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Holmarc Opto-Mechatronics 

• Holmarc Opto-Mechatronics is coming out with an initial public offering (IPO) of 28,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 40 per equity share. 
• The issue will open for subscription on September 15, 2023 and will close on September 20, 2023.
• The shares will be listed on NSE Emerge.
• The share is priced 4.00 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Finshore Management Services.
• Compliance Officer for the issue is Vallath Parvathy.

Profile of the company

Holmarc Opto-Mechatronics is engaged in the manufacture of scientific and engineering instruments for research, industry and education i.e. Imaging Instruments, Measuring Instruments, Spectroscopy, Analytical Instruments, Lab Instruments, Physics Lab Instruments, Breadboard/Table Tops, Opto-mechanics, Optics, Linear & Rotation Stages, Motorized Linear & Rotation Stages, Industrial Automation etc.  Its manufacturing facility situated at, Ernakulam, Kerala is equipped with latest machineries, equipment and instruments which is capable to manufacture diverse products. With state-of-the-art machines, equipment and instruments, Holmarc’s technicians and engineers bring out quality products, each distinct and best in its kind. All its departments, be it optics design, optics manufacturing, mechanics design, electronics R&D or software development are all manned by experienced professionals in the respective disciplines. 

The company is unique in its approach to providing after sales service. It gives maintenance and modification support for all its products as long as its customer needs it irrespective of warranty or year of purchase. It do not make any of its products obsolete, rather encourage its users to modify and use as long as it is technically possible. The company is an ISO 9001:2015 certified company for designing, developing and manufacturing scientific instruments and devices for Industries, Research and Educational Institutes. It has successfully implemented quality management system as per industry standard. The goal of the company is to design, manufacture and service quality products that consistently meet its customer's requirement and needs.

Proceed is being used for:

• Funding capital expenditure towards purchase of additional plant & machinery.
• Meeting the working capital requirements.
• Meeting the issue expenses.
• General corporate purposes.

Industry overview

The engineering sector is the largest of the industrial sectors in India. It accounts for 27% of the total factories in the industrial sector and represents 63% of the overall foreign collaborations. Demand for engineering sector services is being driven by capacity expansion in industries like infrastructure, electricity, mining, oil and gas, refinery, steel, automobiles, and consumer durables. India has a competitive advantage in terms of manufacturing costs, market knowledge, technology, and innovation in various engineering sub-sectors. India’s engineering sector has witnessed a remarkable growth over the last few years, driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of huge strategic importance to India’s economy. 

The electrical equipment market share in India is expected to increase by $33.74 billion from 2021 to 2025 at a CAGR of 9%. Domestic electrical equipment market is expected to grow at an annual rate of 12% to reach $72 billion by 2025. In FY21, India’s heavy electrical equipment production stood at Rs 168,949 crore ($21.15 billion). Production of generation equipment (boilers, turbines and generators) in India is estimated to be around $5.7 billion by 2022. The electrical machinery/equipment segment grew nearly 90% with shipments jumping to Rs 13,606 crore ($1.6 billion) in the April-July 2022 from Rs 7,202 crore ($869 million) in the year-ago period.

India is aggressively working towards establishing itself as a leader in industrialisation and technological development. Significant developments in the nuclear energy sector are likely as India looks to expand its nuclear capacity. Moreover, nanotechnology is expected to transform India’s pharmaceutical industry. The agriculture sector is also likely to undergo a major revamp with the government investing heavily for a technology-driven green revolution. The Government of India, through the Science, Technology and Innovation (STI) Policy-2013, among other things, aspires to position India among the world’s top five scientific powers. 

Pros and strengths

Smooth flow of operations: It has maintained good relationship with its major customers. It is successful in building a strong client base for its business. Its existing relationships help it to get repeat business from its customers. This has helped us to maintain a long-term working relationship with its customers and improve its customer retention strategy.

Quality assurance and accreditations: Quality plays one of the most vital roles in the success of any organization. It is focused on providing high quality products and services. It constantly strive to improve its industrial processes at every step in the production chain. Its focus on quality is evidenced by the quality certifications and accreditations that its facility has obtained from various local and international accreditation agencies.

Diversified product portfolio: The Company manufactures wide and diversified range of products diversified range of products i.e. Imaging Instruments, Measuring Instruments, Spectroscopy, Analytical Instruments, Lab Instruments, Physics Lab Instruments, Breadboard/Table Tops, Opto-mechanics, Optics, Linear & Rotation Stages, Motorized Linear & Rotation Stages, Industrial Automation and others. The company manufactures products on the basis of needs and requirements as per its customer demand. It also make sure that all its products are in working condition to the satisfaction of its customers throughout its life cycle irrespective of warranty period.

