New Delhi based IT firm Newgen Software Technologies’ Initial Public Offer (IPO) to raise up to Rs 424 crore which opened for subscription yesterday got subscribed by nearly 70% as at the end of second day of bidding. Interestingly, the issue saw bids for a total of 82,61,596 shares as against issue size of 1,22,12,821 shares, implying subscription of 70%. QIBs bid for a total of 3.47 lakh shares as against 35.06 lakh shares reserved for them, implying deamd to the tune of 10%. Notably, the issue saw heavy demand from retail investors as they bod for a total of 81.22 lakh shares as against 60.94 lakh shares reserved for them. The non-institutional investor quota registered the least demand at 3% of the total shares.
The company has set a price band of Rs 240-245 for the issue, and looks to raise upto Rs 424 crore at the higher end of the band. The issue constitutes fresh issue worth of Rs 95 crore and offer for sale worth of Rs 330 crore (at upper band). The company will dilute 5.6 per cent of its post-offer paid-up equity share capital. Newgen Software Technologies IPO will remain open for subscription from 16th January to 18th January 2018.
The lot size is fixed at 61 shares and in multiples of 61 shares thereafter. The shares will list on both BSE and NSE. The objectives of the IPO for the Company are to purchase and furnish office premises near Noida-Greater Noida Expressway, Uttar Pradesh and general corporate purposes.
“In terms of valuations, the pre-issue P/E works out to 274x its 1HFY2018 annualized earnings (at the upper end of the issue price band), which is higher compared to its peers like Intellect Design Arena (trading at PE 143x – 1HFY2018 annualized earnings). Further last four years historical financial records and 1HFY18 doesn’t provides confidence. Hence, we recommend Neutral rating on the issue,” noted Angel Broking.
Founded in 1992, Newgen Software Technologies Limited (NSTL) is a New Delhi based IT company and a provider of Business Process Management (BPM), Enterprise Content Management (ECM), Customer Communication Management (CCM), Document Management System (DMS), Workflow and Process Automation. The company has more than 450 active customers, with clients spread over 60 countries. The company sells its products to banks, insurance firms, BPOs and healthcare organizations. It has offices in the US, Canada, the United Kingdom, Singapore, and Dubai.