Synoptics Technologies Limited IPO

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i. Synoptics Technologies is  an IT Services company offering solutions in the areas of IT Infrastructure like connectivity to the Branches, Supply, implementation and support of the network equipment’s needed to run the IT setup like routers, switches etc. They design the solution for customers who need to put their applications on Cloud. They help for the application migration and manage the setup in the cloud. IT Security solution like firewall installation and management. Data Centre design and solution with newer technology to optimize the investment and use less space and power and with clearly defined outcomes. Synoptics helps enterprise, small businesses and Government in their Digital journey with various use cases of specific industry verticals with our technology led and innovation driven approach.

ii. They are currently operating across India and with a team of 584 employees. They have the ability to provide our B2B (Business to Business) customers with a blend of optimal functionality, value for money, commitment and flexibility (coupled with on-site support across India).

iii. The Company aims to reduce Total Cost of Ownership (TCO) and increase Return on Investment (RoI) for their customers to adopt any kind of Digital Transformation use case with our technology led and innovation driven approach

iv. Their B2B customers include government entities, public sector undertakings (“PSUs”), private enterprises. Some of the esteemed customers include TATA Communications Limited, BOB Financial Services, Blue Dart Express Limited, Lifestlye International Private Limited, Shoppers Stop Limited, Hennes & Mauritz Retail Private Limited (H&M), Fedbank Financial Services Limited, GIC Housing Finance Ltd, Motilal Oswal Financial Services Limited, Government of Gujarat etc.

v. The company has recently signed an agreement with BSNL to become their authorized Private LTE / Private 5G service partner nationwide this would establish ourselves into upcoming private LTE / Private 5G opportunities.

Synoptics’s Portfolio of Solutions & Services

i. Managed IT Services and solutions
ii. IT Networking Solution
iii. LAN (Local Area Network) and WAN (Wide Area Network) Solution
iv. Software based networking
v. Data Centre Solution
vi. IT Security
vii. Data Backup and Recovery
viii. Cloud architecture – Combination of on premise and cloud

Competitive Strength

Ability to provide customized and integrated IT solutions
Experienced and Result Oriented Team
Demonstrated track record of strong financial performance

Objects of the Synoptics Technologies Limited IPO:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects: A. Fresh Issue of up to 14,80,000 equity shares (₹ 35.08 Crore) i. Repayment of certain Borrowings, ii. Funding additional Working capital requirements, iii. Investment in Strategic Acquisition / Joint Venture, and iv. General Corporate Purposes. B. Offer for Sale of up to 8,00,000 equity shares (₹ 18.96 Crore)
DRHP of Synoptics Technologies Limited IPO
RHP of Synoptics Technologies Limited IPO

Synoptics Technologies Limited IPO Details:

Open Date: Jun 30 2023
Close Date: Jul 05 2023
Total Shares: 2,280,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 54.03 Cr.
Lot Size: 600 Shares
Issue Price: ₹ 237 Per Equity Share
Listing At: NSE Emerge
Listing Date: Jul 13 2023

Promoters And Management:

i. Mr. Jatin Jagmohan Shah, aged 46 years, is the Promoter and Managing Director of the Company. He has done his Diploma in Industrial Engineering, Marketing Management from NMIMS and has obtained Post Graduate Diploma in Business Management Symbiosis International University. He has 27 years of rich experience in Telecom and communication Sector with companies like Tulip IT services & Bharti Airtel and was responsible for managing the sales team across the region & ensure deeper market penetration of bouquet of telecom services. ii. Mr. Jagmohan Manilal Shah, aged 76 years, is the Promoter and Executive Director of the Company. He holds a Bachelor’s Degree in Business Commerce. Sincehis appointment, he has been actively involved in the Company’s operations. His dedication and firm level of commitment towards the overall success of the Company is appreciable and noticeable. He has been proved to be an asset for the Company as he has successfully utilized his experience and expertise in the areas of management & administration, procurement, business promotion and other key areas of operations of the Company iii. Mr. Amitabh Kanhaiyalal Kundan, aged 49 years, is the Independent Non-Executive Director of the Company. He is a Post Graduate with MBA (Marketing) from University of Pune with rich training experience from ISB, Hyderabad, IIM -Ahmedabad and Centre for Creative Leadership. A highly accomplished Senior Business leader with 20 years of extensive experience in managing Profit Centre Operations, Business Development and Sales in diverse domestic markets, with an overall business perspective. He has rich experience in Telecom sector with companies like ACCEL ICIM Systems and Services Ltd, Tulip IT Services Ltd, Entreprises and Network Solutions and Bharti Airtel Ltd.

