Updater Services stock lists at 5% discount over IPO price: should investors buy, hold or book profit?

Updater Services raised Rs 640 crore via IPO

Updater Services stock made a subdued debut on the bourses, listing at a 5% discount over the IPO price. The stock is listed at Rs 285 on NSE and Rs 299.9 on BSE against the issue price of Rs 300.

Shivani Nyati, Head of Wealth, Swastika Investmart Ltd suggested investors exit their positions owing to the company’s mixed financial performance and high IPO price.

Also Read: Updater Services to be seventh IPO to get listed under T+3 regime; analysts expect subdued listing

“Overall, the listing of Updater Services is disappointing for investors. However, the company's high IPO price, mixed financial performance, and associated risks likely contributed to the negative response in the market. Investors who received allotments in the IPO should consider all these related risks and exit their position,” said  Nyati.

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The company’s profitability has remained volatile in the past few financial years, 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 the previous year and Rs 47.56 crore in FY21. 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.

The company raised Rs 640 crore via IPO. 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.

Updater Services will use fresh issue proceeds to repay debt totalling Rs 133 crore, working capital requirements of Rs 115 crore, and inorganic initiatives at a cost of Rs 80 crore. The remaining funds will be used for general corporate purposes.

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

Updater Services is the second-largest player in the integrated facilities management market in India. The company has the widest service offering in the industry, making it a unique and differentiated player in the market.

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