Orient Technologies Limited IPO Details

The IPO of Orient Technologies Limited, a company set to go public, is garnering significant attention. The total issue size of this IPO stands at a substantial ₹214.76 crore. Investors will have the opportunity to purchase shares within a price band of ₹195 to ₹206. The shares are expected to list on the stock exchange on August 28, 2024. As of now, the tentative Grey Market Premium (GMP) and subscription details are awaited, which will offer further insights into market sentiment.

IPO Valuation

Based on the price band and the Draft Red Herring Prospectus (DRHP), the valuation of Orient Technologies Limited’s IPO reveals some noteworthy figures. The upper price band is set at ₹206, with existing shares totaling 3.58 crore. The fresh issue is pegged at ₹120 crore. With an Earnings Per Share (EPS) for FY24 at ₹10.94, and a Price-to-Earnings (PE) ratio to be determined, this IPO is positioned within an industry where the average PE ratio is 26.84x.

Financial Overview

Orient Technologies Limited is set to raise ₹214.76 crore through its IPO, which includes a fresh issue of ₹120 crore. With 3.58 crore existing shares and a price band ranging from ₹195 to ₹206, the IPO valuation seems competitive within its sector, especially considering the industry’s average PE of 26.84x. The EPS for FY24 stands at ₹10.94, providing a clear picture of the company’s earnings potential. The market is eagerly awaiting the final PE ratio and GMP to assess the company's market position post-listing.

Profit & Loss Overview of Orient Technologies Limited

Orient Technologies Limited has shown a remarkable growth trajectory in its financial performance over the last three years. Net sales have seen a significant jump from ₹247.34 crore in March 2021 to ₹535.10 crore in March 2023, reflecting a strong and consistent increase in revenue. The company’s operating profit has also surged, climbing from ₹3.15 crore in 2021 to ₹48.64 crore in 2023. This indicates a substantial improvement in operational efficiency, despite a corresponding rise in total expenditure, which reached ₹486.46 crore in March 2023.

In terms of profitability, the net profit has grown from a mere ₹0.13 crore in March 2021 to ₹38.30 crore in March 2023, showcasing the company’s ability to convert its growing sales into substantial earnings. The Adjusted Earnings Per Share (EPS) has also improved, moving from ₹0 in 2021 to ₹1.09 in 2023, reflecting the company’s enhanced profitability on a per-share basis.

This consistent growth in both revenue and profit underscores Orient Technologies Limited's strong market position and efficient management, making its upcoming IPO an exciting opportunity for potential investors.

Balance Sheet Overview of Orient Technologies Limited

Orient Technologies Limited has demonstrated a solid financial foundation, as reflected in its balance sheet over the last three years. The company’s total equity and liabilities have grown from ₹129.42 crore in March 2021 to ₹239.94 crore in March 2023, showcasing a strong expansion in its financial base. Notably, the share capital has remained stable at ₹17.50 crore since March 2022, while total reserves have more than doubled from ₹44.79 crore in March 2021 to ₹111.32 crore in March 2023. This indicates robust internal accruals and prudent financial management.

On the liabilities side, the company’s borrowings have seen a slight increase to ₹4.37 crore in March 2023, reflecting a cautious approach to leveraging. Other non-current liabilities also rose significantly to ₹9.45 crore, indicating growing long-term obligations, while current liabilities have seen a steady increase, reaching ₹97.30 crore in March 2023.

In terms of assets, Orient Technologies Limited has significantly increased its net block from ₹10.20 crore in March 2021 to ₹19.28 crore in March 2023, reflecting ongoing investments in fixed assets. Current assets, which primarily include inventories and receivables, have seen a considerable jump from ₹112.45 crore to ₹215.25 crore over the same period, underscoring the company’s expanding operational scale.

This balance sheet reflects a company that is on a growth trajectory, with increasing assets and reserves positioning Orient Technologies Limited as a financially strong entity ahead of its IPO.

Cash Flow Overview of Orient Technologies Limited

Orient Technologies Limited’s cash flow statements for the past three years reveal a dynamic financial landscape, marked by significant fluctuations in operating, investing, and financing activities. In March 2023, the company generated a modest ₹1.95 crore in operating cash flow, a sharp decline from ₹30.48 crore in March 2022. This reduction can be attributed to substantial changes in assets and liabilities, which resulted in a negative impact of ₹37.67 crore, compared to a positive adjustment of ₹16.77 crore in March 2021. Additionally, tax payments in March 2023 amounted to ₹10.55 crore, further impacting the operating cash flow.

On the investing front, Orient Technologies has been consistent in its capital expenditures, with a negative cash flow of ₹11.72 crore in March 2023, reflecting ongoing investments in growth and expansion. Despite these outflows, the financing cash flow turned positive at ₹4.41 crore in March 2023, after being negative in the previous two years. This shift was driven by adjustments in borrowings and equity transactions, which supported the company's overall financial strategy.

However, the net cash flow turned negative in March 2023, resulting in an outflow of ₹5.36 crore, a reversal from the positive net cash flow of ₹13.57 crore in March 2022. This indicates the company’s significant investment activities and the strategic financial decisions made during the year.

This cash flow analysis highlights Orient Technologies Limited’s focus on growth and investment, despite the challenges in maintaining positive net cash flow. The company's ability to navigate these fluctuations will be crucial as it moves forward with its IPO.

What AI Says About Orient Technologies Limited's Financials

AI analysis of Orient Technologies Limited's financials suggests that the company is in a transitional phase, marked by rapid growth and strategic investments. The substantial increase in net sales and operating profit over the past three years reflects a strong market presence and efficient cost management. However,

"The sharp decline in operating cash flow in March 2023 and the negative net cash flow raise concerns about the company's short-term liquidity."

The increase in borrowings and other non-current liabilities indicates that

"The company is leveraging debt to finance its expansion, which could impact its financial stability if not managed carefully."

Despite these challenges,

"The company’s growing reserves and consistent investment in assets indicate a long-term vision focused on sustainable growth."

AI forecasts that, if the company continues to manage its resources efficiently and maintains a balance between growth and debt,

"It could position itself strongly in the market post-IPO."

Investors should, however, keep a close eye on

"The company’s cash flow management and debt levels in the coming quarters."

Source : https://ticker.finology.in/IPO/upcoming/orient-technologies-ltd