Yudiz Solutions coming with an IPO to raise up to Rs 44.84 crore

Yudiz Solutions 

• Yudiz Solutions is coming out with a 100% book building; initial public offering (IPO) of 2,717,600 shares of Rs 10 each in a price band Rs 162-165 per equity share.
• The issue will open for subscription on August 04, 2023 and will close on August 08, 2023.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 16.20 times of its face value on the lower side and 16.50 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Deepak Kantilal Jain.

Profile of the company

The company is engaged into the business of providing IT solutions and consultancy focused on providing scalable and secure solutions to shape a business idea by implementing the latest and cutting-edge technologies. It has been engaged in several projects and successfully completed them. It offers web, mobile, game and blockchain solutions for business. It is an IT development company and an ideal digital transformation and technology services company for customer’s needs. The company also has ISO 13485:2016 certificate in the area of Medical Care and Quality Management Systems (QMS) Development in the respective field. Right from ideation to execution, it has consistently delivered the competitive edge in the form of robust, fore-sighted and qualitative solutions. With its agile, collaborative approach, it has provided tailored domain specific IT solutions that have successfully resolved different business issues. Its deep expertise in mobile app development, Blockchain, Game development, AR/VR and web development has helped it retains numerous clients for years. 

Its range of solutions and services includes web development, wearable device / IoT development, game development and mobile application development. The technologies used by it includes blockchain technology, metaverse, AR (Augmented Reality) / VR (Virtual Reality) / MR (Mixed Realty) and AI (Artificial Intelligence) / ML (Machine Learning), IIoT (Industrial Internet of Things), 2D/3D animation, UI/UX design, SEO (Search Engine Optimization) to efficiently provide the abovementioned solutions and services. Its other services includes designing, digital marketing, quality assurance, hire on contract, whitelabel product development, consulting, Development & IT Operations (DevOps) and Support & Maintenance.

Proceed is being used for:

• Unidentified acquisition (in India & abroad) 
• Development of new product & technology 
• Networking & cabling 
• Branding & marketing expenses 
• Capital expenditure 
• Working capital requirement 
• General corporate purposes 
• Issue expenses

Industry overview

The IT & BPM sector has become one of the most significant growth catalysts for the Indian economy, contributing significantly to the country’s GDP and public welfare. The IT industry accounted for 7.4% of India’s GDP in FY22, and it is expected to contribute 10% to India’s GDP by 2025. As innovative digital applications permeate sector after sector, India is now prepared for the next phase of growth in its IT revolution. India is viewed by the rest of the world as having one of the largest Internet user bases and the cheapest Internet rates, with 76 crore citizens now having access to the internet. 

According to National Association of Software and Service Companies (Nasscom), the Indian IT industry’s revenue touched $227 billion in FY22, a 15.5% YoY growth. According to Gartner estimates, IT spending in India is expected to increase to $101.8 billion in 2022 from an estimated $81.89 billion in 2021. Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing on investing internationally to expand their global footprint and enhance their global delivery centres. The data annotation market in India stood at $250 million in FY20, of which the US market contributed 60% to the overall value. The market is expected to reach $7 billion by 2030 due to accelerated domestic demand for AI. 

India is the top most offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. The Indian IT & business services industry is expected to grow to $19.93 billion by 2025. Spending on information technology in India is expected to reach $144 billion in 2023. By 2026, widespread cloud utilisation can provide employment opportunities to 14 million people and add $380 billion to India's GDP. As per a survey by Amazon Web Services (2021), India is expected to have nine times more digitally skilled workers by 2025.

Pros and strengths

Seasoned management team with domain expertise supported by a professional workforce: It is ably led by its promoters Bharat Shamjibhai Patel, Chirag Rajendrakumar Leuva, and Pratik Bhaskarbhai Patel, who are first generation entrepreneurs and established its business in 2011 and have experience in IT solutions and services industry. Bharat Shamjibhai Patel, promoter and chairman of the company, is a qualified electronics and communications engineer and has more than 03 (three) decades of technical experience. He is a Fellow member of Computer Society of India, The Institution of Engineers (India) (IEI), The Institution of Electronics and Telecommunication Engineers (India) (IETE) and a registered chartered engineer. Chirag Rajendrakumar Leuva, promoter and chief executive officer of the company, has a master’s degree in computer applications (MCA) and has more than a decade of experience. Pratik Bhaskarbhai Patel, promoter and managing director of the company, has a master’s degree in computer applications (MCA) and has more than a decade of experience.

