Protean eGov Technologies IPO: Is It Attractively Valued To Subscribe?

Protean eGov Technologies Ltd.'s initial public offering launched for public subscription on Monday will close on Nov. 8. The IPO issue is priced in the range of 752–792 per share.

The IT-enabled solutions provider is offering 61.9 lakh shares via an offer for sale only, aggregating up to Rs 490 crore. It has raised Rs 143.5 crore from anchor investors ahead of its initial share sale.

Protean will not receive any proceeds from the offer, and all the offer proceeds will be received by the selling shareholders in proportion to the offered shares sold by the respective selling shareholders as part of the offer.

At the higher price band, Protean eGov Technologies is demanding a price-to-equity ratio of 29.9 times, with an implied market capitalisation of Rs 3,203 crore.

There are no listed companies in India that are comparable in all aspects of business and the services that they provide.

"The company is a pioneer and market leader in universal, citizen centric and population-scale e-governance solutions. The company is valued at a P/E ratio of 29.9 of its FY23 earnings. We believe that issue is fairly priced and recommend a “Subscribe – Long Term” rating to the IPO," said Anand Rathi in a note.

Protean is a key player in building public digital infrastructure and providing e-governance services such as the Tax Information Network, Pan card issuance, Central Pension System record keeping, Aadhaar authentication and e-KYC services.

There is significant headroom for steady growth, with 50–60 million PAN cards expected to be allotted annually until FY27 and NPS-APY subscribers expected to grow at a CAGR of 16–17% (FY22–FY27P) as a growth strategy for the coming few years, said analysts at Reliance Securities.

"..with consistent profitability, positive cash flows and limited capital expenditure and working capital required to scale growth in its key areas. Therefore, we recommend subscribing to the issue," they said.

Another brokerage Choice Broking has also assigned a "subscribe" rating for the issue considering its dominant position in the domestic e-governance market, its capabilities to roll out nationally critical and population-scale greenfield technology solutions, and its attractively demanded valuations.