IPO listed on 4 Oct'23
Updater Services Ltd
Minimum Investment
₹ 15,000 / 50 shares
Grey market premium
₹ 0
Issue price
₹ 300
Listing price
₹ 285
Listing gains
-15 (-5%)
Listing on
Oct 4, 2023
Our Verdict:
Avoid
- While the firm showcases a consistent growth trajectory in terms of revenue and boasts a solid market presence in particular sectors, its net profit shows inconsistency. Moreover, there's a noticeable drop in profit margins and return metrics. This, along with the risks listed below, is a substantial concern.
- From a valuation perspective, the IPO appears to be aggressively priced with a post-issue PE ratio of 58x.
- Therefore, it would be prudent for potential investors to closely watch the company's performance in the upcoming two quarters before making an investment commitment.
About the company
Founded in
13 Nov'03
Managing director
Raghunandana Tangirala
- Updater Services Ltd (UDS) stands as a prominent business service provider in India, delivering both integrated facilities management (IFM) and business support services (BSS). Ranking as the second-largest entity in India's IFM sector, their extensive range of services sets them apart and lends them a distinctive edge in the industry.
- As of March 31, 2023, they catered to 1,427 clients in the IFM segment and 1,669 in the BSS segment. Their expansive infrastructure spans 4,331 sites (excluding staff-specific locations) overseen from 129 operational hubs. This includes 116 offices within India and 13 global outposts.
STRENGTHS
- Steady Growth: Between FY21-23, UDS showcased impressive financial growth, registering a CAGR of 32% in revenue, complemented by a 19% surge in EBITDA.
- Dominant Market Position: In the BSS sector, their subsidiary, Matrix, provides Audit and Assurance services. Its extensive branch and associate network has catapulted the company to the top position in India, boasting a 19.2% market share. When it comes to employee background verification services, Matrix ranks as India's third-largest company. Another subsidiary, Denave, dominates the sales enablement services segment with a 20.1% market share. Additionally, through their subsidiary, Avon, they lead the mailroom management services domain in India, capturing an 11.1% market share.
- Marquee Clients: Their clientele features renowned international and national brands, including Procter & Gamble, Aditya Birla Fashion and Retail, Microsoft, Hyundai, and Saint-Gobain.
RISK FACTORS
- Declining Profitability: Over the period of FY21-23, the net profit declined at a CAGR of 15%. The primary cause was the one-time adjustments related to recent acquisitions, which notably impacted the company's bottom line in FY23. Profit margins have also shown a downward trajectory, decreasing from 3.92% in FY21 to 3.85% in FY22, and further plummeting to 1.64% in FY23.
- Dipping Return Metrics: A similar trend was seen in return ratios. The Return on Equity dipped from 15.8% in FY21 to 9.4% in FY23. Similarly, Return on Capital Employed went down from 22.6% to 14.2% over the same span.
- Increasing Leverage: The Debt to Equity ratio, indicative of financial leverage, has been on the rise. It climbed from 0.04 in FY21, reaching 0.17 in FY22 and escalating further to 0.46 in FY23.
- Geographical Dependence: A considerable share of the company's revenue is sourced from specific geographic zones. A decline in revenue from southern India might negatively influence the company's operations, cash flows, and overall business performance.
Issue details
Issue type
Mainstream
Issue size
₹ 640 crore
Fresh Issue
₹ 400 crore
OFS
₹ 240 crore
Price range
₹ 280 - 300
Lot size
50 shares
Issue Objective
Net proceeds from the fresh issue will be utilised towards:
- Repayment and /or prepayment of borrowings availed by the company;
- Funding the working capital requirements;
- Pursuing inorganic initiatives; and
- General corporate purposes.
Dates
Bidding open
25 Sep'23
Bidding close
27 Sep'23
Allotment date
29 Sep'23
Refund date
3 Oct'23
Listing
4 Oct'23
IPO Reservations
Qualified institutional buyers
75%
Non-institutional investors
15%
Retail individual investors
10%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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