What You Must Know About Vdeal System IPO: Price Band ₹112 Per Share

Established in December 2009, Vdeal System Limited is a comprehensive Electrical and Automation solutions provider. The firm focuses on the development of Smart Low-Voltage (LV) panels, Smart Medium-Voltage (MV) panels, Smart Variable-Frequency Drive (VFD) panels, Medium-Voltage (MV) Soft Starters, Energy Management Systems (EMS), and Smart Programmable Logic Controller (PLC) panels. 

Additionally, they supply air-insulated and Sandwich bus ducts. Their offerings encompass in-house product design and development, manufacturing, system integration, and maintenance of automation solutions and intelligent electrical control panels, all adhering to stringent international IEC standards for quality and safety.

The organisation holds ISO 9001:2015 certification. Vdeal System Limited's product range features several Sense IoT Gateways, Reveal Sense Nodes, and the REVNET IIoT Platform. The company's manufacturing facility is located in Bhubaneswar, Orissa. As of August 20, 2024, the company employed 65 individuals.

The Objective of the Issue

To meet the working capital requirements: The company aims to use the funds raised through the IPO to maintain smooth business operations by covering day-to-day expenses, ensuring they have the necessary resources to continue growing and meeting customer demands.

Prepayment and repayment of certain loans: The company plans to use part of the IPO proceeds to pay off or reduce its secured and unsecured loans. This will help improve their financial health by lowering interest costs and reducing debt.

General Corporate Purpose: Funds will also be allocated towards general corporate activities such as expanding operations, improving infrastructure, or investing in new projects that align with the company’s strategic goals.

To meet the Offer expenses: A portion of the funds will be used to cover the costs associated with the IPO, including legal fees, marketing, and other related expenses necessary to bring the offering to market.

Highlights of Vdeal System IPO

Vdeal System IPO is set to launch with a fixed price issue of ₹18.08 crores. The issue comprises a fresh issue of 16.14 lakh shares. Here are the key details of the IPO:

• The IPO opens for subscription on 27th August 2024 and closes on 29th August 2024.
• The allotment is expected to be finalised on 30th August 2024.
• Refunds will be initiated on 2nd September 2024.
• Credit shares to Demat accounts are also expected on 2nd September 2024.
• The company will tentatively list on BSE SME on 3rd September 2024.
• The price band is set at ₹112 per share.
• The lowest lot size for the IPO application is 1200 shares.
• Retail investors need to invest a minimum of ₹134,400.
• The minimum investment for HNI is 2 lots (2,400 shares), amounting to ₹268,800.
• Affinity Global Capital Private Limited is the book-running lead manager for the IPO.
• Cameo Corporate Services Limited serves as the registrar.
• Black Fox Financial is the market maker.

Vdeal System IPO- Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 29th August 2024.

Vdeal System IPO Issue Details/Capital History

The Vdeal System IPO is scheduled from 27 August to 29 August 2024, with a fixed price of ₹112 per share and a face value of ₹10. The lot size is 1,200 shares, and the total issue size is 1,614,000 shares, raising up to ₹18.08 crores through a fresh issue. The IPO will be listed on the NSE SME, with the shareholding increasing from 3,276,460 pre-issue to 4,890,460 post-issue. Black Fox Financial is the market maker responsible for 81,600 shares within the issue.

Vdeal System IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can place bids for at least 1,200 shares, with additional bids required in multiples of this figure. The table below illustrates the minimum and maximum investment amounts for retail investors and high-net-worth individuals (HNI), expressed in shares and monetary values.

SWOT Analysis: Vdeal System IPO

Strengths:

Strong Market Presence: Vdeal System has established a solid market presence, which enhances brand recognition and customer loyalty.
Experienced Management: The company is led by an experienced management team with deep industry knowledge, which effectively guides strategic decisions.
Diverse Product Portfolio: Vdeal System offers a wide range of products and services, catering to various customer needs and reducing dependency on a single revenue stream.

Weaknesses:

High Debt Levels: The company has significant debt obligations, which may impact financial stability and limit future growth opportunities.
Limited Scale of Operations: Compared to larger competitors, Vdeal System operates on a smaller scale, which may limit its ability to compete in terms of pricing and market reach.
Dependency on Key Clients: A substantial portion of the company’s revenue might come from a few key clients, making it vulnerable to changes in its business relationships.

Opportunities:

Expansion into New Markets: Vdeal System has the potential to enter new geographic markets, tap into underserved regions, and expand its customer base.
Technological Advancements: Leveraging new technologies can improve operational efficiency, enhance product offerings, and create new revenue streams.
Strategic Partnerships: Forming alliances with other companies can provide access to new resources, expertise, and markets, driving growth.

Threats:

Intense Competition: The market is highly competitive, with numerous players offering similar products and services, which could impact Vdeal System's market share and profitability.
Economic Downturns: Economic instability can reduce customer spending, affecting the company's sales and financial performance.
Regulatory Changes: Changes in industry regulations or government policies could increase operational costs or limit business activities, posing a risk to the company’s growth.

Financial Highlights: Vdeal System Limited

Below are the financial results of the FY24 and the Fiscal years FY23 and FY22:

The financial performance of Vdeal System Limited over the fiscal years ending March 2022, 2023, and 2024 reveals a strong trajectory of growth. Starting with the assets, the company saw a significant increase from ₹1,142.33 crores in FY22 to ₹1,544.44 crores in FY23 and further to ₹2,727.93 crores in FY24. This upward trend reflects the company’s expanding scale and resource investment, indicating robust financial health and strategic capital allocation.

Vdeal System Limited's revenue also demonstrated substantial growth, rising from ₹1,623.96 crores in FY22 to ₹2,075.41 crores in FY23 and eventually reaching ₹2,625.08 crores in FY24. This consistent increase in revenue highlights the company’s ability to expand its market share and enhance its operational efficiency over the years.

The profit after tax (PAT) figures underscore the company’s successful financial management and profitability. The PAT rose from a modest ₹23.1 crores in FY22 to ₹110.09 crores in FY23 and significantly surged to ₹311.38 crores in FY24. This sharp rise in profits indicates the company’s strong business model and the effective execution of its strategies.

Moreover, the company’s net worth saw a healthy increase, moving from ₹231.73 crores in FY22 to ₹341.83 crores in FY23 and further to ₹628.75 crores in FY24. This growth in net worth, alongside a balanced approach to reserves and surplus and a managed increase in total borrowings, reflects a stable financial foundation and the company’s ability to support its long-term objectives.