Mumbai-based IT solutions provider Orient Technologies has decided to open its initial public offering for subscription on August 21. The price band for the offer will be announced on August 16.
The issue will close on August 23, while the anchor book of the offer will be opened for a day on August 20. The maiden public issue is a combination of equity shares worth Rs. 120 crore, and an offer-for-sale of 46 lakh equity shares by promoters. Promoters Ajay Baliram Sawant, Umesh Navnitlal Shah, Ujwal Arvind Mhatre, and Jayesh Manharlal Shah will be selling 11.55 lakh equity shares each in the offer-for-sale.
Half of the issue will be reserved for qualified institutional buyers, while the non-institutional investors will get up to 15 percent shares and the remaining 35 percent shares will be reserved for retail investors.
Orient, which provides IT infrastructure, IT-enabled services, and cloud and data management services, will spend Rs. 10.35 crore equity shares out of the net fresh issue proceeds for acquisition of office premise at Navi Mumbai. Another Rs. 79.65 crore will be spent on capital expenditure requirements, and the remaining fresh issue money will be used for general corporate purposes.
Strength and Weakness
| Strength | Weakness |
| Since 1997, Orient Technologies Limited has built a solid reputation. They offer tailored solutions for their clients. Their clientele comes from diverse sectors: BFSI, IT, ITeS, healthcare, and pharmaceuticals. Notable clients include Coal India, Mazagon Dock, and Jyothy Labs. The company’s strength lies in customising its offerings. Their top 10 clients contribute significantly to their revenue. This showcases their reliability and value. | The majority of Orient Technologies Limited’s foreign exchange exposure is unhedged, making it vulnerable to changes in exchange rates. The company’s direct and indirect transactions denominated in foreign currencies, especially the US Dollar (USD), are the main source of foreign currency risk. Future business transactions as well as recognized assets and liabilities that are not valued in the company’s functional currency (INR) provide this risk, which calls for close monitoring and management of currency exposures. |
| With offerings including Data Centre Solutions, Managed Services, and Cloud Migration, Orient Technologies Limited caters to the evolving needs of modern businesses. The company’s emphasis on innovation and strategic growth within each area have resulted in remarkable revenue growth in its IT Infrastructure, ITeS, and Cloud businesses. | Orient Technologies Limited manages credit risk from both operating activities (such as trade receivables) and financing activities (including deposits with banks). While the company establishes credit limits based on internal rating criteria and regularly monitors outstanding receivables, there remains a risk of default by counterparties leading to financial losses. |
| Orient Technologies Limited has consistently demonstrated strong financial performance, characterised by steady revenue growth and profitability. With a revenue CAGR of 47.09% between Fiscal 2021 and Fiscal 2023, the company has effectively capitalised on its expanding product range and customer base. | Orient Technologies Limited faces liquidity risk, which refers to the possibility of being unable to settle or meet its obligations on time. While the company’s treasury department manages liquidity, funding, and settlement, overseen by senior management, there is inherent risk in maintaining sufficient liquidity. |
The company that competes with Dynacons Systems & Solutions, HCL Technologies, LTIMindtree, Wipro, Allied Digital Services, Dev Information Technology, and Tech Mahindra is 97.72 percent owned by the above-mentioned promoters; 2.04 percent of its stake is held by public shareholders.
Orient had an orderbook of Rs. 101.2 crore as of June 2024, including Rs. 20.5 crore from the BFSI segment and Rs. 30.6 crore from the government & PSUs.
The IT services company has recorded decent financial performance in the past years, with profit growing 8.2 percent on-year to Rs. 41.4 crore in the fiscal year ended March 2024 and revenue increasing 12.7 percent to Rs. 602.9 crore during the same period. EBITDA (earnings before interest, tax, depreciation and amortisation) for the fiscal 2024 grew by 16.4 percent to Rs. 56.6 crore with margin expanding 31 bps to 9.4 percent compared to the previous year.
The IT infrastructure products and services business contributed 52.2 percent to the revenue in the fiscal 2024, 22.2 percent business came from IT-enabled services, and the remaining 25.6 percent from cloud and data management services.
