Quadpro ITeS coming with an IPO to raise up to Rs 14 crore

Quadpro ITeS

• Quadpro ITeS is coming out with an initial public offering (IPO) of 70,50,000 Equity Shares of face value of Rs 2 each for cash at a fixed price of Rs 20 per equity share. 
• The issue will open on September 20, 2021 and will close on September 22, 2021.
• The shares will be listed on the Emerge platform of NSE.
• The share is priced 10 times higher to its face value of Rs 2.
• Book running lead manager to the issue is Beeline Broking.
• Compliance Officer for the issue is Stutiben Kalpeshkumar Kinariwala.

Profile of the company

The company is providing Information Technology (IT) and Information Technology (IT) enabled services, cash management services (CMS), Cheeque Truncation System (CTS), Door step Banking services, Software Development Services, Banking transaction processing services, Document management services for telecommunication companies, Non Banking Finance companies, internet services providers, Data base Management Services, Digital Document verification for payment banks, Supply of IT and ITeS Hardware, Skilled and unskilled man power supply services etc.

The company also provide E2E (End to End) service provider right from Know Your Customer (KYC) spot audit / pickup of forms from the distributor‘s point, thorough Know Your Client (KYC) audit at nearest spoke office, data entry of application form in to the online portal, opening an account, verifying the voter ID / Aadhaar number from their web portal, and activating the SIM of the customer in a limited Turn Around Time (TAT), outward from spoke, transporting forms to the centralised HUB, inward at HUB, Bar Coding, Gumming Photograph, De-stapling, Scanning, Re-stapling, Image Splitting, File Naming, Batch preparing up to final warehousing.

Proceed is being used for:

• Meeting capital expenditure requirements.
• Acquisitions and other strategic initiatives.
• General corporate purposes.

Industry overview

The IT industry accounted for 8% of India’s GDP in 2020. India’s IT industry is expected to contribute 10% to India’s GDP by2025. As of FY 20, the IT industry employed 4.3 million people. The IT&BPM industry’s revenue is estimated at $194 billion in FY21, an increase of 2.3% YoY. The sector is the largest employer within the private sector. In FY20, the industry added 1.38 lakh new employees, taking the total employment to 44.7 lakh. The market size of India’s IT&BPM sector is expected to grow to $350 billion by 2025 and BPM is expected to account for $50-55 billion out of the total revenue. Spending on information technology in India is expected to reach $144billion in 2023. Outsourcing of large technology contracts by clients is expected to accelerate the growth of the industry in FY20. India’s digital economy is estimated to reach $1trillion by 2025.

Bank credit growth was 6.1 percent as on December 18, 2020 as compared to 7.1 percent in the corresponding period of the previous year. The non-food credit growth (YoY) was 5.6 percent in October 2020, as compared with a growth of 8.3 percent in October 2019. The moderation in credit growth in 2020-21 was witnessed in mostly all the sectors, barring. Total assets of NBFCs had increased from Rs 23.41 lakh crore in March 2018 to Rs 29.23 lakh crore in March 2019, and further to Rs 33.91 lakh crore in March 2020, resulting in an annual growth of 16.01 percent during 2019-20 as compared with 24.86 percent in 2018-19. There is an observable shift in the sources of funding of NBFCs. Banks’ total exposure to NBFCs increased from Rs 7.01 lakh crore in March 2019 to Rs 8.04 lakh crore in March 2020, and further to Rs 8.17 lakh crore in June 2020. 

Pros and strengths

Legacy advantages and networking capabilities: Quadpro ITeS has been in the business of IT Services, ITeS, and BPM Services for 11 years, whereas the promoters of the company have been in service since long before that. The background of Quadpro has contributed to the construction of various strengths. Quadpro currently works with over various Banks to provide multiple and distinctive services. The company has robust and long-lasting relationship with its clientele and it is the consistent support of Quadpro that warrants its client’s continuing endorsement. The company has an exclusive system of first carefully understanding and learning the needs and operations of its clients, then providing expertise through its confident, clear and consistent knowledge of processes and finally exceeding the client’s expectations through unparalleled service, timeline and delivery.

