The initial public offering (IPO) of Orient Technologies Ltd. has garnered significant attention, with an oversubscription of 151.03 times as of the third and final day of bidding, which closed on August 23, 2024. The overwhelming response from investors across all categories underscores the strong market sentiment towards the company's prospects.

According to the latest data from the stock exchanges, a total of 112.51 crore equity shares were bid for against the offer size of 74.49 lakh equity shares. The category reserved for non-institutional investors (NIIs) saw an astounding subscription of 300.19 times, showcasing the heightened interest from high-net-worth individuals and corporates. The retail investor category was also robust, with a subscription of 65.70 times. Meanwhile, the qualified institutional buyers (QIB) segment was subscribed 189.90 times, reflecting strong participation from institutional players.

Grey Market Premium (GMP) and IPO Pricing

In the unlisted market, Orient Technologies shares are trading with a grey market premium (GMP) of ₹60, indicating a potential listing price that is 29% higher than the upper band of the issue price. This GMP had stood at ₹70 the previous day, reflecting the dynamic nature of market expectations. The grey market serves as an unofficial platform where IPO shares are traded before they are officially listed on the stock exchanges.

The IPO, priced between ₹195-206 per share, aims to raise ₹215 crore at the upper end of the price band. Investors could place bids for a minimum of one lot, consisting of 72 shares, with multiples of that thereafter.

IPO Structure and Use of Proceeds

The IPO is structured as a combination of fresh issuance of shares worth ₹120 crore and an offer-for-sale (OFS) of 46 lakh equity shares valued at ₹94.76 crore by the company's promoters. The promoters participating in the OFS include Ajay Baliram Sawant, Umesh Navnital Shah, Ujwal Arvind Mhatre, and Jayes Manharlal. Post-IPO, the promoters' stake in Orient Technologies is expected to decrease to 73%.

The company plans to utilize ₹79.6 crore of the ₹120 crore raised through the fresh issue for capital expenditure (capex), focusing on expanding its infrastructure and operational capabilities. An additional ₹10.35 crore will be allocated for the acquisition of an office premise in Navi Mumbai, which will serve as a strategic hub for the company's operations.

About Orient Technologies Ltd.

Orient Technologies Ltd. is a leading player in the IT infrastructure solutions space, offering a comprehensive range of services including data centre solutions, servers, storage, networking components like switches, routers, and access points, as well as collaboration and security solutions. The company also provides end-user computing services, encompassing desktop management, end-user support, and mobile device management.

Moreover, Orient Technologies has a robust portfolio in Cloud and Data Management Services, assisting clients in migrating workloads from traditional data centres to cloud-based environments, thereby enabling them to achieve greater flexibility and scalability.

Financial Performance

Orient Technologies has demonstrated consistent growth in its financials over the past three years. In the financial year 2024, the company reported a revenue of ₹603 crore, a significant increase from ₹535 crore in FY23 and ₹467 crore in FY22. The company's net profit for FY24 stood at ₹41.4 crore, compared to ₹38 crore in FY23 and ₹33.5 crore in FY22.

Despite fluctuations in the broader market, Orient Technologies has maintained steady margins, with operating margins hovering between 9% to 10% over the last three years. Specifically, the company reported margins of 9.4% in FY24, 9.1% in FY23, and 9.8% in FY22, indicating a stable financial footing.

IPO Allotment and Listing Dates

The IPO allotment for Orient Technologies is expected to be finalized by August 26, 2024. The company's shares are scheduled to be listed on both the BSE and NSE, with a tentative listing date set for August 28, 2024. Investors are eagerly awaiting this listing, given the strong subscription numbers and positive sentiment in the grey market.

Conclusion

The impressive oversubscription of Orient Technologies' ₹215 crore IPO reflects the market's confidence in the company's growth prospects and robust financial performance. With a significant grey market premium and strong demand from all investor categories, the upcoming listing is anticipated to be a notable event in the IPO market. As Orient Technologies continues to expand its offerings in the IT infrastructure space, its strategic investments in capex and infrastructure are likely to pave the way for sustained growth and value creation for its shareholders.

This IPO marks a significant milestone for Orient Technologies, positioning it as a formidable player in the IT solutions sector, with a promising outlook for the future.

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