Introduction:
Updater Services – one of India’s leading integrated business services providers – is planning to raise up to Rs. 640 crores through its Initial Public Offering (IPO). The IPO will be a book-built issue and the bidding for it starts from Monday, 25 June 2023. The stocks can make their debut in the secondary markets on 9 October.
Continue reading to know more details about Updater Services IPO, including the issuing company’s strengths, weaknesses, price band, etc., and make an informed investment decision.
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About Updater Services Limited
Incorporated in 1990, Updater Services Limited is a focused business services platform in India. Its services can be classified into two verticals – Integrated Facility Management (IFM) and Business Support Services (BSS).
Under the BSS segment, the company provides services such as audit and assurance, employee verification checks, sales enablement, airport ground handling, and mailroom management. The services offered under the IFM vertical include production support, soft services, warehouse management, general staffing, institutional catering, and engineering services.
The company offers its services through 129 presence points and four subsidiaries, including Matrix, Denave, Avon, and Athena. At the end of the financial year 2022-2023, it had a market share of 19.2%.
Strengths of Updater Services Ltd.
Below are the key strengths of the company as mentioned in its Red Herring Prospectus (RHP):
- It is among the largest business service providers in India
- Offers a range of services across diverse segments
- Most of the customers are loyal to the company, resulting in recurring business
- Has an established track record of growth through strategic business acquisitions
- Boasts a very strong network spread across 25 states in India
- Known for using the latest technologies to make the business more efficient
- The management team is highly experienced
- Strong backing from private investors
- Long-standing relationships with marquee clients, including Tata Consultancy Services, Aditya Birla Fashion and Retail, SBI Life Insurance, and Hyundai Motors, among others
Exciting opportunities ahead: Don’t forget to apply for Upcoming IPOs!
Risks/Weaknesses Highlighted:
Some of the risks or weaknesses associated with Updater Services Ltd. include:
- The inability to retain or recruit a skilled workforce can affect business operations
- There are outgoing legal proceedings against the company’s promoters and directors
- Chances of default or delay in payments may impact the company’s cash flow
- The policy of frequently acquiring other businesses can sometimes backfire
- The company is struggling due to a high attrition rate
Financials of Updater Services Limited
You must carefully analyze the financials of a company before investing in its IPO. The table below portrays the key financials of Updater Services Ltd. for the last three fiscals:
| Particulars |
Fiscal 2021 |
Fiscal 2022 |
Fiscal 2023 |
| Revenue from Operations |
12100.32 |
14835.52 |
20988.87 |
| Total Income |
12141.92 |
14918.86 |
21060.66 |
| EBITDA |
702.24 |
865.36 |
997.71 |
| EBITDA Margin |
5.78% |
5.80% |
4.74% |
| Adjusted EBITDA |
722.74 |
1086.96 |
1450.23 |
| Adjusted EBITDA Margin |
5.95% |
7.29% |
6.89% |
| Profit After Tax (PAT) |
475.61 |
573.69 |
346.05 |
*Amount in millions except percentages
As you can see, the revenues of the company have grown robustly from Rs. 12,100.32 million to Rs. 20,988.87 million between FY21 and FY23. It is an indicator of its future growth potential. However, the profits have been erratic. While they grew from Rs. 475.61 million in FY21 to Rs. 573.69 million in FY22, there was a decline in FY23. The Return on Equity (ROE) has also fallen in the last financial year after a rise in FY22.
Details of the Updater Services IPO:
The Updater Services IPO will be a combination of a fresh issuance of equity shares worth Rs. 400 and an offer for sale of Rs. 240 crores. The company has fixed the price band for the IPO as Rs. 280 to Rs. 300 per equity share.
The issue opens for public subscription on Monday, 25 September 2023, and closes on Wednesday, 27 September. As a retail investor, you can apply for at least 50 shares (1 lot) and in multiples thereof. For more details, refer to the table below:
| IPO Date |
25 Sept to 27 Sept 2023 |
| Listing Date |
09-Oct-23 |
| Face Value |
Rs. 10 per equity share |
| Price Band |
Rs. 280 to Rs. 300 per share |
| Lot Size |
50 shares |
| Total Issue Size |
Rs. 640 crores |
| Fresh Issue |
14,285,714 shares (aggregating up to Rs. 400 crores) |
| Offer for Sale |
8,000,000 shares (aggregating up to Rs. 240 crores) |
| Issue Type |
Book-built IPO |
| Registrar |
Link Intime India Pvt. Ltd. |
| Listing At |
NSE, BSE |
The final word
Before investing in an IPO, you should analyze certain factors, including the issuing company’s financials, share price valuation, and prevailing market conditions. Should you need a Demat account to invest, you can open it for free with Motilal Oswal.
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