Updater Services fails to impress, lists at 5% discount to IPO price

Updater Services is a leading integrated facilities management services and business support services provider to their customers, with a pan-India presence

On back of tepid subscription numbers, Updater Services saw subdued listing on the bourses on October 4. The stock listed at Rs 285 on the NSE and Rs 299.9 on the BSE, against issue price of Rs 300.

The initial public offering (IPO) of business support services company was subscribed 2.9 times with bids coming in for 3.47 crore equity shares against 1.2 crore shares.

Follow our live blog for all the market action

The company raised Rs 640 crore via its maiden public issue. The offer consisted of a fresh issuance of shares worth Rs 400 crore, and an offer-for-sale of Rs 240 crore by selling shareholders including promoter Tangi Facility Solutions.

Of the net fresh issue proceeds, the company will make use of Rs 133 crore for debt reduction, and Rs 115 crore for working capital requirements. Further, the inorganic initiatives at a cost of Rs 80 crore will also be done via fresh issue money. The remaining funds will be used for general corporate purposes.

In the past fiscal years, there was volatility in the company's profitability, though revenue remained strong. Net profit for the year ended March 2023 came in at Rs 34.6 crore, lower from Rs 57.4 crore in previous year and Rs 47.56 crore in FY21.

Also Read: Updater Services IPO subscribed 2.9 times on final day, retail portion booked 1.38 times

Revenue from operations increased sharply to Rs 2,098.9 crore in FY23, up from Rs 1,483.5 crore in FY22 and Rs 1,210 crore in FY21.

Updater Services is a leading integrated facilities management services and business support services provider to their customers, with a pan-India presence.

According to Ventura Securities, the company has a substantial workforce deployed at various locations, including customer premises, which makes it a key risk. "This exposes them to potential service-related claims, losses, or disruptions in their workforce, which could negatively impact their reputation," it added.

High attrition rates is also a concern. The company's attrition rate stood at 77.78 percent, 65.80 percent, and 77.60 percent in the financial years ending on FY21, FY22, and FY23, respectively.