Capillary Technologies India Ltd IPO

Upcoming DRHP

IPO Synopsis

IPO synopsis
Capillary Technologies has filed its DRHP with SEBI, worth around Rs.850 crore. The issue consists of a fresh issue worth Rs.200 crore and an offer for sale of equity shares of around Rs.650 crore. The shares are being offloaded by Capillary Technologies International Pte Ltd. They are also planning to go ahead with a pre-IPO placement of shares worth Rs.40 crore and this will be deducted from the amount of fresh issue. 
The book running lead managers to the issue are ICICI Securities, Kotak Mahindra Capital Company and NOMURA Financial Advisory and Securities Pvt Ltd. 


Objectives of the issue
1.    Rs.41.99 crore is to be used to prepay and repay any debt availed by the company
2.    Rs.72 crore will be invested in product development, invested in technology and other growth initiatives
3.    Rs. 30 crores will be used for strategic investments and acquisitions
 

About Capillary Technologies India Ltd

Capillary Technologies is a technology first company, and they offer artificial intelligence-based cloud-native SaaS products and solutions, like automated loyalty management and customer data platforms. These enable large companies to develop loyalty among their customers and channel partners. 
Capillary is the market leader in the Asia-Pacific region in terms of loyalty management, with a 39% market share, in FY20. In September 2021, they acquired Persuade Group and expanded into The United States of America. They have a large amount of intellectual property and focus on developing it and currently hold 38 trademarks and 8 patents.
They serve over 250 brands across various countries like India, UAE, Saudi Arabia, Singapore, Malaysia, Indonesia, Thailand, USA and China, as of 31 October 2021. They also have 8 offices and serve more than 30 countries. Large enterprises have been increasingly adopting Capillary’s platform. They have processed over 1,975.27 million transactions in FY21 and as of 31 October 2021, they had served around 875 million users. 
Their promoter acquired Reasoning Global Eapplications Pvt Ltd and Sellerworx Online Services Pvt Ltd, in FY16 and FY17, and combined them to form Martjack- renamed as Anywhere Commerce+. This business provides companies with an endless aisle- like solution which enables various brands to sell inventory which is located at stores and warehouses on platforms like their respective websites and marketplaces. 
 

Financials

Particulars

(In Rs cr)

Q1 ended 30 June, 2021

FY2021

FY2020

FY2019

Total Income

33.7

123.16

167.6

174.94

PAT

2.53

16.94

0.2

(11.6)

EPS (In Rs)

0.53

3.54

0.04

(2.44)

 

Particulars

(In Rs cr)

Q1 ended 30 June, 2021

FY2021

FY2020

FY2019

Total Borrowings

19.86

19.13

24.41

18.16

Total Assets

86.3

81.6

86.2

71.14

Equity Share Capital

2.33

2.33

2.33

2.33

 

Peer comparison in loyalty management space

Company

Year ending

Gross Margin (%)

Revenue growth in the past 3 years (%)

Capillary

March 2021

61%

-3%

Zeta Global

Dec 2020

60%

6%

Sprinklr

Jan 2021

69%

12%

Veeva

Jan 2021

72%

29%

Shopify

Dec 2020

53%

40%

Twilio

Dec 2020

56%

64%

Ring Central

Dec 2020

73%

33%

Paylocity

Jan 2021

65%

20%

Coupa Software

Jan 2021

59%

43%

Wix

Dec 2020

68%

32%


Key Points

  • Strengths

    1.    They are a market leader in both loyalty management and consumer engagements in Asia, with a 39% market share in FY20
    2.    After acquiring Persuade Group, the company now has 37 employees in the United States and also has a multiple Fortune 100 and Fortune 500 companies as their customers
    3.    Their main focus is on adding more enterprise customers to their portfolio and this leads them to have a synergistic customer acquisition model
    4.    They have been developing comprehensive solutions for loyalty management over the last decade
    5.    They also provide analytics and AI-driven Solutions which have enabled them to have an extensive set of customers standing at 855.53 million
     

  • Risks

    1.    Inability to be cost effective while trying to gain more customers will adversely affect the business of the company
    2.    A large part of the revenue is generated from a specific group of customers. If there is any decrease in the amount of these customers, it will materially affect the operations of the company
    3.    Decrease in demand in the industry verticals that the company supplies will lead to reduction in revenues and an adverse effect on the operations of the company
    4.    If Capillary isn’t successful in getting more customers and fruitfully executing their strategy, then it will materially affect the business functions and operations 
     

How to apply for an IPO?

  • Login to your 5paisa account and select the issue in the current IPO section

  • Enter the number of lots and price at which you wish to apply for

  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange

  • You will receive a mandate notification to block funds in your UPI app

  • Approve the mandate request on your UPI and funds will be blocked

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