Wherrelz IT Solutions coming with an IPO to raise upto Rs 2.01 crore

Wherrelz IT Solutions

• Wherrelz IT Solutions is coming out with an initial public offering (IPO) of 117600 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 171 per equity share.
  
• The issue will open for subscription on December 16, 2021 and will close on December 21, 2021.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 17.10 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Fedex Securities.
  
• Compliance Officer for the issue is Aditi Bagul.
  

Profile of the company

The company including its subsidiary Company, Infinitybeam IOT Labs is engaged in the business of web-centric, multi-spectrum IT Product development and maintenance and provision of IT Consultancy. It provides a wide range of services such as Enterprise Risk Management (ERM), Enterprise Resource Planning (ERP), E-Commerce, Application programming interface (API), Cyber security, Internet of Things (IoT), cloud based tools, etc through standard software development model or through customized software development model depending upon the requirement of the clients which is backed by advanced technology and efficient team of software developers who tend to keep themselves abreast by undergoing continuous R&D activity. The company’s objective is to develop and maintain all in all software solutions to every enterprise in various sectors such as E-commerce, Education, Fintech, Healthcare, Social Networking, and other industries to enable ease of doing business customer-centric solutions.

Proceed is being used for:

• Funding working capital requirements.
  
• General corporate purposes.
  

Industry overview

The IT & BPM industry’s revenue is estimated at $194 billion in FY21, an increase of 2.3% YoY. The domestic revenue of the IT industry is estimated at $45 billion and export revenue is estimated at $150 billion in FY21. According to Gartner estimates, IT spending in India is estimated to reach $93 billion in 2021 (7.3% YoY growth) and further increase to $98.5 billion in 2022. Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing to invest internationally to expand global footprint and enhance their global delivery centres. The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55% market share of the $200-250 billion global services sourcing business in 2019-20. The IT industry accounted for 8% of India’s GDP in 2020. Exports from the Indian IT industry are expected to increase by 1.9% to reach $150 billion in FY21. In 2020, the IT industry recorded 138,000 new hires.

Indian IT's core competencies and strengths have attracted significant investment from major countries. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $62.47 billion between April 2000 and September 2020. The sector ranked 2nd in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT). Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra are diversifying their offerings and showcasing leading ideas in blockchain and artificial intelligence to clients using innovation hubs and research and development centres to create differentiated offerings. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $62.47 billion between April 2000 and September 2020. The sector ranked 2nd in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

Pros and strengths

Agile engineering and delivery: The company helps its customers deliver effective, quality software. With broad software engineering capabilities, it has the ability to choose the methods, technologies and tools which are best suited to customers’ business needs. Its engineers use a broad range of technologies including web technologies, cloud, data, mobile, testing, hardware & embedded, integration and APIs, IoT, AI, analytics and DevOps. Its tools provide it with a flexible approach for running large software projects and it constantly experiment with the latest tools and techniques, which allow it to select technologies with the right balance between innovation and predictability. The company utilizes common agile scaling frameworks, but enhances them by balancing the requirements of delivering both quality and speed-to-market.

Scalable business model: The company’s business model is technology driven and comprises of optimum utilization of its ability to put together a successful team for its creative software solutions, efficient working of its marketing team, management expertise in identifying upgraded technology, acquiring new customers, budgeting the production lifecycle and achieving consequent economies of scale. This business model has proved successful and scalable for it since its incorporation. It can scale upward as per the requirement generated by the Company. The business scale generation is basically due to the exponential online digital possibilities open to it.

Wide customer base across various industries: The company along with its subsidiary Company, Infinitybeam IOT Labs provides varied applications for its product portfolio which has helped it build a wide customer base across many sectors. It has leveraged existing clients to maintain long term business relations by maintaining agility in product iteration, maintenance and software development. Repetitive orders and faithful clients have led to the maintaining strong customer relationships. Its existing relationship with its clients represents a competitive advantage in gaining new clients and increasing its business in the global space.

Risks and concerns

Development of products is costly, complex and time-consuming process: The development of the company’s products is a costly, complex and time-consuming process, and the investment in their development often involves a long wait until a return is achieved on such an investment. It has made, and will continue to make, significant investments in product development and related product opportunities. Investments in new technology and processes are inherently speculative. Commercial success depends on many factors, including the degree of innovation of the software products and services developed and effective distribution and marketing. Such expenditure may adversely affect the company’s operating results if they are not offset by corresponding and timely revenue increases. It must continue to dedicate a significant number of resources to its research and development efforts in order to maintain its competitive position. However, significant revenues from new software product and service investments may not be achieved for a number of years, or at all.

Face competition: Growing competition may result in a decline in the company’s market share and may affect its margins which may adversely affect its business operations and its financial condition. It operates in an industry, which faces intense competition from established as well as unorganized players. Its competition depends on several factors, which include quality, price and its pace in keeping up with the changing trends. Competition emerges from both organized as well as unorganized sector. If the company is unable to effectively compete its revenues and reputation may be adversely affected and it not be able to achieve its long-term strategies.

Increases in wages for IT professionals could reduce cash flows and profit margins: Historically, wage costs in the Indian IT services industry have been significantly lower than wage costs in developed countries for comparable skilled technical personnel, which has been one of India’s competitive strengths. However, wage increases in India may prevent the company from sustaining this competitive advantage and may negatively affect its profit margins. In the long term, wage increases may make it less competitive unless it is able to continue increasing the efficiency and productivity of its professionals and the quality of its services and the prices it can charge for its products and services. Increases in wages, including an increase in the cash component of its compensation expenses, may reduce its cash flows and its profit margins and has a material adverse effect on its business, financial conditions and results of operations.

Outlook

Wherrelz IT solutions and its subsidiary Infinitybeam IOT Labs is engaged in the business of web-centric, multi-spectrum IT Product development and maintenance and provision of IT Consultancy. The company provides a wide range of services such as Enterprise Risk Management (ERM), Enterprise Resource Planning (ERP), E-Commerce, Application programming interface (API), Cyber Security, Internet of Things (IoT), cloud-based tools, etc through standard software development model or customized software development model depending upon the requirement of the clients. Since incorporation, the company has focused on developing expertise in each of these areas through continuous iteration, research and development and updating ourselves in the field of technology to meet the needs of the clients. On the concern side, the company requires working capital for its smooth day-to-day operations of business and any discontinuance or its inability to acquire adequate working capital timely and on favorable terms may have an adverse effect on its operations, profitability and growth prospects. It generally does not have any long-term contracts with its customers and it provides services on basis of regular work order with its customers which could adversely affect the business of the company.

The company is coming out with a maiden IPO of 117600 equity shares of Rs 10 each at a fixed price of Rs 171 per equity share to mobilize Rs 2.01 crore. On the performance front, the total income from operations for the FY 2021 was Rs 20.24 lakh and it was Rs 21.79 lakh during the FY 2020. There was a decrease in revenue in the year FY 2021 by 7.14%. The company’s Profit after Tax decreased by 54.53% from Rs 3.16 lakh in fiscal 2020 to Rs 1.44 lakh in fiscal 2021. The company intends to come up with innovative techniques that enable to create innovative trends to retain the client by providing services that are user friendly and develop systems according to the needs of the people in the changing world. It now intends to diversify the business activity by inclusion of new division of resale of electronic gadgets, applications, appliances and hardware. It also plans to continue enhancing its expertise in different verticals by recruiting IT professionals with industry expertise.