Protean eGov Technologies Limited IPO

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i. Protean eGov Technologies is one of the key IT-enabled solutions companies in India engaged in conceptualizing, developing and executing nationally critical and population scale greenfield technology solutions. They collaborate with the government and have extensive experience in creating digital public infrastructure and developing innovative citizen-centric e-governance solutions.

ii. Protean eGov was originally setup as a depository in 1995 and created a systemically important national infrastructure for capital market development in India. They have been the chief architect and implementer for some of the most critical and largescale technology infrastructure projects in India.

iii. They were among the leading Indian companies in the e-governance sector in terms of profitability, operating income, operating profit, and operating profit margin in Fiscal 2022.

iv. Protean have implemented and managed 19 projects spread across seven ministries and autonomous bodies ushering change in public delivery of services.

v. Their primary engagement has been with following ministries:

Some of company’s key interventions include:

i. Modernising the direct tax infrastructure in India through projects like Permanent Account Number (“PAN”) issuance, the Tax Information Network (“TIN”) including Online Tax Accounting Systems (“OLTAS”).

ii. Strengthening the old age security system in the country by building the core IT infrastructure as a Central Recordkeeping Agency (“CRA”) for the National Pension System (“NPS”).

iii. Enabling the universal social security system for all Indians, particularly the workers in the unorganized sector by creating technology infrastructure as a CRA for the Atal Pension Yojana (“APY”).

iv. Contributing to the India Stack, a set of application programming interface (“API”) that allows governments, businesses, startups and developers to utilise a unique digital infrastructure to prepare solutions that are presence-less, paperless and enable cashless service delivery.

v. Improving accessibility to education and skill financing through creation of efficient digital marketplaces enabling discovery of financial resources through platforms such as Vidya Lakshmi, and Vidyasaarathi.

vi. Contributing to and supporting open digital building blocks such as Open Network for Digital Commerce (“ONDC”) for use-cases across sectors like e-commerce, mobility, healthcare, agriculture and education.

Competitive Strengths

i. Pioneer and market leader in universal, citizen centric and population scale e-governance solution
ii. Secure, scalable and advanced technology infrastructure
iii. Large physical infrastructure with pan-India network and scale resulting in inclusion

Objects of the Protean eGov Technologies Limited IPO:

The company will not receive any proceeds from the Offer and all the Offer Proceeds will be received by the Selling Shareholders, in proportion to the Offered Shares sold by the respective Selling Shareholders as part of the Offer.

Protean eGov Technologies Limited IPO Details:

Open Date: Nov 06 2023
Close Date: Nov 08 2023
Total Shares: 6,191,000
Face Value: ₹ 10 Per Equity Share
Issue Size: 490.33 Cr.
Lot Size: 18 Shares
Issue Price: ₹ 752 to ₹792 Per Equity Share
Listing At: NSE,BSE
Listing Date: Nov 13 2023

Promoters And Management:

Suresh Kumar Sethi is the Managing Director and Chief Executive Officer of our Company. He holds a bachelor’s degree in engineering in electronics and electrical from Panjab University, Chandigarh. He holds a master’s degree in business administration from the University of Delhi. He has over three decades of experience in the financial services industry with financial services companies such as Citigroup, YES Bank and Vodafone M- Pesa across India, Kenya, UK, Argentina, and USA. Prior to this role, he was the managing director and chief executive officer of India Post Payments Bank. Jayesh Waman Sule is the Whole-time Director and Chief Operating Officer of our Company. He holds a bachelor’s degree in commerce from the University of Bombay. He is a member of the Institute of Chartered Accountants of India. He was previously associated with NSDL and has over two decades of experience in capital markets and IT-enabled services. Karan Omprakash Bhagat is a Non-Executive Director of our Company. He holds a bachelor’s degree in commerce from University of Calcutta and a post-graduate diploma in management from the Indian Institute of Management, Bangalore. Previously he was associated with Kotak Mahindra Bank Limited as a vice president. He is currently the managing director of 360 One WAM Limited.

