Updater Services opens, price band at Rs 280-300; should you subscribe to the issue-

Updater Services opens, price band at Rs 280-300; should you subscribe to the issue?

Updater Services IPO: Updater Services opens for public subscription today and will close on Wednesday, September 27, 2023. The bidding for anchor investors concluded on Friday, wherein the company collected Rs 288 crore. The price band for its public issue at Rs 280-300 per equity share of face value Rs 10 each. At the upper end of the price band, the company’s promoters and shareholders seek to raise Rs 640 crore from the IPO.

The IPO comprises a fresh issue of 13,333,333 shares aggregating up to Rs 400 crore and an offer-for-sale (OFS), with promoters offloading 8,000,000 shares of Rs 10 aggregating up to Rs 240 crore. The lot size of the Updater Services IPO is 50 shares.

Founded by Raghunandana Tangirala, Updater Services company is India’s leading, focused, integrated business services platform. It offers its customers integrated facilities management (IFM) and business support services (BSS) with a pan-India presence. Updater is India’s second-largest player in the IFM market. In its BSS segment, the company offers Audit and Assurance services through its Subsidiary, Matrix.

Should you apply for the Updater Services IPO?

Anand Rathi recommends Subscribe: “Through the marque clients, past acquisitions and operational efficiency, the company has successfully created a niche place in services. Moreover, the company has aimed for high margin through value-added services with the support of latest technology in its portfolio. On the valuation front, we believe that the company is fairly priced. Thus, we recommend an “Subscribe – Long Term” rating to the IPO.”

Stoxbox recommends Avoid: “The company’s widespread network enables it to service many customers and render customised services across India, where they are required to provide services per the customer’s specific needs through a combination of workforce, materials, supervision, technology and economic models. Their contracts with most of its customers are for at least one year, which subsequently gets renewed on an ongoing basis. As a result, their business is on an annuity-based model where a customer, once secured, generates revenue over a long period. If we attribute FY23 earnings to the post-IPO fully diluted paid-up equity capital of the company, the asking price is at a P/E of 44.8x, and we believe it to be priced aggressively. We, therefore, recommend an ‘Avoid’ rating for the issue. However, we would reassess the company on improvement in financial metrics over a sustained period.”