Orient Technologies Limited, headquartered in Mumbai, Maharashtra, is a prominent player in the information technology (IT) sector. Established in 1997, Orient Technologies has developed significant expertise in delivering specialized IT solutions and products across various business verticals. The company is now set to launch its Initial Public Offering (IPO) on August 21, 2024.

IPO Details and Subscription Information

The Orient Technologies IPO comprises a book-built issue amounting to ₹214.75 crores. The offering includes a fresh issue of 5.82 lakh shares valued at ₹120.00 crores and an Offer for Sale of 4.6 lakh shares totaling ₹94.76 crores. The share price band for the IPO is set between ₹195 and ₹206 per equity share, with a minimum lot size of 72 shares. Retail investors are required to invest a minimum of ₹14,832, while High-Net-Worth Individuals (HNIs) need to invest in at least 14 lots (1,008 shares), amounting to ₹207,648.

The subscription period for the IPO is from August 21, 2024, to August 23, 2024. The allotment of shares is expected to be finalized on or about August 26, 2024, with a tentative listing date on August 28, 2024, on the BSE and NSE.

Grey Market Premium and Market Sentiment

The Grey Market Premium (GMP) for the Orient Technologies IPO is projected to be in the range of ₹100 to ₹105. GMP reflects the anticipated market sentiment and demand for the IPO shares before the official listing. It is important to note that GMP is not regulated and may fluctuate based on market conditions. While GMP provides an indication of potential listing gains, it is essential for investors to approach it with caution as it is based on unregulated trading.

Financial Performance and Valuation

Orient Technologies has demonstrated a steady financial performance over recent fiscal years. The company's revenue increased from ₹4,691.23 million in FY22 to ₹5,420.09 million in FY23, and further to ₹6,068.64 million in FY24, showcasing consistent growth. EBITDA has also shown stability, rising from ₹458.25 million in FY22 to ₹566.18 million in FY24. Profit After Tax (PAT) has been relatively stable, moving from ₹334.93 million in FY22 to ₹414.80 million in FY24.

For the Orient Technologies IPO, the company is issuing shares with a pre-issue EPS of ₹11.80 and a post-issue EPS of ₹9.95. The pre-issue P/E ratio is 17.45x, while the post-issue P/E ratio is 20.70x, compared to the industry average P/E ratio of 29.87x. The company’s Return on Capital Employed (ROCE) for FY24 is 32.5%, and the Return on Equity (ROE) is 27.26%, indicating robust returns on investment and equity.

Objectives of the IPO

The proceeds from the IPO will be utilized for the following objectives:

Acquisition of Office Premises: ₹103.48 million will be used to acquire office premises at Navi Mumbai, located at Plutonium Business Park, Trans-Thana Creek Industrial Area, Turbhe MIDC.

Capital Expenditure: ₹796.50 million will be allocated towards purchasing equipment for setting up a Network Operating Centre (NOC) and Security Operation Centre (SOC) at the Navi Mumbai property, as well as devices for the Devise-as-a-Service (DaaS) offering.

General Corporate Purposes: Remaining funds will be utilized for general corporate needs and related expenses.

Investment Recommendation

Given the strong financial performance and the favorable Grey Market Premium, the Orient Technologies IPO offers a promising opportunity for investors. The company’s steady growth and relatively attractive valuation suggest potential for listing gains and long-term investment returns. However, as always, investors should carefully assess their investment strategies and consult with financial advisors before participating in the IPO.

Conclusion

The Orient Technologies Limited IPO presents a compelling investment opportunity with solid financial fundamentals and attractive market sentiment. Investors are encouraged to evaluate their options and stay informed about the latest developments to make well-informed investment decisions. For further details, refer to the company’s Red Herring Prospectus (RHP) and seek advice from certified financial experts.

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