Pelatro coming with IPO to raise Rs 55.98 crore

Pelatro

• Pelatro is coming out with an initial public offering (IPO) of 27,99,000 equity shares in a price band Rs 190-200 per equity share.
• The issue will open on September 16, 2024 and will close on September 19, 2024.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 19.00 times of its face value on the lower side and 20.00 times on the higher side.
• Book running lead manager to the issue is Cumulative Capital.
• Compliance Officer for the issue is Khushboo Sharma.

Profile of the company

Pelatro is a global technology business and has developed a comprehensive Customer Engagement Platform, i.e., mViva that empowers customer-centric interactions between enterprises or brands and its end users. Its platform empowers enterprises to understand the behaviour and needs of their customers deeply with a view to enhance their engagement with end users. Its customer Engagement Platform mViva collects and processes large amounts of data for each enterprise on a daily basis across almost a billion consumers in 30 countries. Its mViva platform helps enterprises undertake marketing operations on their end users through behavioural analysis of their end users. The platform provides end-to-end capability and experience starting with collection of data, analysis, intelligence gathering, audience selection, configuration, execution and reporting. 

The entire approach of its Customer Engagement Platform is customer-centric in nature, offering distinctive features. In addition to that, mViva is a very user friendly platform that has been built for marketers who may not be tech savvy. It empowers the marketers to innovate and constantly push the envelope on customer engagement. mViva’s extensive capabilities enable marketers to orchestrate elaborate journeys over the entire life cycle of their end use consumers. The Customer Engagement Platform is capable of weaving micro journeys into long term journeys thereby leveraging the intelligence gleaned on specific consumer behaviour along the way.

Its customer engagement platform aims to enhance returns on marketing spend by delivering contextual campaigns, while proactively addressing consumer privacy expectations. While doing so, it also ensures privacy to its customers as the company does not download or save data pertaining to its customers on its data base. The products of the company are installed within the firewalls and the computer systems of the customers and therefore handle the data within the computer data base and environment of the customers. The company uses its own servers to only develop software and does not use it for data storage, therefore any service provided to the customers is done only on the servers of the customers. Further, the company does not use third party servers for any activity.

Proceed is being used for:

• Funding capital expenditure requirement of the company towards; Purchase & Installation of IT equipment, computer hardware, server and other ancillary equipment
• Investment in its subsidiary
• Funding working capital needs of the company
• General corporate purposes

Industry Overview

The telecommunications and BFSI (banking, financial services, and insurance) customer engagement market refers to the sector-specific strategies, technologies, and solutions employed by companies to interact with and serve their customers effectively. This market encompasses a wide range of initiatives aimed at enhancing customer experience, fostering loyalty, and driving business growth through personalized interactions and streamlined service delivery. In the telecommunications sector, customer engagement focuses on providing seamless communication services while ensuring optimal customer satisfaction. This includes leveraging technologies such as AI-powered chatbots, virtual assistants, and self-service portals to offer immediate support, resolve issues efficiently, and personalize customer interactions. Telecom companies also utilize data analytics to understand customer behavior, predict service demands, and tailor marketing campaigns to individual preferences. The goal is to improve customer retention rates, reduce churn, and increase lifetime customer value through enhanced service quality and personalized experiences across various communication channels.

In the BFSI sector, customer engagement strategies revolve around delivering secure, efficient, and personalized financial services. Banks, insurance companies, and financial institutions leverage digital platforms, mobile apps, and AI-driven analytics to provide seamless banking experiences, offer personalized financial advice, and detect fraudulent activities in real time. Customer engagement in BFSI also includes targeted marketing efforts based on customer data insights to promote relevant products and services. The objective is to build trust, strengthen customer relationships, and meet regulatory compliance requirements while driving operational efficiencies and business growth. For instance, in June 2024, More Telecom partnered with SourseAI, a specialist firm in Telco AI decision intelligence. The collaboration aims to introduce advanced marketing mix modelling techniques in the telecom sector, leveraging AI and machine learning to enhance marketing strategies and customer experiences.

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 IT spending in India is estimated to record a double-digit growth of 11.1% in 2024, totalling $138.6 billion up from $124.7 billion last year. India’s public cloud services market grew to $3.8 billion in 1H2023, expected to reach $17.8 billion by 2027. 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

In-house technology development and testing capabilities: Owing to the constant efforts of its technical teams, the company has developed mViva platform which enables brands to easily integrate its platform with both their in-house technical infrastructure and its expanding partner ecosystem of best-in-class technologies. Its in-house infrastructure consisting of its technical teams and computing environment, run continuous tests to analyse the application of the platform in diverse situations and sectors to test its ability to import data from other systems into any layer of its technology stack via application programming interfaces, or APIs.

