Integrated Personnel Services coming with an IPO to raise Rs 12.74 crore

29 Oct 2022 Evaluate

Integrated Personnel Services

  • Integrated Personnel Service is coming out with an initial public offering (IPO) of 21,60,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 59 per equity share.
  • The issue will open for subscription on October 31, 2022 and will close on November 2, 2022.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced 5.90 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Unistone Capital.
  • Compliance Officer for the issue is Kajal Jinam Shah.

Profile of the company

The company was incorporated in the year 2004 with an intent to deliver integrated Human Resource solutions under the three broad categories of Raising, Leasing and Management for various industries and diverse functional roles for both, Information Technology (IT) and non-IT companies. Under these broad categories, the company has bifurcated its services in such way so as to enable its clients to select services as per their requirements. The company’s employment services broadly include temporary staffing solutions (flexi- staffing), permanent recruitment (executive search) services, specialised staff recruitment, outsourced recruitment processes and payroll management.

The company started its operations in 2004 with its main focus in the hospitality as the prime sector, followed by the engineering and energy sector in the coming years. To expand its business ambit, the company through Vantage Tech HR Services in 2014 entered into the IT domain by setting up additional branches. From year 2015 onwards, its marketing plan as well as consolidated business and growth strategy have enabled it to bring most of the operations and processes of IPS on one single digital platform. It aims at working on innovative technologies to facilitate its clients and to further expand its business operations.

Proceed is being used for:

  • Meeting working capital requirements.
  • General Corporate Purposes.
  • Meeting the issue expenses.

Industry overview

The staffing industry added 2.27 lakh contractual employees in 2021-22, driven by demand in industries like fast-moving consumer goods, e-commerce and manufacturing. In 2020-21, the contractual workforce or flexi staff demand grew at a modest 3.6 per cent. FMCG, e-commerce, manufacturing, healthcare, retail, logistics, banking and energy segments drove the demand for general flexi staffing or contractual workers.
Digital adoption across sectors drove the demand for new employees. This indicates that in FY23, fintech, IT- Infra, IT/ITeS are promising impact sectors that are expected to continue with the staffing demand.

Women’s participation in the flexi workforce continued at 27% in FY22, the same as in the previous financial year. The majority of job opportunities for flexi staff moved from outdoor sales to essential delivery services. Most of the flexi workers were in the 25-30 years age-bracket, comprising 40 per cent of the workforce. There is a growth in the participation of the 31-45 years age bracket in the flexi working population, which saw over 10 per cent growth compared with other formats of employment. Flexi Staffing is growing trend in an Indian job economy. Around 72% of Flexi workers want to keep working as same, and 85% of Flexi workers are happy with their current situation.

Healthcare, IT & ITeS, Pharma, EdTech, and Ecommerce are the top five sectors predicted to continue to boost temp job demand in H2 2021, with employment growth exceeding 35%. The majority of growth is projected in the IT & ITeS industry, owing to first the extensive digital connectivity and, second Tech firm’s investment in hastened automation procedures. These IT organizations are placing a large stake on entry-level talent, particularly in temp roles, which is allowing more newbies to join this work structure. The organized staffing market in India is growing beyond traditional skills, positions, industries, and is now taking centre stage in a variety of sector. IT staffing, ecommerce, logistics, and manufacturing all saw increase in a pandemic year with only 3.6% growth. While Covid 2.0 may represent a shift in growth in Q1FY22 compared to Q4FY21, it appears that the staffing industry's trend is positive and here to stay.

Pros and strengths

Diversified client base: The company provides HR consultancy solutions to Indian companies and MNCs through a team of well competent and practiced professionals. It always endeavour to employ best professionals who create businesses for its clients. It provides integrated solutions for temporary staffing/ contract/ staff outsourcing for various industry segments and corporate. It delivers its staffing services across various industries.

Scalable business model with Pan-India presence: The company conducts its operations from ten branches including co-working space excluding its Registered Office, to maintain its Pan-India presence and provide services to its clients across the country. It is present through its branch offices across major cities in India, including Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Noida, Bhopal and Pune among others.

