specializes in delivering a comprehensive range of solutions, including digital transformation services, managed IT services, cloud solutions, and custom software development.
Written By Vaibhav Patil
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