Raghunandana Tangirala is the Promoter, Chairman of the Board and Managing Director on the Board of the Company. He is one of the founding directors of the Company and has been on the board since the incorporation of the Company. In the Company, he focuses primarily on corporate governance, organizational development, capital allocation and strategic growth of the Company. He holds a bachelor’s degree in commerce from Faculty of Commerce, University of Madras. He has approximately 30 years of experience in the service sector as an entrepreneur. Amitabh Jaipuria is a Non - Executive Director on the Board of the Company. He holds a bachelor’s degree in science from University of Bombay and a post-graduate diploma in management from XLRI, Jamshedpur. He was previously associated with Ziqitza Healthcare Limited as the managing director & CEO, First Meridian Business Services Pvt. Ltd. as the president-general staffing/managed & allied services, Quess Corp Limited as president & chief executive officer – global services, Reliance Jio Infocomm Limited as the head – fixed business, AGS Transact Technologies Limited as the chief executive officer in the banking department, Monsanto India Limited as the managing director, PepsiCo India Holdings Pvt. Ltd. as the market unit general manager – west market unit, Reliance Infocomm, GE Lighting India (P) Ltd and Blow Past Limited. Pondicherry Chidambaram Balasubramanian is an Executive Director (Whole-Time Director) on the Board of the Company. He holds a bachelor’s degree in commerce from St. Joseph’s College, Bharathidasan University. He is a member of Institute of Chartered Accountants of India. In the Company, he focuses on group integration and growth initiatives. He is one of the founding directors and previously served as a managing director of Matrix Business Services India Private Limited and as a partner with Gopinath & Sharma, Chartered Accountants.

A. Balance Sheet

Particular (In Million)	Mar-21	Mar-22	Mar-23
Equity Share Capital	528	528	530
Reserves	2,324	2,876	3,279
Borrowings	116	587	1,765
Trade Payables	319	457	793
Other Liabilities	2,508	4,298	5,802
Total Liabilities	2,942	5,341	8,361
Net Block	135	332	608
Capital Work in Progress	3	41	0
Investments	0.1	0.1	0.1
Other Assets	1,741	3,320	4,544
Total NC Assets	1,879	3,693	5,152
Receivables	2,689	3,475	4,277
Inventory	50	63	70
Cash & Bank	638	710	1,651
Other Assets	538	804	1,019
Face value	10	10	10

B. Profit & Loss Statement

Particular (In Million)	Mar-21	Mar-22	Mar-23
Sales	12,100	14,836	20,989
Raw Material Cost	276	387	768
Purchases of Stock In Trade	25	20	24
Change in Inventory	16	-13	10
Other Mfr. Exp	94	1,228	3,117
Employee Cost	9,817	10,682	13,841
Other Expenses	1,213	1,751	2,303
Other Income	63	143	132
EBITDA	724	925	1,058
EBITDA Margin	5.98%	6.24%	5.04%
Depreciation	150	165	370
Interest	30	51	146
Profit before tax	544	709	542
Tax	69	136	196
Net profit	476	574	346
NPM (%)	3.91%	3.83%	1.64%

C. Cash Flow Statement

Particular (In Million)	Mar-21	Mar-22	Mar-23
Cash From Operating Activity
Profit From Operation	780	1,095	1,450
Receivable	741	-721	-674
Inventory	16	-13	-1.7
Payable	-39	127	213
Loans And Advances	-0.8	7	-0.8
Other WC Items	-87	30	365
Working Capital Changes	630	-570	-98
Direct Taxes	-125	-214	-204
Net Cash Inflow from Operating Activity	1285	311	1148
Cash from Investing Activity
Fixed assets purchased	-43	-135	-516
Fixed assets sold	7	0	9
Investments purchased	-25	0	-38
Investment sold	0	40	0
Investment in subsidiaries	0	-495	-762
Other investing items	-104	118	-224
Net cash inflow from investing activities	-165	-472	-1,530
Cash from Financing Activity
Proceeds from borrowings	195	8,790	10,798
Repayment of borrowings	-978	-8,361	-9,618
Intrest paid fin	-25	-45	-125
Dividends paid	0	0	-10
Other financing items	-38	-95	-90
Net Cash Flow	273	127	574

 

Name of the Company	Revenue (In Crore)	PAT (In Crore)	EPS ( in Rs)	P/E	CMP	Mcap (In Crore)
Updater Services Limited	2,099	35	5.1.8	57.8	300	2,001
Quess Corp Limited	17,158	223	15.14	38.7	423	6,268
SIS Limited	11,346	346	23.77	17.5	424	6,183
Team Lease Services Limited	7,870	112	65.12	38.2	2,510	4,292

* All the data is as per FY23.

