HRH Next Services coming with IPO to raise Rs 9.57 crore

HRH Next Services

• HRH Next Services is coming out with an initial public offering (IPO) of 26,58,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 36 per equity share.
• The issue will open for subscription on December 27, 2023 and will close on December 29, 2023.
• The shares will be listed on NSE Emerge platform.
• The share is priced 3.60 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Finshore Management Services.
• Compliance Officer for the issue is Akash Tiwar. 

Profile of the company

The company is engaged in Business Process Outsourcing (BPO) offering a comprehensive suite of Call Centre Services, covering Inbound Services, Outbound Services, Backend Support, Chat Support, Email Support and more. Its specialty is in providing efficient end-to-end solutions to its clients. It customises its top-notch solutions to meet specific business needs, helping its clients achieve their objectives. The company is an ISO 9001:2015 certified company for Quality Management Services and ISO/IEC 27001:2022 certified company for Information Security Management System in the field of providing Business Process Outsourcing Services, Inbound/Outbound Services through Phone, E-mail, Chat, Social Media and Digital Channels, Business Support Service, Chatbot Support, Advisory and Related Consulting Services.

HRH Next has seen an exponential growth over the years. As a domestic contact centre services provider, it is always committed to fulfil the requirements of its clientele according to their needs. In order to meet these requirements, it have adapted to the best measures in the industry for customer support services. It transforms customer experiences by providing excellent services to companies of multiple sectors. Using the latest technology; an experienced & dynamic team; and simple yet effective language, it helps consumers understand, relate to, and have a positive experience with brands. HRH Next is proud to be an early adopter, whose vision is to change the customer experience landscape in India.

Proceed is being used for:

• Expansion of its services by launching 2 call centres.
• Capital expenditure towards purchase of computer systems.
• Meeting the working capital requirements.
• Meeting the issue expenses.
• General corporate purposes.

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. 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. The current emphasis is on the production of significant economic value and citizen empowerment, thanks to a solid foundation of digital infrastructure and enhanced digital access provided by the Digital India Programme. India is one of the countries with the quickest pace of digital adoption. This was accomplished through a mix of government action, commercial innovation and investment, and new digital applications that are already improving and permeating a variety of activities and different forms of work, thus having a positive impact on the daily lives of citizens.

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. Exports from the Indian IT industry stood at $149 billion in FY21. Export of IT services has been the major contributor, accounting for more than 51% of total IT export (including hardware). BPM and engineering and R&D (ER&D) and software products export accounted for 20.78% each to total IT exports during FY21. The ER&D market is expected to grow to $42 billion by 2022.

India is the topmost 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. IT spending in India is expected to increase to $110.3 billion in 2023 from an estimated $81.89 billion in 2021.

Pros and strengths

Excellent infrastructure and technology: The Company is committed to providing quality services to its clients. Accordingly, it has invested in hardware and software of the highest quality. Multiple redundancies are in place to ensure business continuity irrespective of power disruption or any other issue. The IT Team is trained and committed to quick diagnosis and trouble shooting. All in all, its clients get access to continuous Operations due to the excellent Infrastructure and Trained IT Team.

Superior process solutions: Apart from a superb managerial team, HRH Next builds and reviews processes. Listening to its Clients, their end Customers and its own Call Centre Executives/Associates gives it rich insights. These insights combined with rigorous data analysis provide it scope for innovation as well as continuous improvement in its processes.

Quality assurance and standards: The Company is an ISO 9001:2015 and ISO 27001:2013 certified company. It is committed to designing process based on customer insights, team wisdom and continuous improvement. Additionally, there is an audit process to check for adherence to process. Last but not the least, the results are monitored to ensure that ROI is achieved both for external and internal Clients.

Risks and concerns

Maximum revenue comes from few clients: Its top ten customers have contributed 97.45%, 95.16%, 98.60% and 99.90% of its revenues for six month period ended on September 30, 2023 and for the year ended March 31, 2023, March 31, 2022 and March 31, 2021 respectively based on Restated Financial Statements. However, its top customers may vary from period to period depending on the demand and thus the composition and revenue generated from these customers might change as it continues to add new customers in normal course of business. Since its business is concentrated among relatively few significant customers which are majorly from Foodtech and Autotech industries, it could experience a reduction in its results of operations, cash flows and liquidity if it loses one or more of these customers or the amount of business, it obtains from them is reduced for any reason, including but not limited on account of any dispute or disqualification.

Customers default in their repayment obligations: Its customers may default on their obligations to it due to a variety of factors, including as a result of their bankruptcy, lack of liquidity, government or other regulatory intervention, other reasons such as their inability to adapt to changes in the macro business environment or any other factors which impact their incomes. Additionally, some customers may intentionally default on their repayment obligations. Further if any such case arises in future, it will impact the financial condition of the company and it needs to involve in legal matters for realization of pending dues. Also such adverse impact may limit its ability to recover the dues from such customers and the predictability of its cash flows.

Dependent upon services such as outbound sales & services: Its core business is Business Process Outsourcing such as Outbound Sales & Services etc. Consequently, its income is significantly dependent on services that it provides and over the years, such services have emerged as the largest single contributor to its revenue and business. Its continued reliance on Services that it offers for a significant portion of its revenue exposes it to risks, including the potential reduction in the demand for such services in the future; increased competition; cost-effective technology; fluctuations in the price and availability of the man power; changes in regulations; and the cyclical nature of its customers’ businesses. One or more such reasons may affect its revenues and income from services rendered and thereby adversely affects its business, profitability, cash flows and results of operations. 

Outlook 

The company is engaged in Business Process Outsourcing (BPO) offering a comprehensive suite of Call Centre Services, covering Inbound Services, Outbound Services, Backend Support, Chat Support, Email Support and more. Its specialty is in providing efficient end-to-end solutions to its clients. On the concern side, its customers may default on their obligations to it due to a variety of factors, including as a result of their bankruptcy, lack of liquidity, government or other regulatory intervention, other reasons such as their inability to adapt to changes in the macro business environment or any other factors which impact their incomes. Further if any such case arises in future, it will impact the financial condition of the company and it needs to involve in legal matters for realization of pending dues

The company is coming out with an IPO of 26,58,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 36 per equity share to mobilize Rs 9.57 crore. On performance front, the total revenue for FY 2022-23 was increased to Rs 5124.96 lakh as against Rs 4428.42 lakh in the FY 2021-22 primarily due to increase in revenue from operations of the Company. The restated Profit after Tax for FY 2022-23 has been increased to Rs 347.79 lakh as against Rs 93.03 lakh in the FY 2021-22. Going forward, the company continues to focus on enhancing operational controls and cost efficiencies through optimal service quality & cost management. Its ability to provide timely Completion of Service and quality service is key to its reputation and further expansion of its business. It also continues to implement various measures aimed at incremental improvement in operational efficiencies, such as deploying more professional for providing services. It also continues to adopt industry best practices and training for its employees to provide best services to its customers.