Capillary Technologies India IPO : 7 things to know

Capillary Technologies India IPO : 7 things to know

by 5paisa Research Team Last Updated: 2022-12-10T15:55:12+05:30

Capillary Technologies India Ltd, has filed draft red herring prospectus (DRHP) for its proposed IPO in late December 2021 and the final approval from SEBI in the form of observations is still pending. Capillary Technologies India Ltd is a cloud based SAAS (software as a solution) provider.

The approval process at SEBI normally takes about 2-3 months and the approval from the regulator is expected either by the end of March or in early next fiscal year once the market situation stabilizes and the LIC IPO is done.

7 important things to know about the Capillary Technologies India IPO

1) Capillary Technologies India Ltd has filed for a Rs.850 crore IPO with SEBI which comprises of a fresh issue of Rs.200 crore and an offer for sale or OFS of Rs.650 crore. Capillary Technologies India Ltd is a major SAAS player offering software as a solution, largely on the cloud environment.

SAAS is a recent addition to the IT lexicon that is a cost offering method of offering software as a solution to the complex needs of business in a manner that is also scalable at short notice.

2) Out of the total issue size of Rs.850 crore, let us look at the OFS portion of Rs.650 crore first. The OFS of Capillary Technologies India Ltd will entail the sale of stocks by the promoters and also by some of the early investors.

Currently, Capillary Technologies India Ltd is backed by big PE names like Warburg Pincus, Sequoia Capital, Avatar Capital, Qualcomm Asia Pacific and Filter Capital. However, none of these PE investors will be diluting their stake in the OFs.

The entire OFS of Rs.650 crore will be offered by Capillary Technologies International Pte Ltd of Singapore, which is a promoter group company. Post the OFS issue, the overall share capital will not change nor will the OFS portion be either capital dilutive or EPS dilutive. However, it will lead to change in ownership and result in improving the free float of the stock in the market.

3) The Rs.200 crore fresh issue portion of Capillary Technologies India Ltd will be used for predominantly for repayment and prepayment of borrowings, for product development, investments in technology, specific growth initiatives; both organic and inorganic, mergers and acquisitions of niche businesses and a small part for general corporate purposes. 

4) The company is also planning a pre-IPO placement of up to Rs.20 crore ahead of the IPO. This pre-IPO placement is typically done at a price for which there is leeway and the lock in period is longer than a typical anchor placement that happens just before the IPO opening.

This pre-IPO placement will be done in consultation with the investment bankers and if the placement is successful, then the size of the Capillary Technologies IPO will be reduced proportionately. The anchor issue placement will happen closer to the actual issue.

5) Capillary Technologies India Ltd serves more than 250 brands located across 30 countries and some of the key countries served, apart from India, include United Arab Emirates, Saudi Arabia, Singapore, Indonesia, Malaysia, Thailand, the United States and China.

It caters to a wide range of user industries including major segments like apparel, footwear, supermarkets, conglomerates, manufacturing, electronics, pharmacy, wellness, QSR, luxury segments, gems & jewellery etc. The company is based out of Bengaluru in South India. 

6) Capillary Technologies India Ltd  reported net sales revenues of Rs.115 crore and net profits of Rs.16.94 crore, reporting healthy net profit margins. Both the top line sales and net profits have gone up more than 3 fold in the last on year on the back of solid business traction.

Some of the key brands that the company provides SAAS services to include ASICS, Indian Terrain Fashions, Apollo Medsmart, TTK Prestige, BIBA and Fossil. 

7) The IPO of Capillary Technologies India Ltd will be lead managed by ICICI Securities, Kotak Mahindra Capital Company and Nomura Financial Advisory. They will act as the book running lead managers or BRLMs to the issue.

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