Financials of Protean eGov Technologies Limited IPO:

A) Balance Sheet
Particular (In Cr) Mar-21 Mar-22 Mar-23
Equity Share Capital 40.10 40.30 40.40
Reserves 627 748 817
Borrowings 0 0 0
Trade Payables 99 96 132
Other Liabilities 96 104 115
Total Liabilities 862 988 1104
Net Block 51 52 55
Capital Work in Progress 1 1 0
Investment 285 364 528
Other Assets 54 29 113
Total NC Assets 391 446 696
Receivables 208 200 209
Inventory 0 0 0
Cash & Bank 115 233 137
Other Assets 137 52 56
Face value 10 10 10
B) P&L Statement
Particular (In Cr) Mar-21 Mar-22 Mar-23
Sales 603 691 742
Raw Material Cost 0 0 0
Change in Inventory 0 0 0
Employee Cost 75 79 123
Allowance for expected credit loss 29 30 17
Other Expenses 414 458 484
Other Income 49 79 42
Depreciation 17 17 18
EBITDA 85 124 118
EBITDA Margin 14.10% 17.95% 15.90%
Interest 0.9 0.5 0.9
Profit before tax 116 186 140
Tax 24 42 33
Net profit 92 144 107
NPM (%) 14.11% 18.70% 13.65%
C) Cash Flow Statement
Particular (In Cr) Mar-21 Mar-22 Mar-23
Cash From Operating Activity
Profit From Operation 116 186 140
Receivable -16 -33 -26
Inventory 0 0 0
Payable 10 -3 36
Other WC Items 8 10 26
Working Capital Changes 2 -26 36
Direct Taxes 32 48 42
Net Cash Inflow from Operating Activity 100 94 137
Cash from Investing Activity
Fixed assets purchased -8 -17 -12
Fixed assets sold 0 132 0
Investments purchased -40 -91 -221
Investment sold 165 11 55
Other investing items -1 38 -104
Net cash inflow from investing activities 116 73 -282
Cash from Financing Activity
Repayment of borrowings 0 0 0
Interest paid fin 0 0 0
Dividends paid -180 -36 -40
Other financing items -3 2 -40
Net Cash Flow 32 133 -189

Comparison With Peers:

There are no listed companies in India that engage in a business similar to that of Company.

Recommendation on Protean eGov Technologies Limited IPO:

Review and Recommendation of Protean e-Governance IPO by IZ team is 4/10 Protean e-Governance is a company that stands at the forefront of implementing e-governance projects for the Government of India. Since its inception in 1995, Protean has been instrumental in developing the infrastructure for the National Securities Depository Limited (NSDL), enabling the storage of shares in Demat form. This foundational work has established them as the infrastructure developer for NSDL. As of June 30, 2023, Protean has effectively implemented and managed 19 projects across seven ministries and autonomous bodies, driving significant improvements in the public delivery of services. Some notable examples of their impactful work include: 1. Developing the infrastructure for the issuance of PAN cards in India. 2. Establishing the core IT structure for the Central Recordkeeping Agency (CRA) for the National Pension System (NPS). 3. Creating technology infrastructure as a CRA for the Atal Pension Yojana, which supports the universal social security system for all Indians, particularly those working in the unorganized sector. 4. Contributing to and supporting open digital building blocks, such as the Open Network for Digital Commerce (ONDC), which facilitates diverse use-cases across sectors including e-commerce, mobility, healthcare, agriculture, and education. Protean has been a key and early contributor to the open source community and protocols that power ONDC. Protean is a professionally managed entity, led by a seasoned senior management team whose deep expertise and broad industry experience have been pivotal in expanding operations and bringing innovation to their services. The company's shareholders comprise esteemed financial institutions like NSE Investments Limited, 360 ONE Special Opportunities Fund (formerly known as IIFL Special Opportunities Fund), SUUTI, Citicorp Finance India Limited, and a cadre of public and private sector banks including the State Bank of India, Punjab National Bank, Union Bank of India, Bank of Baroda, Canara Bank, HDFC Bank Limited, Axis Bank Limited, Deutsche Bank A.G., The Hong Kong and Shanghai Banking Corporation Limited, and Standard Chartered Bank, among others. However, Protean faces inherent risks, primarily due to its substantial reliance on government-awarded projects. This reliance exposes the company to the vagaries of doing business with government entities, which could have adverse effects on its business, operational results, and financial condition. From a financial perspective, the company has not shown growth in the last four years; the revenue stood at INR 756 crores in FY19 and saw a slight decline to INR 742 crores in FY23. The Profit After Tax (PAT) also dropped from INR 124 crores in FY19 to INR 107 crores in FY23. Regarding the valuation, the company is presenting a pure Offer for Sale (OFS), meaning it will not retain any capital raised. With approximately 4 crore outstanding shares and a PAT of INR 107 crores, the Earnings Per Share (EPS) stands at 26. The IPO price is pegged at INR 792, which brings the Price to Earnings (P/E) ratio to 30x, while the Return on Equity (ROE) is a modest 12% as of FY23. In summary, Protean e-Governance is a company heavily dependent on government projects, which poses a certain degree of risk. The lack of growth in the past four years and the valuation that does not appear particularly reasonable are factors that investors must weigh carefully.

Registrar of Protean eGov Technologies Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Times Tower, 1st Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, Maharashtra;

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