Protean eGov Technologies IPO Review: Protean eGov technologies is coming up with the IPO which is set to be listed on BSE. The IPO will be open for subscription on 6th November 2023 and closes on 8th November 2023. This article will provide a comprehensive review of the IPO, including an in-depth analysis of the company’s financials and the strengths and weaknesses of Protean eGov technologies. Keep reading for more details!

Protean eGov Technologies IPO – About The Company

Protean eGov Technologies is a leading IT-enabled solutions company in India that was established in 1995. The company specializes in designing, developing and implementing innovative and nationally important technology solutions for e-governance.

The company works closely with the government and has rich experience in creating digital public infrastructure and citizen-centric services. The company has partnered with seven ministries and autonomous bodies, including the Ministry of Finance, education, electronics and information technology, communications, commerce and industry, skill development and entrepreneurship, and information and broadcasting. 

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Protean eGov Technologies has successfully executed 19 projects across various domains such as tax administration, pension schemes, and digital literacy. Some of its key projects include TIN, PAN, NPS, and Atal Pension Yojana. As a pioneer in its field, the company continues to lead the market in providing universal, citizen-centric, and population-scale e-governance solutions.

Industry Overview

E-governance Technologies is at the forefront of the digital revolution in India, leveraging technology to streamline government operations and enhance public services. The strategic goal of e-governance is to simplify governance for all stakeholders: government, citizens, and businesses. This growth is driven by technology and platform upgrades, as well as e-governance initiatives by central and state governments.

The rapid expansion of internet and broadband penetration in India, primarily through smartphones and other digital modes, has been a key driver. Internet subscribers in the country have grown at a CAGR of 16.0%, from 251.6 million in Fiscal 2014 to 824.9 million in Fiscal 2022.

Government spending on IT and telecom has consistently increased, with telecom accounting for approximately 86% of the share in Fiscal 2023. In the Budget 2023-2024, out of the total telecommunication capital spending of ₹616.9 billion, approximately 86% was allocated to support public sector undertakings (PSUs; ₹530.9 billion), primarily for the revival plan of Bharat Sanchar Nigam Limited.

The payments space has witnessed rapid innovation due to government and regulatory initiatives and changing consumer preferences. Notable regulatory initiatives such as JAM (Jan Dhan, Aadhaar and Mobile), demonetisation of high-value currency notes in November 2016, implementation of GST, and introduction of the Unified Payments Interface (UPI) have spurred growth in this sector.

Digital India has undoubtedly been successful since its launch six years ago. However, it is crucial to accelerate focus on core components like enhancing digital literacy and accessibility to fully realise the potential of India’s digital economy.

Protean eGov Technologies IPO Review – Financials

Protean eGov Technologies has demonstrated a robust financial performance. Between March 2021 and March 2023, 

The company’s revenue saw an increase from ₹603 crore to ₹742 crore, and its Profit After Tax (PAT) grew from ₹92 Cr to ₹107 Cr. As of 2023, the company has no borrowings and its reserves and surplus have risen from ₹627 Cr in 2021 to ₹812 Cr in 2023, indicating a healthy financial status. 

The net worth of the company also increased from ₹667 crore to ₹856 crore during the same period.In recent Quarters the company achieved a revenue of 220 Cr and a PAT of 32 Cr. 

In terms of returns, the company achieved a Return on Equity (ROE) of 12.49% and a Return on Capital Employed (ROCE) of 16.13% as of FY2023.

Financial Metrics 

(Source: RHP of the company)

Competitors of the company

As per the RHP of the company there are no listed companies in India that engage in a business similar to Protean eGov technologies. 

Strengths of the company

  • Public Digital Infrastructure: Protean eGov Technologies has played a key role in establishing public digital infrastructure and creating e-governance interventions across multiple sectors of the Indian economy. It has modernized India’s direct tax infrastructure through projects like PAN issuance, the TIN, and CRA for the NPS.
  • Domain Knowledge: The company’s domain knowledge across various industries allows it to develop functionalities that cater to the specific needs of end-users, businesses, and public entities. Its clients benefit from its delivery model, extensive experience across various technologies, industry knowledge, project management expertise, and proprietary software engineering tools.
  • Market Leadership: Protean eGov Technologies is a pioneer and market leader in universal, citizen-centric, and population-scale e-governance solutions. It continues to lead in providing e-governance services such as TIN management, PAN processing, NPS, and Atal Pension Yojana.
  • Strong Business Model & Network: The company boasts a strong business model with a history of healthy financial performance and positive cash flows. As of 2023, it had an operating cash flow of 137 Cr and has been profitable since 1999. It also has a pan-India service delivery network with 79,374 centres as of June 30, 2023.

Weaknesses of the company

  •  Client Dependence: The company is heavily dependent on e-governance and other projects awarded by government establishments, generating 72% of its revenue from government contracts. This dependence exposes it to various risks that could adversely affect the business.
  • Technological Adaptability: The technology services market is characterized by rapid technological changes. The company’s business could suffer if it fails to anticipate and develop new services or enhance existing ones to keep pace with these changes.
  • Contract Pricing Risks: If the company’s pricing structures do not accurately anticipate the cost, complexity, and duration of its work, its contracts could be unprofitable. There is a risk of underpricing contracts, underestimating the duration and complexity of work, or failing to accurately assess the risks associated with potential contracts.
  • Third-Party Reliance: Protean Technologies relies on third parties for certain services, including hardware implementation, software delivery, and digital transformation. Any loss of key suppliers or their failure to deliver equipment or perform services in a timely or satisfactory manner could adversely affect the business.

Protean eGov Technologies IPO Review – GMP 

As of 1st November 2023, The IPO for Protean eGov Technologies is set at a price band of ₹752-₹792  per share. The latest grey market price stands at ₹111. The IPO is projected to list at a premium of 14.02%, with an estimated listing price of ₹903. 

Key IPO Information

IPO Size490.33 Cr
Offer for sale 490.33 Cr
opening date 6th November 2023
closing date8th November 2023
face value ₹10 per share
price band₹752 to ₹792 per share
lot size 18 shares
Minimum lot 1 (18 shares)
maximum lot 14 (252 shares)
Investment amount ₹14,256
listing date 17th November 2023

Promoters: Protean eGov Technologies is a professionally managed company and does not have any identifiable promoter

Book Running Lead Manager: ICIC Securities Limited, Equirus Capital private limited, IIFL securities limited, Nomura financial advisory and securities private limited. 

Registrar to the Offer: Link Intime India Private Limited.

The Objective of the Issue

The company will not receive any proceeds from the Offer and all the Offer Proceeds will be received by the Selling Shareholders, in proportion to the Offered Shares sold by the respective Selling Shareholders as part of the Offer.

In Closing

As a market leader in e-governance solutions, Protean eGov Technologies excels in providing services like TIN management, PAN processing, and pension schemes. With its industry-specific knowledge, it develops functionalities for end-users, businesses, and public entities.

Despite global competition, it aims to diversify and expand geographically. Having significantly impacted the Indian economy through digital infrastructure and e-governance, and backed by strong financials, Protean eGov Technologies is set for remarkable future growth.

What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.

Written By Niharika Jadhav

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