Is Orient Technologies IPO Good or Bad - Detailed Analysis

Orient Technologies is kicking off its initial public offering which will be open from August 21, 2024, to August 23, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Orient Technologies IPO is good or bad, whether Is it worth investing in Orient Technologies, and so on. In this article, we will cover a few details about Orient Technologies to better analyze its IPO.

Orient Technologies IPO - Company Overview

Incorporated in 1997, Orient Technologies Limited is a Mumbai-based IT services and solutions provider. Over the years, the company has built deep expertise to develop products and solutions for specialized across business verticals mentioned below:

• IT Infrastructure: Products and solutions include Data Centre Solutions and End-User Computing.

• IT Enabled Services (IteS): Services include Managed Services, Multi-Vendor Support Services, IT Facility Management Services, Network Operations Centre Services, Security Services, and Renewals.

• Cloud and Data Management Services: Services include migration of workload from data centers to the cloud.

The company has a strategic collaboration with leading global technology partners, such as Dell International Services India Private Limited (Dell), Fortinet, Inc. (Fortinet), and Nutanix Netherlands B.V. (Nutanix) which enable it to leverage cutting-edge technologies and deliver innovative solutions that meet the evolving needs of its diverse clientele. Furthermore, the company has built a reputation for its robust IT infrastructure products and services, which remain a significant part of its revenue stream. 

Currently, the company caters to a wide range of clients across various industries, including Banking, Financial Services, and Insurance (BFSI), healthcare, manufacturing, and government sectors. 

Here’s a table showing some of the prominent public and private sector customers of Orient Technologies:

Orient Technologies IPO - Revenue Break-up 

Business Segment Wise Break-up

As you can see in the above table, while the company mainly generates its revenue through the IT Infrastructure Products and Services segment, its revenue declined in FY24. On the other hand,  ITeS and Cloud services segments have shown an improved performance due to which the overall revenues of the company have increased

Customer Segment Wise Break-up

*Note: Others include infrastructure, real estate, logistics, education, e-commerce, conglomerates, energy and service industries etc.

The table shows that BFSI remains a key revenue source for Orient Technologies. However, its share has decreased over time, and sectors like Communication and "Others" have grown, reflecting a more diversified revenue base, thus, reducing reliance on any single sector to generate revenue.

Geography Wise Break-up

The table highlights that Maharashtra has consistently been the largest contributor to revenue. Thus, suggesting that the business is particularly concentrated in one particular state.

Orient Technologies IPO - Financial Overview

If we take a look at the financials of Orient Technologies Limited, we can see that the company has steadily increased its revenue year on year, from Rs.467.44 crores in FY22 to Rs.602.89 crores in FY24. Furthermore, profits have also increased from Rs.33.49 crores in FY22 to Rs.41.45 crores in FY24.

In FY24, the company reported an ROE of 27.26% and an ROCE of 28.42%. This shows that the company has given good returns to shareholder’s capital and has efficiently used its overall resources. To top it off, the company is almost debt-free and mainly operates using its own funds.

Orient Technologies IPO - Industry Overview 

The field of IT-enabled services (ITeS) includes a wide range of services that use information technology to deliver internet-based services. From CY2019 to CY2023, the IT industry has experienced a growth rate of 5.6% CAGR, with the banking, financial services, and insurance (BFSI) and telecom sectors expected to drive sectoral volumes. 

In fiscal 2025, it is anticipated that the volume of CRM will lead to a growth rate of 6-8%. The domestic revenue of ITeS companies is projected to increase at a CAGR of 6-8% between Fiscals 2024 and 2027, attributed to increased digitization, reaching an estimated Rs 430-460 billion by Fiscal 2027. As of FY 2024, Indian IT Services account for approximately 53% of the total Indian IT revenue.

Comparing Orient Technologies to its Peers

While Orient Technologies has demonstrated a consistent increase in revenues, we can see from the table above that the company operates on a much smaller scale compared to its listed industry peers like HCL, Wipro, LTIMindtree, and Tech Mahindra.

While the company has a modest revenue and EPS, the company's return on equity stood at 23.64% in FY24 which demonstrates a good return on the capital invested by the shareholders. The ROE  is competitive within its peer group, closely aligning with HCL Technologies' 23.01% and surpassing companies like Wipro (14.79%) and Tech Mahindra (8.83%)

Orient Technologies IPO Details

Orient Technologies IPO Date

The IPO of Orient Technologies is open to subscription from August 21, 2024, to August 23, 2024. The shares will be allocated to investors on August 26, 2024, and the company will be listed in the NSE and BSE on August 28, 2024

Orient Technologies IPO Price

Orient Technologies is offering its shares in the price band of Rs 195-206 apiece. This means you would require an investment of Rs. 14,832 per lot (72 shares) if you are bidding for the IPO at the upper price band.

Orient Technologies IPO Size

The company is offering a total of 10,425,243 shares, amounting to Rs. 214.76 Crores. Out of these, 5,825,243 shares worth Rs. 120.00 Crores are offered through a fresh issue and 4,600,000 shares worth Rs 94.76 Crores are offered through an offer for sale.

Is Orient Technologies IPO a Good or Bad Investment? Final Thoughts

In conclusion, Orient Technologies IPO could be a good investment for those looking for a company with solid fundamentals, consistent growth, and minimal debt. However, potential investors should weigh these strengths against the risks associated with their smaller scale and regional concentration before making a decision. As with any investment, it's crucial to consider your own risk tolerance and investment strategy.

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