🚀 SaaS Giant Capillary Technologies IPO Launches: Price Band Revealed, Valuations Spark Debate!

Author

Simar Singh | Whalesbook News Team

Detailed Coverage:

Capillary Technologies India, a provider of AI-driven loyalty and engagement SaaS solutions, is launching its Initial Public Offering (IPO) worth ₹877.5 crore. The subscription period is set from November 14, 2024, to November 18, 2024. Shares will be offered in a price band of ₹549 to ₹577 per equity share, with a lot size of 25 shares. The total IPO comprises a fresh issue of ₹345 crore to fund its growth, and an offer-for-sale (OFS) of ₹532.5 crore by promoters and existing investors.

Ahead of the public offering, the company successfully raised ₹393.98 crore from anchor investors, including marquee institutions like SBI, ICICI Prudential, and Mirae Asset, by allocating shares at the upper price band of ₹577.

Funds raised from the fresh issue are earmarked for cloud infrastructure costs (₹143 crore), research, design, and product development (₹71.5 crore), and computer system purchases (₹10.3 crore).

However, SBI Securities has flagged the IPO valuation as expensive, noting a post-issue FY25 P/E multiple of 323.3x at the upper price band, and recommended investors avoid the issue.

Capillary Technologies serves global enterprise clients such as Tata Digital and Puma India. For the six months ending September 2024, the company reported a profit of ₹1.03 crore, a significant improvement from a loss in the prior year, with revenue growing 25% year-on-year to ₹359.2 crore.

JM Financial, IIFL Capital Services, and Nomura Financial Advisory and Securities (India) are the book-running lead managers. Share allotment will be finalized on November 19, with shares expected to debut on the BSE and NSE on November 21, 2024.

Impact This IPO introduces a new technology stock to the Indian bourses, potentially influencing investor sentiment towards SaaS companies. The valuation debate and analyst recommendations will be closely watched. Rating: 7/10

Difficult Terms: IPO (Initial Public Offering): The process by which a private company offers its shares to the public for the first time, allowing it to raise capital from investors. SaaS (Software-as-a-Service): A software distribution model where a third-party provider hosts applications and makes them available to customers over the Internet, typically on a subscription basis. Price Band: The range within which a company plans to offer its shares during an IPO. Lot Size: The minimum number of shares an investor can apply for in an IPO. FY25 P/E Multiple: A valuation metric that compares the company's stock price to its earnings per share for the fiscal year 2025. A high multiple can indicate an expensive valuation. Offer for Sale (OFS): A provision that allows existing shareholders (like promoters or investors) to sell their shares to the public during an IPO. The proceeds go to the selling shareholders, not the company. Anchor Investors: Large institutional investors who commit to buying shares in an IPO before it opens to the public, providing early demand assurance. Cloud Infrastructure: The hardware and software components that enable cloud computing, including servers, storage, and networking. Promoters: The founders or initial owners of a company who typically retain a significant stake.