What you must know about Vinsys IT IPO

Vinsys IT Ltd, is an SME IPO on the NSE which is opening for subscription on 01st August 2023. The company, Vinsys IT Ltd, was incorporated in in the year 2008 to provide IT skill development solutions. The company is engaged in offering packages for IT training, IT skill development, IT skill upgradation in line with changing demands, as well as certification domain. It operates through a network of 8 entities and has a strong presence in India and also abroad. Its foot print is very strong in the Middle East and in the US. It also offers mid-end and high-end digital learning courses.

Vinsys IT Ltd is an ISO 9001:2015 certified organization and also a globally acclaimed individual and corporate training provider. The company already has a legacy of empowering professionals with knowledge for more than 15 years. Till date, the company has successfully trained and certified more than 600,000 professionals around the world. Vinsys IT Ltd has now spread its wings across the globe and has its footprints in countries including Australia, China, India, Kenya, Malaysia, Oman, Singapore, Tanzania, UAE, and the US. Vinsys IT Ltd is a renowned players in conducting corporate training and open house workshops in Information Technology, IT Service Management, IT Governance, IT Infrastructure Library, Project Management, behavioural and Management Solutions; and Foreign Languages for enterprises and governments worldwide.

Key terms of Vinsys IT IPO

Here are some of the highlights of the Vinsys IT IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 01st August 2023 and closes for subscription on 04th August 2023; both days inclusive.
   
• The company stock has a face value of ₹10 per share and the IPO issue will be a book built issue. The price band has been fixed in the range of ₹121 to ₹128 per share. For all the analysis in this IPO report, we will use the upper end of band as the benchmark.
   
• The entire issue is a fresh issue of shares. The company will issue a total of 38.94 lakh shares, which at the upper end of the price band of ₹128 per share aggregates to a total fund raising of ₹49.84 crore.
   
• There is no offer for sale (OFS) component in the IPO. As a result, the total fresh issue of the IPO is also equivalent to the total issue size. It may be recollected that fresh issue of shares is EPS dilutive and also capital dilutive.
   
• Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation carved out of the issue. The market making portion is for 195,000 shares and Sunflower Broking Ltd will act as the market maker for the issue. The market maker to the issue will provide two-way quotes to ensure liquidity on the counter.
   
• The company has been promoted by Vikrant Patil and Vinaya Patil and the promoter stake in the company stands currently at 92.74%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted to 68.13%.
   
• The fresh issue funds will be used for giving loans to subsidiary, repayment / prepayment of loans to subsidiary, meeting the working capital funding gaps and also for general corporate purposes.
   
• While Beeline Capital Advisors Private Ltd will be the lead manager to the issue, Link Intime India Private Ltd will be the registrar to the issue. Post the issue, the issued capital base will expand from 107.84 lakh shares to 146.78 lakh shares.

The company has allocated 50% of the issue size for the QIB investors, 35% for the retail investors while the balance 15% is allocated to HNI / NII investors. This will be as a percentage of the net issue after the anchor portion is removed from the total issue size. The table below captures the IPO reservation for Vinsys IT Ltd.

The minimum lot size for the IPO investment will be 1,000 shares. Thus, retail investors can invest a minimum of ₹128,000 (1,000 x ₹128 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 2,000 shares and having a minimum lot value of ₹256,000. There is no upper limit on what the HNI / NII investors can apply for. The table below captures the break-up in detail.

Key dates to be aware of in the Vinsys IT IPO (SME)

The SME IPO of Vinsys IT Ltd IPO opens on Tuesday, August 01st, 2023 and closes on Friday August 04th, 2023. The Vinsys IT Ltd IPO bid date is from August 01st, 2023 10.00 AM to August 04th 2023, 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 04th of August 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Vinsys IT Ltd

The table below captures the key financials of Vinsys IT Ltd for the last 3 completed financial years.

Data Source: Company RHP filed with SEBI

The profit margins have fairly robust at around 15.5% in the latest year but generally erratic in the previous years due to the loss in FY22. Even the return on equity in the latest year has been in excess of 60% with numbers relatively erratic in the previous years. However, the latest year numbers do pave the way for more attractive valuations for the company. While sales growth has been robust, the profit turnaround in the latest year has also been very impressive. Investors must remember that this is a traditionally low investment and high margin business despite a lot of competition from a plethora of companies. However, the company can take solace from its improving asset turnover ratio as a measure of asset sweating.

The weighted average EPS of the company for the last 3 years is around ₹7.39 and that makes the company relatively expensive at the upper band price of ₹128 per share. In terms of valuation, the stock valuation is more than 16 times forward earnings, so it is relatively fully priced. However, this is a business that is about implementation and there are big names with large balance sheets already foraying into this business. Vinsys IT Ltd is likely to see stiff competition although a lot will depend on the niche it picks for itself. For now, it is working, but investors must keep a longer perspective and a higher risk appetite for this stock.