IPO Preview One Point One Solutions Ltd
One Point One Solutions Ltd is a Mumbai based provider of business process management (BPM) services such as Inbound and Outbound Call, Back Office/Transaction Processing, Data management and Business Analytics, Integrated Telephony Management, Customer Relationship Management, Sales Management, Document Management, Payment Gateway Management, Order Booking Management and IVR Solutions Management etc. Company’s customers include Bharti Airtel Limited, Videocon d2h Limited, Baroda Pioneer Asset Management Company Limited, Dish Infra Services Pvt Ltd, LIC Mutual Fund Asset Management Limited, Shop CJ network India Private Limited, Wonderchef Home Appliances Private Limited.
Employee costs are key expenses and office furniture such as computers is key capex.
Company’s competitors include Allsec Technologies Ltd, Datamatics Global Services Ltd, Firstsource Solutions Ltd.
Company was incorporated in 2008. Initial Subscribers to the Memorandum of Association transferred their entire shareholding to Arjun Bhatia and Akashanand Karnik on January 07, 2014 in the ratio of 66.40% and 33.60% respectively. Further, Akshay Chhabra acquired entire shares from Arjun Bhatia pursuant to invocation of pledge agreement dated July 24, 2015. Subsequently, Company allotted 5,00,000 equity shares to Tech
Worldwide Support Private Limited on March 27, 2017. Akshay Chhabra and Tech Worldwide Support Private Limited are current promoters of our Company.
Company has grown rapidly since current promoters have acquired the company.
Company is promoted by 44 year old Akshay chhabra who holds a bachelor’s degree in Engineering from Mumbai University.
Company has not paid any dividends, pays taxes at full rate, and has not repaid any debts in the past. Part of the IPO proceeds will be used to repay debt.
Key Shareholders (pre-issue).
Chhabra family effectively controls 99% of the company. Post issue their shareholding will come down to 60%.
Company is selling 66 lakh shares at 65-67 range. Shares outstanding after the issue will be 1.67 cr shares valuing the company at 112 cr on a post issue basis.
Objects of the issue
Repayment of loans including loans from promoter (26 cr), working capital (10 cr), general corporate purposes (approx 8 cr).
Company is being valued at 112 cr on a post issue basis. Based on FY 17 PAT of 6 Cr, PE ratio works out to be 19. Based on FY 17 book value of 17 Cr shares are valued at 6.5 times book value.
Opportunity size is large as customer service, call centers etc are rising. More and more companies are now offering these types of services and / or outsourcing these functions. Company has executed well generating strong ROE of 53%. Valuation at which shares are offered is also fair. Yes Bank is an anchor investor. Traditional IT services companies are much more expensive than BPM companies for these type of services.
- Top ten customers contributed 70.54% of total revenue.
- Wage pressure. Manpower intensive. These services are in demand only if these are cheap. Higher wages will reduce opportunity size.
- Peers do not have a good track record in the market.
- Company’s track record is limited.
- Shares are issued at Rs 9 to corporate promoter (Tech Worldwide Support Private Limited) just 8 months ago.
- Tech worldwide is also a lender. IPO proceeds will be used for repayment of loans from promoter.
- Large dilution through IPO. Shares offered are 65% of pre-issue capital of the company.
Disc: Applying for IPO.