Updater Services IPO Day 2: GMP, review, other key details. Should you subscribe?

Chennai-based Updater Services IPO opened for subscription on Monday, September 25, and will close tomorrow (Wednesday, September 27). Updater Services IPO has been subscribed 16% on day 2. Updater IPO's retail investors portion was subscribed 68%, NII portion was subscribed 12%, and Qualified Institutional Buyers (QIB) portion did not receive any bids.

Also Read: Updater Services IPO sees tepid demand on day 2, retail portion booked 68%

Updater Services IPO price band is set in the range of ₹280 to ₹300 per equity share of face value of ₹10. Updater Services IPO lot size is 50 equity shares and in multiples of 50 equity shares thereafter.

Updater IPO has reserved not less than 75% of the shares in the public issue for Qualified Institutional Buyers (QIB), not more than 15% for Non Institutional Investors (NII), and not more than 10% of the offer is reserved for Retail Investors.

Ahead of the IPO opening, Updater Services raised ₹288 crore through an anchor book process on Friday, September 22.

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Updater Services Ltd offers integrated facilities management (IFM) services and business support services (BSS). It was founded in 1990 by Raghunandana Tangirala, who has over 30 years of experience in the integrated business services industry.

On day 1, Updater Services IPO subscription status was 6%, according BSE data. Updater Services IPO retail investors portion was subscribed 30%, NII portion was subscribed 1%, and Qualified Institutional Buyers (QIB) portion did not receive any bids.

Updater Services IPO details

Updater IPO consists of fresh issue of shares of up to ₹400 crore and an offer for sale (OFS) of up 8,000,000 equity shares of face value of ₹10 each by a promoter and others.

Promoter Tangi Facility Solutions Private Ltd will offload 40 lakh shares in the IPO and two private equity funds, India Business Excellence Fund-II and India Business Excellence Fund–IIA, will sell 8 lakh and 32 lakh shares, respectively.

According to the red herring prospectus (RHP), net proceeds from the IPO to pay off some borrowings it has taken out, support working capital needs, pursue inorganic activities, and for general corporate purposes.

IIFL Securities Ltd, Motilal Oswal Investment Advisors Ltd, and SBI Capital Markets Ltd, are the book running lead managers to the issue, and the registrar is Link Intime India Private Ltd.

Also Read: Chennai-based Updater Services IPO opens on September 25, price band awaited

The company's listed industry peers are Quess Corp Ltd(with P/E ratio of 28.38), SIS Ltd (with P/E ratio of 19.74), and TeamLease Services Ltd (with P/E ratio of 40.96)

For FY22, the firm reported revenue of ₹1,483.55 crore as against ₹1,210.03 crore in FY21. Net profit for the period stood at ₹57.4 crore as against ₹47.5 crore last year.

Updater Services IPO review

Brokerage house, Canara Bank Securities Ltd stated that the company is a prominent, specialised, and integrated business services platform in India that provides comprehensive facilities management and business support services to clients across the country. The company is the second-largest player in integrated facilities management (IFM), which encompasses soft services, production support services, engineering services, washroom and feminine hygiene care. Strong clientele from a variety of industries has supported the company's revenue growth of almost 72%.

Also Read: Updater Services gets Sebi nod to raise funds via IPO

"The company is looking to increase its customer base with expansion of key segments and introduce new products and services catering to existing and new customer. The company is also looking to pursue inorganic growth through acquisition of high margin businesses with expansion of standalone margin. However, the company looks expensive vis a vis its peers in terms of valuation . Hence, we recommend to subscribe the issue for long term," said the brokerage in its report.

According to Dilip Davda, the contributing editor at Chittorgarh.com, the company has created a niche place in the area of services it is offering under one roof. It has planned up the sleeve high margin and value-added services with the latest technology in its portfolio. Though the IPO appears aggressively priced, it holds promising prospects. Well-informed investors may park funds for medium to long-term rewards.

Also Read: Updater Services IPO: GMP, review, other details in 10 points. Apply or not?

Updater Services IPO GMP today

Updater IPO GMP today or grey market premium was ₹0, which meant shares were trading at their issue price of ₹300 with no premium or discount in the grey market according to topsharebrokers.com

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Also Read: Updater Services IPO opens on September 25, price band set at ₹280-300 per share