Risks and concerns

Face competition: The Company operates in a competitive market that includes manufacturers of scientific and engineering instruments for research, industry, and education. The company competes with domestic and international players and faces challenges in maintaining its market share and profitability. The principal factors affecting competition include customer relationships, technical excellence or differentiation, price, service delivery, service quality, health, safety and environmental standards and practices, financial strength, breadth of technology and technical sophistication and risk management awareness and processes. The company may face intense competition from other companies that offer similar products and services, which could impact its ability to maintain or increase its market share. To remain competitive, the company may need to invest in research and development to develop new and innovative products, improve the quality of its existing products, and enhance its manufacturing processes.

Revenues is highly dependent on Indian clients: It majorly sell its products and services to clients located in India. If the economic conditions of India become volatile or uncertain or the conditions in the financial market were to deteriorate, especially in recent times due to the COVID-19 pandemic, or if there are any changes in laws applicable to its services and operations or if any restrictive conditions are imposed on it or its business, the pricing of its services may become less favourable for it. Further, its clients located in these geographies may reduce or postpone their spending significantly which would adversely affect its operations and financial conditions.

Delays or defaults in customer payments: It is exposed to payment delays and/or defaults by its customers and its financial position and financial performance are dependent on the creditworthiness of its customers. Further, it may not receive advance payment from its customers after signing the purchase orders. Delays in customers’ payments may require it to make a working capital investment. If a customer defaults in making payments where it has devoted significant resources or where it has invested significant resources is delayed, cancelled, or does not proceed to completion, it could have an adverse effect on its operating results.

Outlook

Holmarc Opto-Mechatronics is engaged in the manufacture of scientific and engineering instruments for research, industry and education i.e. Imaging Instruments, Measuring Instruments, Spectroscopy, Analytical Instruments, Lab Instruments, Physics Lab Instruments, Breadboard/Table Tops, Opto-mechanics, Optics, Linear & Rotation Stages, Motorized Linear & Rotation Stages, Industrial Automation etc. On the concern side, the company may face intense competition from other companies that offer similar products and services, which could impact its ability to maintain or increase its market share.

The company is coming out with an IPO of 28,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 40 per equity share to mobilize Rs 11.40 crore.  On performance front, the company’s total revenue for FY 2022-23 was increased to Rs 2918.44 lakh as against Rs 2117.84 lakh in the FY 2021-22. The restated Profit after Tax for FY 2022-23 has been increased to Rs 356.14 lakh as against Rs155.19 lakh in the FY 2021-22. Going forward, the company aims to continue to improve ongoing operational effectiveness and efficiencies to achieve cost reductions including overheads. This can be done through continuous business process review and timely corrective measures in case of diversion and technology up gradation with proper analytics base. As a result of these measures, the company will be able to increase its market share and profitability.

Kody Technolab 

• Kody Technolab is coming out with an initial public offering (IPO) of 17, 20,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 160 per equity share. 
• The issue will open for subscription on September 15, 2023 and will close on September 20, 2023.
• The shares will be listed on NSE Emerge.
• The share is priced 16.00 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Sanchita Ojha.

Profile of the company

The company is in business of software development services to a diverse set of industries. With a focus on innovation and customer satisfaction, it provides its clients with custom software solutions that cater to their specific needs and requirements. The company is a full stack development company that provides innovative and cutting-edge digital solutions to the clients. The company specializes in helping businesses undergo Digital Transformation by leveraging the latest technologies and trends. With a keen focus on understanding the unique challenges faced by its clients, it provides customized solutions that are tailored to meet their specific needs. The company has presence in USA, Canada and UK through its sales representative in that country from where it market its services and solutions.

The company offers a wide range of services that include custom development, AI Consultation & Implementation, IOT Services and IT consulting services. Its expertise in these areas allows it to deliver solutions that are not only innovative but also efficient, reliable and cost-effective. It works closely with its clients to understand their business goals, challenges and future potential and then develop solutions that help them achieve their objectives. The company's team of skilled professionals comprises developers, designers, project managers and quality assurance specialists. The vast experience and expertise in their respective domains enable them to deliver solutions that are of the highest quality and meet the highest industry standards. Its ability to deliver customized solutions that cater to the specific needs of its clients has earned them a reputation as a trusted and reliable technology partner. 

Proceed is being used for:

• Funding capital expenditure toward setting up development center at gift city, Gandhinagar.
• Funding incremental working capital requirement of the company.
• Repayment/ prepayment of certain borrowings availed by the company.
• General corporate purpose.
• Meeting the issue expenses.

