Updater Services IPO: All You Need To Know

Updater Services Ltd. launched its initial public offering on Sept. 25 and will close bidding on Sept. 27.

The Chennai-based integrated business services platform plans to raise Rs 400 crore via a fresh issue and Rs 240 crore through an offer for sale, according to its red herring prospectus filed with the Securities and Exchange Board of India on Sept. 20.

Apart from other selling shareholders, promoter Tangi Facility Solutions Pvt. will be selling up to 40 lakh shares in the offer for sale.

IPO Details

• Issue opens: Sept. 25.

• Issue closes: Sept. 27.

• Face value: Rs 10 per share.

• Fresh issue: Rs 400 crore.

• Offer for sale: Rs 240 crore.

• Total issue size: Rs 640 crore.

• Price band: Rs 280-300 per share.

The company has not undertaken a pre-IPO placement.

Business

Updater Services is an integrated business services platform offering integrated facilities management and business support services, with a two pronged offering strategy.

The company offers audit and assurance for dealer/distributor audits and retail audits through its subsidiary, Matrix, which has a 19.2% market share in India. It also offers employee background verification check services, with a share of 5.4% in the fiscal 2023.

It also offers sales enablement services through their subsidiaries Denave India Pvt. and Athena BPO Pvt. Denave is the largest player in this segment, with a market share of 20.1% for FY23. Avon, another subsidiary of theirs, is the market leader in mailroom management service, according to an F&S report.

Use Of Proceeds

• Repayment or prepayment, in full or in part, of borrowings by the company of Rs 133 crore.

• Funding working capital requirements of Rs 115 crore.

• Pursuing inorganic initiatives of Rs 80 crore.

• General corporate purposes.

Risk Factors

• The company employs a large workforce of 65,627, which poses several regulatory risks and dispute risks with their employees. The company has compensated customers in the past for damages as a result of their employee's negligence.

• High gross attrition rate of 77.78%, 65.80% and 77.60% during fiscals 2021, 2022 and 2023, respectively.

• The company has received and may in the future receive whistle blower complaints, which may adversely affect their reputation and impact the business operations.

• A significant portion of revenues from services comes from southern India. In fiscal 2023, 59.49% of revenue from IFM and other services segments was derived from the southern region, amounting to Rs 905.40 crore.

• Trade receivables of the company constitute a significant portion of their total assets, standing at ~35.15% as of FY23. Receivables outstanding for FY23 stood at Rs 427.73 crore.

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