Integrated business model offering one-stop-shop solutions: It provides its products and services through an integrated business model, encompassing its four business segments (being web development, wearable device / IoT development, game development and mobile application development). At the core of its business strategy, its integrated business model includes creating solutions and products from scratch as per its client’s specific requirements and needs. It provides comprehensive services right from the generation of an idea with technology research to deployment of the product and solution and subsequently marketing of that product and solution. Each step includes agile methodologies that maintain a constant feedback mechanism between it and its clients. The implementation of these agile methodologies helps its clients to avoid the engagement of any third party solution provider inturn making it a company offering one-stop-shop solutions and services that are required. Most common benefits of this is it saves time and overall cost, provides efficiency and also decreases the downtime during the entire process. Some of its clients for whom it has provided one-stop-shop solutions are in the field of social media, fantasy sports and oil & gas.

Low attrition rate: One of its missions is to focus on providing scalable solutions that require research and learning about modern as well as innovative technologies. Its workplace comprises experienced leaders ready to share their valuable knowledge which makes it an admirable place to work resulting in a low attrition rate.

Risks and concerns

Dependent on few customers: It has established and will continue to focus on strengthening long-standing relationships with its customers across the end-use industries that it caters to. However, it depends on certain customers who have contributed a substantial portion of its total revenue from operations. There is no guarantee that it will retain the business of its existing key customers or maintain the current level of business with each of these customers. The loss of these customers or a loss of revenue from sales to these customers may materially affect its business, financial condition, results of operations and cash flow.

Highly competitive: The industry in which the company operates is highly competitive in nature, and it expects competition to increase in the future from established competitors as well as new market entrants. These companies may have significant recognition, substantial resources and existing infrastructures and powerful economies of scale and scope, which allow them to rapidly develop and deploy new solutions. Many of its existing competitors have, and some of its potential competitors could have, substantial competitive advantages such as greater recognition and brand awareness, longer operating histories, larger client bases, larger sales and marketing budgets and resources, broader distribution and established relationships with partners and clients, greater professional services and client support resources and more mature intellectual property portfolios, and substantially greater financial, technical and other resources.

Major revenue is sourced from web development: It is engaged in the business of the web development and developing gaming interfaces and related activities. Its revenue from operations is bifurcated into web development, Wearable/IoT Device, Game Development and mobile application interface. The majority of its revenue from operations is concentrated in web development segment. However, web development is a huge market segment which is taking pace and in coming years, its high dependence on this segment could be risky for its operations as it is a competitive market. its inability of failure to source clients and new agreements could adversely affect its business. 

Outlook

Incorporated in 2012, the company is engaged into the business of providing IT solutions and consultancy focused on providing scalable and secure solutions to shape a business idea by implementing the latest and cutting-edge technologies. It has been engaged in several projects and successfully completed them. On the concern side, the industry in which the company operates is highly competitive in nature, and it expects competition to increase in the future from established competitors as well as new market entrants. These companies may have significant recognition, substantial resources and existing infrastructures and powerful economies of scale and scope, which allow them to rapidly develop and deploy new solutions.

The company is coming out with an IPO of 2,717,600 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 162-165 per equity share. The aggregate size of the offer is around Rs 44.02 crore to Rs 44.84 crore based on lower and upper price band respectively. On performance front, the company’s net revenue from operations for the period ended March 31, 2023, stood at Rs 2,731.45 lakh whereas in Financial Year 2021-22 it stood at Rs 1875.98 lakh representing an increase of 45.60%. The restated profit after tax for the Period ended March 31, 2023, stood at Rs 275.17 lakh whereas in Financial Year 2021-22 it stood at Rs 74.07 lakh representing an increase of 271.51%. Going forward, the company intends to commercialize the white label products developed by it. Over the period, it has developed certain white label products in the areas of fantasy sport, sports tech, e-commerce, card game, board game, on demand service, HRMS, dating application, food delivery, taxi booking, over the top (OTT), blockchain based game and skill based game. It has so far already commercialized fantasy sports, OTT and e-commerce. However, it now intends to commercialize the balance white label products that it has developed.