Deep domain expertise: Developing a software solution which is focused on any specific industry calls for a deep understanding of that industry. The company has a large team of experienced professionals who have extensive knowledge about the sectors that it operates in, namely telecom and banking. Its specialised team has enabled it in attracting reputed clientele who rely on its team for both business consulting and business operations.

End to End Platform: The company has developed an extensive platform which is able to cater effectively to the multiple requirements of its customers. For example, in the telco sector, it covers pre-paid, post-paid; consumers, enterprises, retailers; mobile, home broadband, fixed line; scheduled campaigns, trigger campaigns, real time campaigns and various other permutations and combinations. Its platform further addresses customer engagement from multiple angles like campaigning, loyalty programs, lead management etc. The same is applicable to banking sector as well, however with its own sectoral variations. 

Risks and concerns 

Maximum revenue comes from limited customers: The company offers a comprehensive Customer Engagement Platform, i.e., mViva to its customers that empowers them to have customer-centric interactions with its end users. It is dependent upon limited customers, which include large conglomerates and entities forming part of their group. For the financial years ended March 31, 2024, financial years ended March 31, 2023 and March 31, 2022 its top ten customers accounted for around 48.70%, 82.09% and 100% of its total revenue from operations. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows.  

Geographical constrain: The company’s customers are mainly in Asia and Africa. Exposure to projects in new geographies may not be as profitable as its current geographies. The revenue from Asian region is 65.02%, 87.51% and 93.53% in FY24, FY23 and FY22 respectively. Moreover, the revenue from African region is 24.07%, 3.39% and 2.91% in FY24, FY23 and FY22 respectively. The company’s geographic concentration may have a have a material adverse effect on its business, results of operations and financial condition. Further, it derives a significant portion of its revenue from a limited number of customers. Its customers are large conglomerates, therefore a significant amount of revenue is earned from the holding and subsidiary companies of the same group, therefore a loss of any such customer could decrease its customer base to a large extent and significantly impact its business, results of operations and financial condition. 

Huge working capital requirement: The company’s business requires a significant amount of working capital. In the event, it is unable to source the required amount of working capital for addressing an increased demand of its services, it might not be able to efficiently satisfy the demand of its customers. Even if the company is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect the price of its services. Any delay in processing its payments by its customers may increase its working capital requirement. Further, if a customer defaults in making payments on subscriptions, on which it has devoted significant resources, it could affect its profitability and liquidity and decrease the capital reserves that are otherwise available for other uses. If the company decides to raise additional funds through the incurrence of debt, its interest and debt repayment obligations will increase, and could have a significant effect on its profitability and cash flows and it may be subject to additional covenants, which could limit its ability to access cash flows from operations.

Outlook

Pelatro offers a comprehensive customer engagement platform, mViva, which enables customer-centric interactions between companies or brands and their end users. The company helps businesses to accurately understand their customers' behavior and needs to improve interactions with end customers. The platform provides end-to-end capabilities and experiences, starting with data collection, analytics, intelligence gathering, audience selection, configuration, execution and reporting. The company's core product portfolio includes Campaign Management Solutions, Loyalty Management Solutions, Lead Management Solutions, and Data Monetization Solutions. On the concern side, the company depends on its long term customers for a significant portion of its revenue, and any decrease in revenues or sales from any one of such key customers may adversely affect its business and results of operations. Moreover, the company operates in limited geographies for a significant portion of its revenue and also depends on limited number of customers for its revenue from operations. Projects in new geographies may not be as profitable as in existing geographies.

The company is coming out with a maiden IPO of 27,99,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 190-200 per equity share. The aggregate size of the offer is around Rs 53.18 to Rs 55.98 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations for the FY 2024 was Rs 5,880.82 lakh. This represents a 20.06% increase compared to the previous financial year's revenue from operations of Rs 4,898.26 lakh. Moreover, PAT is Rs 541.46 lakh for the FY 2024 compared to Rs 463.89 lakh in FY 2023. The PAT was 9.15% of total revenue in FY 2024 compared to 9.46% of total revenue in FY 2023. The profit is increased on account of increase in revenue from operations with stable margins compared to FY 2023.

The company is a global technology business and has developed a comprehensive Customer Engagement Platform, i.e. mViva that empowers customer-centric interactions between enterprises or brands and its end users. Its platform empowers enterprises to understand the behaviour and needs of their customers deeply with a view to improve their engagement with the end user and to enhance their engagement with end users. Its Customer Engagement Platform mViva collects and processes large amount of data for each enterprise on a daily basis across almost a billion consumers in 30 countries. In order to encompass the increasing scale of operations of its business, it is planning to relocate to new office premise.