Updater Services IPO Review: Updater Services Limited is coming up with its Initial Public Offering. The IPO will open for subscription on September 25, 2023, and close on September 27, 2023. In this article, we will look at the Updater Services IPO Review and analyze its strengths, weaknesses, financials and GMP. Keep reading to find out!
Updater Services IPO Review – About The Company
Updater Services Limited, incorporated in 1990, provides property management services as well as business support services (“BSS”). The company operates in the Business-to-Business (“B2B”) services space, providing a variety of business services that can be broadly categorized into two categories:
- IFM & Other Services Segment
In IFM & Other Services Segment, it offers Production Support Services, Engineering Services, Soft Services, Washroom and feminine hygiene, Warehouse management, General Staffing and more.
- BSS Segment.
In the BSS segment, through its subsidiary, Matrix, the company provides Audit and Assurance services. Through its subsidiaries, it also provides employee background check services, airport ground handling services, sales enablement services, and other services.
As of June 30, 2023, the company has a pan-India presence, with a large network comprising 4,331 sites (excluding staffing locations) handled from 129 points of presence, including 116 offices in India and 13 offices abroad.
As of Q1FY, the company has served 2,797 customers across various sectors, including certain global and Indian customers such as Aditya Birla Fashion and Retail Limited, Procter & Gamble Home Products Limited, Microsoft, Hyundai Motor India Limited (“Hyundai”), Saint-Gobain India Private Limited and more.
Updater Services IPO Review – Industry Overview
Here is a brief overview of the integrated facilities management (IFM) market and business support services (BSS) under which the company operates:
The total IFM market in India for FY23 was valued at ₹100,386.70 crore of which 39.3% is outsourced to 3rd party companies. The outsource value of the IFM was valued at ₹39,480.00 crore as of FY23.
From FY18 to FY23, this market grew at a CAGR of 9.5%. It is further expected to grow at a CAGR of 17% until FY28 and will reach a market value of ₹86,442.0 crore.
The total BSS market in India for FY23 was valued at ₹7,115 crores which grew at a CAGR of 8% since FY18. This market is further expected to grow at a CAGR of 15.3% until FY28 and will reach a market value of ₹14,477.6 crores
Updater Services IPO Review – Financial Highlights
If we look at the financials of Updater Services we find out that their assets have doubled from ₹579.49 crores in March 2021 to ₹1,216.95 crores in March 2023.
Their revenues also follow a similar trend, nearly doubling from ₹1,216.35 crores in March 2021 to ₹2,112.09 crores in March 2023. But, the net profits of the company have declined from ₹47.56 crores in March 2021 to ₹34.61 crores in March 2023. The decline in profits can be seen in the company’s margins which were reported at 1.64% as of FY23
In terms of return ratios, it has a ROE of 9.40% and a RoCE of 14.17% as of FY23. These ratios suggest an average return on shareholders’ capital and a moderate efficiency in the use of company resources.
The debt-to-equity ratio of 0.46 indicates that the company primarily uses its own funds to run its operations
Competitors of the Company
The table image will give you a list of the company’s listed peers along with its along with its key metrics:
Strengths of the Company
- The company’s suite of business services has enabled it to address a diverse set of customer needs and expand its geographic presence in key markets in India.
- The company’s diverse customer base has allowed it to reduce its vulnerabilities to economic cycles and dependence on any particular set of customers.
- The Pan India presence of the company allows it to offer services to customers who prefer a single service provider for their operations at multiple locations.
- The Company along with its Subsidiaries have adopted and developed appropriate technology that not only helps it become more efficient and effective but also drives customer satisfaction and market competitiveness
- The company has established a track record of successful inorganic growth through strategic acquisitions to supplement its business segments, diversify its revenue streams, and integrate such acquired businesses to strengthen its services portfolio further.
Weaknesses of the Company
- The operations of the company are dependent on its ability to successfully obtain payment from its customers for services provided in a timely manner. Failure to collect its receivables can adversely affect its cashflows, profits and liquidity.
- The company is exposed to service-related claims and losses or employee disruptions that could have an adverse effect on its reputation, business and cash flows.
- The company requires huge working capital to run its operations. Failure to acquire such capital can adversely affect its business and operations.
- The company operates in a highly competitive and fragmented industry with low barriers to entry. Increased competition can result in pricing pressure, improved product/service offerings, and higher costs for talent acquisition and retention for the company.
- The company requires huge manpower to run its operations. An inability to retain the existing manpower or attract new manpower can have a significant impact on the business.
Updater Services IPO Review – GMP
GMP for Updater Services IPO has not started yet. we shall update the article once we receive the information.
Updater Services IPO Review – Key IPO Information
|IPO Size||₹640.00 Cr|
|Fresh Issue||₹400.00 Cr|
|Offer for Sale (OFS)||₹240.00 Cr|
|Opening date||September 25, 2023|
|Closing date||September 27, 2023|
|Face Value||₹10 per share|
|Price Band||₹280 to ₹300 per share|
|Lot Size||50 Shares|
|Minimum Lot Size||1(50 shares)|
|Maximum Lot Size||13(650 shares)|
|Listing Date||October 9, 2023|
Promoters: Raghunandana Tangirala, Shanthi Tangirala and Tangi Facility Solutions Private Limited
Book Running Lead Manager: IIFL Securities Limited, Motilal Oswal Investment Advisors Limited and SBI Capital Markets Limited
Registrar to the Offer: Link Intime India Private Limited
The Objective of the Issue
The net proceeds from this issue will be utilized for the following purposes:
- Repayment and /or prepayment of certain borrowings availed by the Company.
- Funding the company’s working capital requirements
- Taking on inorganic initiatives.
- General corporate purposes.
In this article, we looked at the details of Updater Services. On a closing note, we can say, though, the company’s revenues have increased exceptionally along with growth in the industry, it has fallen behind in retaining more revenues. If it manages to reduce its expenditure in the future, it has more potential for growth ahead
What do you think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written By Aaron Vas
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