Another SME company has come up with its IPO offer. Ekennis Software Service Limited has come up with its IPO to tap the public markets. So let us understand in detail about the company’s business prospects.
About the company
Ekennis Software Service Limited is engaged in the business of software IT solution and consulting services, IT product/software development and software training, enterprise resource planning solution, learning management solution, 3D printing, digital printing and packaging design management consultancy.
The company’s major focus areas for implementation are discrete manufacturing, automotive, food processing, chemicals, and telecom sectors. The company has a successful track record of outsourcing manpower with multiple clients across India, delivering ERP support services with their clients, having built-in software application packages to support various operations. The company was originally incorporated as a one person company. The company’s consultants are trained and qualified on SAP, Microsoft and Oracle.
Ekennis Software Service Limited IPO Details
Following are the details about the company’s IPO:
- The company’s IPO will open on February 21, 2022 and will close on February 24, 2022.
- The company’s IPO is a fixed price issue.
- The IPO price has been set at ₹72 per equity share.
- One market lot consists of 1600 shares.
- The company’s shares will list on the BSE SME platform.
- The promoters currently hold 100% stake in the company. Their stake will come down to 71.42% after the IPO.
Objectives of the IPO
Following are the objectives of the company’s IPO:
- The company’s IPO offer comprises of fresh issue of equity shares of up to 4, 00,000.
- The company will use a part of the net proceeds to purchase plant and machinery.
- A part of the proceeds will also be used to fund the working capital requirements.
- The company will also use some proceeds for general corporate purposes.
- Further, the company expects to enhance its credibility and brand image by listing its equity shares on the exchanges.
Following are the key strengths in the company’s business:
- The company has an experienced promoter and a well-trained employee base.
- The company has a comprehensive and integrated range of offerings that provide a one stop shop for managed business solutions to a diversified clientele.
- The company also provides e-learning and mobile learning solutions.
- The company has Ekennis Application Tracking System for staffing solutions.
- The company is a one stop packaging provider.
- The company has latest machinery installed for digitized printing with modern-day technology.
- The company has a cost advantage and a differentiation strategy.
Following are the key risks that the company may face in its business:
- The company’s business is dependent on developing and maintaining continuing relationships with their clients and customers.
- The length of the company’s sales cycle may fluctuate significantly and depends on several external factors.
- There are certain outstanding litigations against the company and its promoters. Any adverse outcome in relation to this event could disrupt the company’s business.
- The company earned 95% of its revenue from a single customer in FY21, which poses a concentration risk.
- The company has a limited operating and financing history.
- The company also has limited experience and operating history in 3D printing, which may affect its growth.
- The company might also need to change its pricing models to operate successfully.
Fundamentals of the company
Following are the fundamentals of the company:
- The company’s revenue from operations decreased from ₹485 lakhs in FY20 to ₹468 lakhs in FY21. For the period ended 15 January 2022, the company’s revenue from operations stood at ₹367.18 lakhs.
- The company’s profit after tax increased from ₹22 lakhs in FY20 to ₹94.92 lakhs in FY21. For the period ended 15 January, 2022, the company’s profit after tax stood at ₹70.20 lakhs.
- The company’s total borrowings decreased from ₹36.64 lakhs in FY20 to ₹13.16 lakhs in FY21.
- The company’s net asset value per share stood at ₹385.43 as of 15 January, 2022.
- The company’s earnings per share stood at ₹140.41 as of 15 January, 2022.
- The company’s net worth increased from ₹27.60 lakhs in FY20 to ₹192.72 lakhs for the period ended 15 January, 2022.
- The company’s assets increased from ₹163 lakhs in FY20 to ₹261 lakhs in FY21. The total assets stood at ₹301 crore for the period ended 15 January, 2022.
According to its prospectus, there are no other listed companies who are directly engaged in a similar line of business as the company itself. Hence, a peer comparison is not possible in this regards.
Following were the details about the company’s business fundamentals. Investors should do their own due diligence before investing in the company’s IPO. As this is an SME IPO, investors should pay attention to the liquidity issues they may face while trading in the company’s shares.