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Anand Rathi's IPO Report
Protean eGov Technologies Ltd.'s initial public offering will open on November 6, and the issue closes on Nov 8. The Rs 490.3 crore issue is entirely an offer for sale by existing investors.
Protean eGov Technologies is pioneer and market leader in universal, citizen centric and population scale e-governance solutions has fixed a price band in the range of Rs 752 to Rs 792 per equity share. The minimum bid lot is 18.
Strengths
Pioneer and market leader in universal, citizen centric and population scale e-governance solutions.
Secure, scalable, and advanced technology infrastructure.
Large physical infrastructure with pan-India network and scale resulting in inclusion.
Diversified, granular and annuity-based service offerings.
Track record of healthy financial performance
Strategies
Diversify their offerings with a focus on new sectors.
Building capability around data analytics, digital verification, and due diligence.
Expanding into newer geographies.
Adoption of disruptive technologies and investment in open-source solutions, protocol, and networks.
Valuation
The company is pioneer and market leader in universal, citizen centric and population scale e-governance solutions.
At the upper price band company is valued at price/earning ratio of 29.9 of its FY23 earnings with a market cap of Rs 32,034 million post issue of equity shares.
We believe that issue is fairly priced and recommend 'Subscribe – Long Term' rating to the IPO.
Key Risk:
The company is substantially dependent on projects awarded by government entities and agencies and their relationship with Government of India entities exposes them to risks inherent in doing business with the company, which may adversely affect their business, results of operations and financial condition.
Protean eGov Technologies may not be able to provide business solutions that meet their clients' requirements, which could lead to clients discontinuing their work with them, which in turn could harm their business.
The company relies on telecommunications and information technology systems, networks, and third-party infrastructure to operate their business and any interruption or breakdown in such systems, networks or infrastructure of the third parties they rely on, or their technical systems could impair their ability to effectively deliver the products and services.
Their business will suffer if they fail to anticipate and develop new services and enhance existing services to keep pace with rapid changes in technology and in the industries on which they focus.
If the company's pricing structures do not accurately anticipate the cost, complexity, and duration of their work, then their contracts could be unprofitable.
Their client contracts can typically be terminated without cause, which could negatively impact their revenues and profitability.
The company may become liable to their clients and lose clients if they have defects or disruptions in their service or if they provide poor service.
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