Review and Recommendation of Updater Services IPO by IZ team is 3/10

A) Integrated Facilities Management (IFM) Sector: Overview and Uses

Integrated Facilities Management (IFM) is a sector that focuses on the management and maintenance of various facility services within an organization. These services can range from real estate management, infrastructure, soft services like cleaning and catering, to hard services like HVAC maintenance, electrical works, and plumbing.

B) Uses of IFM Sector:

1. Operational Efficiency: IFM enables organizations to focus on their core business by outsourcing non-core activities. 2. Cost Savings: Through the consolidation of services under a single provider, organizations can achieve economies of scale. 3. Quality Control: IFM providers often bring expertise and standardization, ensuring high-quality services across the board. 4. Compliance: IFM firms stay updated on regulations and ensure that an organization's facilities are compliant with laws and guidelines. 5. Scalability: As organizations grow, IFM services can be easily scaled to meet new requirements.

C) Problems in the IFM Sector:

1. Fragmented Market: The sector is often fragmented, with many players offering specialized services, making integration challenging. 2. Cost Pressure: In a bid to offer competitive prices, IFM companies might compromise on service quality. 3. Regulatory Challenges: Frequent changes in compliance and regulatory norms can create operational hiccups. 4. Dependency: Heavy reliance on subcontractors can sometimes affect service quality and reliability. 5. Talent Gap: Specialized services require skilled labor, which is often in short supply.

D) Analysis of Updater Services Limited

1. Market Position: Being the second-largest player in the IFM market in India is a competitive advantage. 2. Diverse Service Offerings:  Updater Services Limited's Business Support Services (BSS) division offers a multifaceted range of services, operating through several specialized subsidiaries to serve various market needs. Firstly, Matrix, one of their subsidiaries, stands as a frontrunner in the Audit and Assurance sector in India, specializing in dealer, distributor, and retail audits. According to a recent F&S Report, Matrix has secured the leading position in India with a remarkable market share of 19.2% as of the fiscal year ending in March 2023. This achievement is largely attributed to its expansive branch and field associate network across the country. Secondly, Matrix also extends its expertise to employee background verification services. In this particular segment, the company holds a significant market share of 5.4%, making it the third largest player in India for the fiscal year that concluded in March 2023. Additionally, Updater Services Limited operates in the sales enablement sector through its subsidiaries Denave and Athena. As per the same F&S Report, Denave dominates this sector with a commanding market share of 20.1% in India for the fiscal year ending in March 2023. Lastly, the company also offers specialized mailroom management services through another subsidiary, Avon. Avon has emerged as the market leader in India in this niche, boasting an 11.1% market share in the mailroom management services market for the fiscal year ending in March 2023. These diversified service offerings not only make Updater Services Limited a versatile player in the BSS segment but also position it as a market leader in multiple domains. 3. Financial Performance: Sales have shown significant growth from March 2021 to March 2023, indicating strong market demand. 4. Management: Led by a seasoned entrepreneur with 30 years of experience, the management team brings robust sectorial expertise. 5. Acquisition and Integration: The company has a good track record of successfully acquiring and integrating high-margin business segments.

D) Weaknesses in the Company:

1. Net Profit Margins: There is a noticeable decrease in net profit margins from 3.91% in Mar-21 to 1.64% in Mar-23, which could be a concern. 2. Increasing Borrowings: Borrowings have gone up significantly, from 11 Cr in Mar-21 to 176 Cr in Mar-23, indicating a higher debt load. 3. Operational Costs: Employee costs and other manufacturing expenses have increased substantially, impacting profitability.

E) Comparisons:

Compared to peers like Quess Corp and SIS Limited, Updater Services has a higher P/E ratio, indicating stock might be overvalued. Moreover, the company has lower Revenue and PAT compared to its peers.

Updater Services Limited No. 2/302-A, UDS Salai, Off Old Mahabalipuram Road, Thoraipakkam, Chennai 600 097, Tamil Nadu, India Phone: +91 44 24963234 / 0333 Email: compliance.officer@uds.in Website: https://www.uds.in/