IPO Note : Aditya Infotech Ltd By Geojit Financial Services Ltd
First-Mover in Domestic Surveillance Solutions...
Aditya Infotech Limited (AIL), established in 1995, is a leading provider of technology-enabled security and surveillance solutions in India (with a market share of ~21% in FY25), operating under its flagship brand “CP Plus”. AIL entered into a joint venture with Dixon Technologies in 2017 to manufacture CCTVs and DVRs, and fully acquired the venture in 2024 through a share swap, granting Dixon a 6.6% stake in AIL. The company also serves as the exclusive super distributor for Dahua Technology in India. AIL operates through 40+ offices, 10+ service centers, a workforce of 970+, and a network of 800+ partners across 500+ towns in India. As of FY25, the company's manufacturing capacity stood at 17.2 million units, with an overall capacity utilization of 77%.
* The global video surveillance market is valued at US $35.9bn in FY25 and is expected to grow at a CAGR of ~10% over FY25-FY30. (Source: Frost & Sullivan).
* India’s video surveillance market is expected to grow at a CAGR of ~16.5% from Rs.106bn in FY25 to Rs.227bn by FY30, driven by rising security needs and smart city initiatives. (Source: Frost & Sullivan).
* Between FY23 and FY25, AIL recorded robust financial growth, with revenue, EBITDA, and PAT growing at a CAGR of 17%, 24%, and 80%, respectively. This performance was driven by rising demand, strong brand recognition, and favourable policy support.
* The total debt stood at Rs.457cr in FY25 (D/E at 0.4x), and upon utilisation of net proceeds from the IPO for debt repayment (~Rs.375cr), the debt-toequity ratio will trim down to 0.2x.
* The return ratios, RoE and RoCE are healthy at an average of ~32% and 28% over the last three years.
* AIL is positioned to benefit from the recent STQC (Standardization Testing and Quality Certification) norms, leveraging its domestic manufacturing status for faster compliance, government contract access, and market leadership amid rising import restrictions.
* At the upper price band of Rs.675, AIL’s FY25 P/E ratio of 22.5x appears fairly priced. Considering its market leadership, strong brand recall, extensive distribution network, rapid growth in financials, healthy RoE, favourable policy environment and first mover advantage, we assign a ‘Subscribe’ rating with a long-term investment perspective.
Purpose of IPO
The IPO consists of a fresh issue of Rs.500cr and an OFS (offer for sale) of Rs.800cr, totalling Rs.1,300cr. The net proceeds from IPO will be utilised for repayment/ prepayment, in full or in part, of certain borrowings availed by the company (~Rs.375cr) and general corporate purposes.
Key Risks
* ~25% of FY25 revenue is derived from the sale of products by Dahua Technology Pvt Ltd.
* In FY25, AIL relied heavily on a single supplier, which alone accounted for ~52% of material costs, with the top five comprising ~92%.
* Reliance on Chinese imports and global commodity prices exposes the business to risks that could impact financial performance.
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