Technological proficiency: The Tech-Team of Quadpro ITeS is company’s most effective strength. Through an in-house IT team, it has the indepth and specialised knowledge of its line of business. It has the capability to develop and implement customized solutions and bespoke systems for its clients as well as within the business by continuously enhancing current offerings. Furthermore, it has direct control over things like response time and quality of work. Technology is moving faster than ever and is transforming the way that it and its clients operate. Having its own technological capacity facilitates it to consistently research new opportunities which helps it stay a step ahead of its competition. Its Tech-Team is always motivated and enthusiastic to stay updated on the latest technologies to grow and acquire new opportunities and empower its service delivery.

Pan-India presence: The company Quadpro ITeS has a Pan-India presence through its network of branches in India’s Metropolitan Cities like Mumbai, New Delhi, Chennai, Kolkata, Hyderabad, and finally its Head Office in Bangalore. Its multi-state presence especially in the principal cities gives it an effective access to a larger and finest talent pool with unique skills and mindsets. Whereas having its Head-Office in Bangalore gives it access to the best IT talent pool. Furthermore, having its processing centres in multiple cities helps it to provide flexible services to clients who require multi-state operations.

Risks and concerns

Depends on few numbers of customers and suppliers: The company’s top ten customers contributes 85.08, 70.55 for its total sales for the year ended March 31, 2021 and 2020 respectively. Any decline in its quality standards, growing competition and any change in the demand, may adversely affect its ability to retain them. It cannot assure that it shall generate the same quantum of business, or any business at all, and the loss of business from such top ten customers may adversely affect its revenues and results of operations. Though it will not face substantial challenges in maintaining its business relationship with valuable clients, there can be no assurance that it will be able to maintain long term relationships with its valuable clients or find new customers in time.

Depends on third parties for the supply of services: The company’s business is significantly affected by the availability, cost and quality of services. The prices and supply of services bought out and some of the factors not under its control, including domestic and international general economic conditions, competition, availability of quality suppliers, transportation costs etc. It majorly requires manpower for its operations and maintenance and it also depend on third party for supply of services forming part of overall project execution. Any delay in supply of services may delay in its projected completion of work and ultimately affect its business.

Face competition: The industry, in which the company is operating, is highly and increasingly competitive and its results of operations and financial condition are sensitive to, and may be materially adversely affected by, competitive pricing and other factors. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow its market share, any of which could substantially harm its business and results of operations. There can be no assurance that it can effectively compete with its competitors in the future, and any such failure to compete effectively may have a material adverse effect on its business, financial condition and results of operations.

Outlook

Quadpro ITeS provides end-to-end solutions to the Banking, Insurance, and Telecom industries. Company’s product offerings are divided into Quad Quick: For Banking and Financial Services Industries, Quad Sure: For Insurance Industry, and Quad Comm: For Telecomm Industry. The company has exclusive tie-ups with all leading hardware and software solution providers to provide the latest range of desktops, servers, and scanners as part of the solution. The company's services include Cheque Truncation, QuadScan - DMS Solution, Cash Management Services, and Cheque processing and Clearing Support. Quadpro manages critical and highly sensitive data of various client Banks, financial institutions and Telecom Companies, the robust and stringent information security policies and processes followed by it, facilitate a smooth sailing during various types of audits appointed by its clients. The company Quadpro ITeS has a Pan-India presence through its network of branches in India’s Metropolitan Cities like Mumbai, New Delhi, Chennai, Kolkata, Hyderabad, and finally its Head Office in Bangalore.

The company is coming out with a maiden IPO of 70,50,000 equity shares of Rs 2 each at a fixed price of Rs 20 per equity share to mobilize Rs 14.10 crore. On the performance front, the total revenue from operations for the FY 2020-21 was Rs 1,034.90 lakh as compared to Rs 1,281.37 lakh during the FY 2019-20 showing a decrease of 19.23%.Profit after Tax (PAT) increased from Rs 21.17 lakh in the FY 2019-20 to Rs 72.68 lakh in FY 2020-21 showing increase of 243.26%. Being in the IT and ITES industry, the company can encounter a wide variety of risks and challenges in its endeavour to create and maintain a seamless, successful, sustainable and scalable business. It is necessary to accept challenges as people cannot be visible in a society or famous in an industry circle without conquering challenges and transforming challenges into opportunities. The company is determined to acquire greater efficiencies and economies of scale its single focus is on Information Technology Infrastructure. The company consolidate the purchasing power and have access to deep and broad knowledge bases across various services. Therefore, it intends to make efforts toward delivering better, faster and cheaper technology solutions and services.