The much-anticipated Initial Public Offering (IPO) of Orient Technologies Ltd, an established IT solutions provider based in Mumbai, has officially opened for public subscription today, August 21, 2024. The subscription window will remain open until August 23, 2024. This blog provides an in-depth look at the Orient Technologies IPO, covering key details such as subscription status, grey market premium (GMP), financials, and expert reviews to help you decide whether to invest in this IPO.
Founded in 1997, Orient Technologies has built a robust portfolio in IT Infrastructure, IT Enabled Services (Ites), Cloud, and Data Management Services. The company serves a diverse client base, including numerous multinational corporations, and has a presence in Singapore. However, its primary revenue stream is rooted in the Indian market.
Orient Technologies has consistently grown its revenue, EBITDA, and PAT at a compound annual growth rate (CAGR) of 13.7%, 12.9%, and 11.2% respectively during the FY2022-24 period. This sustained growth reflects the company's efforts to expand its product range, increase its customer base, and deepen its technological partnerships.
The company plans to use the net proceeds from the IPO for general corporate purposes, capital expenditure requirements, and the purchase of an office building in Navi Mumbai. These strategic investments are aimed at enhancing the company’s infrastructure and expanding its operational capabilities.
As of 12:45 IST on the first day of bidding, Orient Technologies IPO has already garnered significant interest from investors. The public issue has been subscribed 3.28 times overall. The retail portion has been particularly strong, with a subscription rate of 5.54 times. The Non-Institutional Investor (NII) segment has been subscribed 2.20 times, while the Qualified Institutional Buyers (QIB) portion is yet to see significant traction.
The grey market has shown a positive sentiment towards the Orient Technologies IPO. The IPO's grey market premium (GMP) stands at ₹30 as of today, indicating that shares are trading at a premium of ₹30 over the upper end of the price band. This translates to an estimated listing price of ₹236 per share, which is approximately 14.56% higher than the IPO price of ₹206 per share.
At the upper end of the price band, Orient Technologies is valued at a Price-to-Earnings (P/E) ratio of 17.46x based on its diluted earnings per share (EPS) for FY2024. This valuation appears reasonable when compared to its peers in the IT services industry. For instance, Dynacons Systems & Solutions Ltd has a P/E ratio of 29.47x, HCL Technologies Ltd is at 26.93x, and Wipro Ltd at 23.39x. However, the P/E ratios of other major players like LTIMindtree Ltd (34.56x) and Tech Mahindra Ltd (55.17x) suggest that Orient Technologies is priced conservatively, offering potential for upside in its stock price.
StoxBox: Research Analyst Prathamesh P Masdekar from StoxBox has given a "SUBSCRIBE" rating to the Orient Technologies IPO. He points out the company’s consistent financial performance and its efforts to broaden its product portfolio and increase its global footprint. Masdekar considers the IPO fairly valued at a P/E ratio of 20.7x on the upper price band based on FY24 earnings.
Master Capital Service Ltd: This brokerage highlights the company’s recent foray into "Device as a Service (DaaS)", offering IT hardware and managed services on a subscription basis. The firm’s focus on expanding its consumer base internationally and its strategic move to establish a branch in Singapore are seen as positive steps. The brokerage recommends the IPO for medium- to long-term investors.
The Orient Technologies IPO presents an intriguing investment opportunity, especially given its conservative valuation compared to peers and its strong growth trajectory. The company’s focus on expanding its service offerings, particularly in emerging areas like DaaS, coupled with its plans for geographic expansion, bodes well for its future growth.
However, potential investors should be mindful of the company’s limited international exposure, which could be a double-edged sword. While the company has a solid foundation in India, its success in global markets is yet to be proven. Additionally, the IT services industry is highly competitive, with larger players like HCL Technologies and Wipro dominating the space.
Given the reasonable valuation, strong subscription numbers, and positive grey market sentiment, the IPO appears to be a sound investment for those looking to diversify their portfolio with a promising IT services company. The "SUBSCRIBE" rating from analysts further adds confidence to the potential upside of this investment.
Orient Technologies’ IPO has generated significant buzz in the market, and for good reason. The company’s consistent financial performance, reasonable valuation, and strategic growth plans make it a compelling choice for investors. If you are looking for an investment with solid fundamentals and growth potential, Orient Technologies might be the right pick for you.
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