Industry overview

The IT & BPM sector has become one of the most significant growth catalysts for the Indian economy, contributing significantly to the country’s GDP and public welfare. The IT industry accounted for 7.4% of India’s GDP in FY22, and it is expected to contribute 10% to India’s GDP by 2025. As innovative digital applications permeate sector after sector, India is now prepared for the next phase of growth in its IT revolution. India is viewed by the rest of the world as having one of the largest Internet user bases and the cheapest Internet rates, with 76 crore citizens now having access to the internet. India’s rankings improved six places to the 40th position in the 2022 edition of the Global Innovation Index (GII)

Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing on investing internationally to expand their global footprint and enhance their global delivery centres. The data annotation market in India stood at $250 million in FY20, of which the US market contributed 60% to the overall value. The market is expected to reach $7 billion by 2030 due to accelerated domestic demand for AI. Exports from the Indian IT industry stood at $149 billion in FY21. Export of IT services has been the major contributor, accounting for more than 51% of total IT export (including hardware). BPM and engineering and R&D (ER&D) and software products export accounted for 20.78% each to total IT exports during FY21. The ER&D market is expected to grow to $42 billion by 2022. The IT industry added 4.45 lakh new employees in FY22, bringing the total employment in the sector to 50 lakh employees.

India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both onshore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. The Indian IT & business services industry is expected to grow to $19.93 billion by 2025. Spending on information technology in India is expected to reach $144 billion in 2023. By 2026, widespread cloud utilization can provide employment opportunities to 14 million people and add $380 billion to India's GDP.

Pros and strengths

Diversified customer base and revenue sources: It serves a diverse mix of end markets across several industry sectors. In its business, it serves a number of customers with variety of services. Since it caters to a diverse customer base, it has historically been able to pass a significant portion of increases in operating costs such as infrastructure cost and other operating expenses through review.

Opportunity for innovation: The current business landscape presents numerous opportunities for innovation, as businesses are looking for new and innovative ways to adapt to the changing environment. This has opened new markets and created opportunities for software businesses to develop new products and services that address emerging needs and trends. For example, there has been a growing demand for software solutions that enable contactless payments, virtual events, and telemedicine.

Global Delivery Network: It comprehend global industry practices & business trends as it is already serving its clients coming from India and all parts of the world. It is constantly adopting new technologies to further augment its global business expansion and client acquisition from all over the world.

Risks and concerns

Face competition: It operates in a competitive industry that experiences rapid technological developments and changes in customer requirements. Its competitors include the big Global System Integrators, in addition to some mid-sized and several smaller local competitors in the various geographic markets in which it operates. It may face competition from companies that grow in size or scope as the result of strategic mergers or acquisitions, which may result in larger competitors with significant resources that benefit from economies of scale and scope. Such events could have a variety of negative effects on its competitive position and its financial results, including reducing its revenue, increasing its costs and lowering its gross margin percentage.

Depends on top ten customers: Its top ten customers have contributed 40.04%, 43.33% & 66.09% of its revenues for the year ended March 31, 2023, March 31, 2022 and March 31, 2021 based on Restated Standalone Financial Statements. However, its top customers may vary from period to period depending on the demand and thus the composition and revenue generated from these customers might change as it continues to add new customers in normal course of business. Since its business is concentrated among relatively few significant customers, it could experience a reduction in its results of operations, cash flows and liquidity if it losses one or more of these customers or the amount of business it obtains from them is reduced for any reason, including but not limited on account of any dispute or disqualification.

Success is dependent on key personnel: Its Promoter, Managing Director, Whole Time Directors and senior management have significantly contributed to the growth of its business, and its future success is dependent on the continued services of its senior management team. It’s Managing Director Mr. Manav Subhashchandra Patel and whole-time Director Mrs Manali Krunal Patel, have been employed with the company since its incorporation. They are having experience of 07 years and 6 years in IT Industry which turn out beneficial for the company. An inability to retain any key managerial personnel may have an adverse effect on its operations. Its ability to execute contracts and to obtain new clients also depends on its ability to attract, train, motivate and retain highly skilled professionals, particularly at managerial levels.

Outlook

The company is in business of software development services to a diverse set of industries. With a focus on innovation and customer satisfaction, it provides its clients with custom software solutions that cater to their specific needs and requirements. On the concern side, it operates in a competitive industry that experiences rapid technological developments and changes in customer requirements. Its competitors include the big Global System Integrators, in addition to some mid-sized and several smaller local competitors in the various geographic markets in which it operates

The company is coming out with an IPO of 17,20,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 160 per equity share to mobilize Rs 27.52 crore. On performance front, the company’s revenue from operations had increased by 185.21% from Rs 384.01 lakh in Fiscal 2022 to Rs 1095.24 lakh in Fiscal 2023. The company reported a net profit of Rs 318.09 lakh in Fiscal 2023 as compared to a net profit of Rs 62.13 lakh in Fiscal 2022. Going forward, the company aims to continue to improve ongoing operational effectiveness and efficiencies to achieve cost reductions including overheads. This can be done through continuous business process review and timely corrective measures in case of diversion and technology up gradation with proper analytics base. As a result of these measures, the company will be able to increase its market share and profitability