Financials of Synoptics Technologies Limited IPO:

A. Balance Sheet
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 9MFY23
Equity Share Capital 700.00 700.00 700.00 700.00
Reserves 508 744 1,177 1,702
Borrowings 1,290 1,195 1,410 1,959
Trade Payables 408 420 415 399
Other Liabilities 419 701 578 620
Total Liabilities 2,118 2,315 2,403 2,978
Net Block 1,187 1,101 1,215 899
Capital Work in Progress 33 45 0 116
Other Assets 43 93 221 370
Total NC Assets 1,263 1,239 1,437 1,385
Receivables 1,346 967 1,081 1,553
Inventory 151 209 584 574
Cash & Bank 289 78 166 309
Other Assets 277 1,266 1,013 1,559
Face value 10 10 10 10
B. Profit & Loss Statement
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Sales 2,208 3,476 5,092 4,621
Purchases of Stock In Trade 823 1,831 2,622 946
Change in Inventory -40 -58 -375 13
Employee Cost 592 671 1,258 1,608
Other Expenses 219 253 488 533
Other Income 4 4 5 2
EBITDA 617 783 1,105 1,523
EBITDA Margin 27.96% 22.53% 21.69% 49.12%
Depreciation 232 306 388 452
Interest 165 154 131 209
Profit before tax 220 323 586 861
Tax 38 87 154 161
Net profit 182 236 432 700
NPM (%) 8.23% 6.78% 8.48% 15.15%
C. Cash Flow Statement
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 9MFY23
Cash From Operating Activity
Profit From Operation 585 764 1093 1126
Receivable -224 379 -113 -472
Inventory -40 -58 -375 10
Payable -164 12 -5 -16
Loans And Advances 46 -6 -54 -98
Other WC Items -39 -706 445 -307
Working Capital Changes -421 -380 -102 -883
Direct Taxes 42 110 167 156
Net Cash Inflow from Operating Activity 122 274 824 86
Cash from Investing Activity
Fixed assets purchased -206 -209 -428 -116
Other investing items 2 -72 -119 -35
Net cash inflow from investing activities -204 -281 -547 -151
Cash from Financing Activity
Proceeds from borrowings 356 0 0 350
Repayment of borrowings 0 -66 -66 0
Intrest paid fin -136 -139 -124 -142
Net Cash Flow 138 -211 87 144
 

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Synoptics Technologies Limited 46.2 7 8.26 28.69 237 201
Allied Digital Services Limited 660 7 1.26 10.3 101 554
* All the Data is as per FY23.

Recommendation on Synoptics Technologies Limited IPO:

Reveiw and Recommendation of Synoptics Technologies by IZ team is 2/10 1. Synoptics Technologies specializes in IT infrastructure solutions, focusing on hardware provisioning and setup for businesses. They offer a wide range of hardware products from leading vendors such as Cisco, Cambium, HP, Ray, and Juniper. It is important to note that they do not provide IT software services. They sell IT Equipment’s such as switches, routers, wireless devices, wi-fi devices, security devices etc. 2. Synoptics Technologies is a trading company that specializes in procuring hardware from OEMs and providing setup services to customers. Their core business revolves around sourcing and configuring hardware solutions, ensuring seamless implementation for their clients. 3. It is a capital intensive business as they need to maintain lot of inventory, plus have to manage receivables and creditors. 4. That is why the business has low EBITDA margins. From Fy18 to Fy22, the average EBITDA margins were around 18%. However, in 9MFY23, i.e. just before the IPO, the EBITDA margins suddenly raised to 45%. 5. Upon careful examination of the annual Profit and Loss (P&L) statements, it becomes evident that an increase in sales directly corresponds to a rise in the purchase of stock in trade, as indicated by the management in the RHP (Red Herring Prospectus). According to their explanation, the elevated purchase of hardware reflects the increased sales volume. However, in the first nine months of FY23, there was a significant reduction in the percentage of stock in trade compared to average figures, dropping from 50% to 20%. This sudden change in the ratio may be attributed to the excellent EBITDA and profit margins observed during that period. 6. Company has ~18 Cr debt on books that looks high. 7. Out of 54 Crores to be raised from IPO, 19 Cr will go in the pocket of promoters. OFS in a small company is always a big red flag. 8. The revenue has grown from 22 Cr in Fy20 to 50 Cr in Fy22 and in the same period, the PAT has grown from 1.82 cr to 4.32 Crores. 9. The financials for the first nine months of FY23 seem potentially inflated as both EBITDA and PAT margins are significantly higher than what has been achieved in the past five years. The EPS based on FY22 figures is 5.14, and with a P/E ratio of 46x, the valuation seems excessively high, particularly for a hardware trading company with no unique competitive advantage in the business.

Lead Manager of Synoptics Technologies Limited IPO:

  1. First Overseas Capital Limited

Registrar of Synoptics Technologies Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Synoptics Technologies Limited 301, A-Wing, 3rd Floor, Interface 16, Mindspace, Malad (West), Mumbai - 400064 Phone: +91 22 4505 0000 Email: cs@synoptics.co.in Website: https://synoptics.co.in/

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