IPO Note : Seshaasai Technologies Ltd by Motilal Oswal Financial Services Ltd
Leading manufacturer of payment cards in India: Seshaasai Technologies (STL) is one of the top two payments card manufacturers in India with a market share of 31.9% in FY25 (vs 25% in FY23) for credit and debit cards issuances. It is also one of the largest manufacturer of cheque leaves in India.
Comprehensive Portfolio of Solutions: Its business verticals comprise solutions for Payments (63%), Communication & Fulfilment (30%), and IoT (7%). STL’s revenue from IoT grew from Rs.41.3mn (0.4%) in FY23 to Rs.1,062.3mn (7%) in FY25. Notably, the company has a long-standing partnership with NPCI on RuPay products, which has been instrumental in driving innovation within the Indian financial ecosystem.
Diverse Customer Base: STL serves a wide customer base, including leading banks, insurance companies, depositories, and fintech firms. In the IoT segment, demand for RFID (Radio Frequency Identification) is expected to rise, particularly in garment retail, owing to its role in improving inventory accuracy and enhancing customer experience.
Growing Industry with Entry Barriers: The payment card manufacturing industry has high entry barriers due to substantial capital requirements, stringent regulatory standards, technological expertise and dominance of established players. In India, the payments card market stood at Rs.30,804mn in 2024 and is projected to reach Rs.61,684mn by 2030, implying a CAGR of 12.3%. The RFID market is expected to grow a CAGR of 13.6% over FY24–30, presenting strong growth opportunities for STL.
Strong Financials: STL has strong revenue/EBITDA/PAT CAGR of 13%/ 34%/43% respectively over FY23-25. Due to technology driven operations and low operational costs, its FY25 EBITDA/PAT margins are robust at 25%/15%. The company offers healthy return ratios with ROE/ROCE of 41.5%/27.6% as of FY25.
Issue Size and Objects: The Rs.8.1bn IPO comprises a fresh issue of 4.8bn and an OFS of 3.3bn. STL proposes to utilize the net proceeds towards expansion of existing manufacturing units and debt repayment.
View: Seshaasai has a leadership position in the regulated payment solutions industry with advanced pan-India manufacturing capabilities and elite client base. With high industry growth potential, strong financial performance and fair valuation at 30.8x FY25 P/E; offering a PEG ratio of 0.82, we recommend investors to ‘Subscribe’ to the issue.
Risk and Concerns
* The company is highly focused on serving the BFSI industry (84% of FY25 revenue). Any downturn, regulatory change, or shift in technology within this sector could reduce demand for its services.
* The business relies on imported materials (40%) and equipment. Disruptions in global supply chains, currency fluctuations, or trade restrictions could increase costs or delay operations.
* The nature of the business - involving payment systems, data handling, and IT infrastructure - requires strict compliance with regulatory standards and data security norms. Any lapses could lead to penalties, reputational damage, or loss of business.
* There have been some instances of delayed filing with the Registrar of Companies under the Companies Act and RBI in the past which may attract penalties.
* Operating in a fast-evolving tech space, the company must continually innovate to stay competitive. If it fails to adapt to new technologies or market trends, its offerings may become outdated.
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SEBI Registration number is INH000000412