Quality assurance and customer satisfaction: The company has implemented processes and systems that have resulted in it achieving operational excellence, particularly in its ability to identify the right human resources to suit the customer requirements and to provide its clients consistently high levels of quality and reliability. It has also standardized processes for client, by choosing broad templates that can be applied uniformly to all its clients.

Risks and concerns

Maximum revenue comes from top two sectors: The company’s top two sectors, Engineering and Information Technology, contribute 36.76% & 21.24%, 32.69% & 25.20%, 39.51% & 27.35% and 28.64% & 27.87% of its revenue for the period as at June 30, 2022, and for the financial year ended March 31, 2022, March 31, 2021 and March 31, 2020, respectively. Any decline in its quality standards, growing competition and any change in the demand for its services in these sectors may adversely affect its ability to retain clients from these sectors. It cannot assure that it shall generate the same quantum of business, or any business at all, from these sectors, and loss of business from any one or both sectors may adversely affect its revenues and profitability. However, the composition and revenue generated from these sectors might change as it continues to add new clients in normal course of business. It intends to retain its customers by offering solutions to address specific needs in a proactive, cost effective and time efficient manner. This helps the company in providing better value to each customer thereby increasing its engagement with its new and existing customer base that presents a substantial opportunity for growth.

Businesses are subject to various operational risks: As a provider of temporary and permanent staffing solutions and other manpower outsourcing services, its reputation is dependent upon the performance of its Associates it places with its clients and the services rendered by such Associates. If its clients become dissatisfied with the performance of its Associates or recruitment personnel, or if any such Associates do not perform in accordance with the instructions or standards established by the clients or agreed by it, the company’s reputation and ability to maintain or expand its client base may be adversely affected.

Highly competitive industry: The company operates in an industry which is highly competitive and fragmented and it competes with a range of organized and unorganized players, both on the national and regional level. Further, while it has an expanding portfolio of services requiring it to allocate resources across these verticals, its competitors may have the advantage of focusing on concentrated product verticals. Further, it competes against established players also, which may have greater access to financial, technical and marketing resources and expertise available to them than it in the products and services that compete against them.

Outlook

Integrated Personnel Services is an end to end human resource management company providing customized solutions to various corporates in India. IPS Group has over 11 branch offices for sourcing and recruitment in 128 cities with more than 6,000 Associates deployed on March 31, 2022. The company's branch offices are across major cities in India, including Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Noida, Bhopal and Pune among others. On the concern side, the company’s top two sectors contribute significantly to its revenue. Any loss of business from any one or both sectors may adversely affect its revenues and profitability. Moreover, the company operates in a highly competitive and fragmented industry with low barriers to entry and may be unable to compete successfully against existing or new competitors, particularly in the unorganized segment.

The company is coming out with an IPO of 21,60,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 59 per equity share to mobilize Rs 12.74 crore. On performance front, the company’s revenue from operations decreased from Rs 16,902.68 lakh in year ended March 31, 2020 to Rs 13,839.16 lakh in year ended March 31, 2021 with a resultant decrease of 18.12% in year ended March 31, 2021 due to decrease in revenue from contract staff by 2,900.40 lakh or by 17.54 & decrease in revenue from contract staff through SEZ unit by 148.61 lakhs or by 52.46%. Moreover, net Profit after tax decreased from Rs 311.08 lakh in year ended March 31, 2020 to Rs 190.7 lakh in year ended March 31, 2021 with a resultant decrease of 38.70% in year ended March 31, 2021. Going forward, the company’s track record and deep experience in providing staffing solutions across industry sectors has given it deep and substantive knowledge of the staffing needs of a diverse range of clients in different industries. This enables the company to provide a bundled solution of services to each client that is tailored to its specific needs and to attract sales professionals with industry expertise.

Peers
Company Name CMP
SIS 324.00
TeamLease Services 1956.85
RattanIndia Ent 45.33
Updater Services 313.45
Mach Confer. & Event 198.00
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