Protean eGov Technologies IPO
Published by Sharekhan Education | November 7, 2023
Protean eGov Technologies IPO has an issue size of ₹492 Cr. Price Band is in the range of ₹ 752-792. The issue opens on November 6, 2023 and closes on November 8, 2023
Company Overview:
Protean eGov Technologies Ltd. is a company dedicated to developing citizen-centric and population-scale e-governance solutions. Their impressive track record includes enabling 19 nationally critical e-governance stacks and collaborating with 7 ministries across various sectors. Moreover, the company has played a pivotal role in modernizing the direct tax infrastructure through initiatives like PAN issuance and establishing the Central Recordkeeping Agency (CRA) for the Atal Pension Yojana, thereby providing universal social security for all Indians, particularly those in the unorganized sector. Additionally, they have contributed significantly to developing the national infrastructure for capital market growth in India.
Purpose of the IPO:
It is important to note that the entire IPO consists of an offer for sale, with no proceeds going to the company. Protean eGov Technologies IPO will bolster its visibility and brand reputation. This listing will also offer liquidity to its shareholders and provide a public market for its equity shares in India. The minimum application for shares is set at 18 shares, with increments in multiples thereof. Post allotment, the shares will be listed on both the BSE and NSE.
Competitive Advantages:
Protean eGov Technologies Ltd. stands out as a leading IT-enabled solutions provider in India, specializing in the conception, development, and execution of large-scale technology solutions of national significance. Their strategic expansion across the digital and e-governance ecosystem has resulted in the creation of a pan-India public service delivery network. They are among the few entities in India actively contributing to the development of open digital ecosystems like ONDC. Their investments in technology platforms ensure scalability and improved functionality while driving innovation, all achieved with limited capital expenditure. This allows them to offer a wider range of services.
Business Strategy:
The company’s strategic vision aligns with the Digital India initiative, aiming to diversify its offerings and expand into new sectors. They plan to build expertise in data analytics, digital verification, and due diligence, while also seeking expansion into new geographies. Their business strategy revolves around embracing disruptive technologies and investing in open-source solutions, protocols, and networks.
Key Concerns:
It’s worth noting that Protean eGov Technologies Ltd.’s business heavily relies on projects awarded by government entities. Any adverse changes in government policies could significantly impact the company’s ability to participate in competitive bidding or negotiations for future projects. Furthermore, the performance, reliability, and security of India’s telecommunications and internet infrastructure, which are beyond the company’s control, are critical to their operations. The company has faced negative cash flows from operating activities in previous years.
Financial Performance:
Over the period from FY21 to FY23, the company has shown steady growth, with a 10.9% CAGR in revenue, a 17.9% CAGR in EBITDA, and a 9.4% CAGR in PAT. Notably, the EBITDA margin has expanded from 14.1% to 15.9%, and receivable days have reduced from 120 to 103. Return on Capital Employed (RoCE) has increased from 8.1% to 8.9%. At the upper end of the price band (₹752-792), the issue appears to be reasonably valued at 29.8 times FY23 earnings.
Source: IPO Red Herring Prospectus
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