Identixweb BSE SME IPO review (May apply)

•    The company is engaged in providing SaaS based digital product solutions for E-commerce store development.
•    It is providing its product and services worldwide across a wide range of sectors.
•    The company posted marginal growth in its top line, but its bottom line jumped over 100% between FY23 and FY24.
•    Based on recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for long term.

ABOUT COMPANY:
Identixweb Ltd. (IWL) as an IT firm, it is involved in providing Software as a service (SAAS) - based digital product solutions. The Company offers E-Commerce Store Development, Web App Development, UI/UX Design, Website development, Customize Software Development, support and maintenance with a primary focus on Shopify application development. The primary goal of the company is to deliver applications online, eliminating the need for installation and maintenance. This approach simplifies software management. Its products include more than 10 Shopify applications that are conversion-optimized and tailored made to meet customer needs. 

It provides products and services worldwide across a wide range of sectors. The company specializes in Shopify application development, which focuses on creating applications that enhance the functionality and performance of Shopify stores. These applications can range from tools that improve store management and customer engagement to features that optimize sales and streamline operations. Shopify is a leading e-commerce platform that powers over a million businesses worldwide. Its flexibility and scalability make it an ideal choice for businesses of all sizes. However, to truly maximize the potential of a Shopify store, merchants often need custom applications that cater to their specific needs. IWL’s extensive experience and deep understanding of the Shopify platform enable it to deliver top-tier Shopify solutions. The company is committed to ensure that all services are executed with the highest level of precision and customer satisfaction. Its dedication to excellence has earned a reputation for delivering innovative, reliable, and efficient Shopify solutions that help merchants achieve their business goals.

The Company has 2 subsidiaries named Munim ERP Private Limited and Identixweb LLC*. Munim ERP Private Limited, Subsidiary of Identixweb Limited, located in Surat, India, is a company specializing in accounting and GST compliance software, particularly focused on ERP (Enterprise Resource Planning) solutions for various industries. Established to transform business management through technology. As of February 28, 2025, it had 64 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 3080000 equity shares to mobilize Rs. 16.63 cr. at the upper cap. The company has announced a price band of Rs. 51 – Rs. 54 per share of Rs. 10 each. The issue opens for subscription on March 26, 2025, and will close on March 28, 2025. The minimum number of shares to be applied is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 29.50% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 2.50 cr. for marketing to support organisation growth, Rs. 4.20 cr. for investment in market research and product development working capital, Rs. 4.16 cr. for investment in subsidiary for product development through talent hiring, and the rest for general corporate purposes. 

The IPO is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and Skyline Financial Services Pvt. Ltd., is the registrar to the issue. Beeline group’s Spread X securities Pvt.  Ltd., is the Market Maker for the company. Spread X Securities Pvt. Ltd. is also a syndicate member.

Having issued initial equity shares at par value, the company issued further equity shares in the price range of Rs. 138– Rs. 4742 per share between April 2022, and September 2023. It has also issued bonus shares in the ratio of 94 for 1 October 2023. The average cost of acquisition of shares by the promoters is Rs. 1.25, and Rs. 49.92 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 7.36 cr. will stand enhanced to Rs. 10.44 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 56.38 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 6.27 cr. / Rs. 1.38 cr. (FY23), Rs. 6.66 cr. / Rs. 2.70 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 1.96 cr. on a total income of Rs. 4.79 cr. 

For the last three fiscals, the company has reported an average EPS of Rs. 4.66 (simple average) and an average RoNW of 38.26%. The issue is priced at a P/BV of 3.22 based on its NAV of Rs. 16.77 as of September 30, 2024, but, post-IPO NAV data is missing from offer documents.

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 14.40. Based on FY24 earnings, the P/E stands at 20.93. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 12.55% (FY22), 22.13% (FY23), 44.86%, (FY24), 47.19% (H1-FY25), and RoCE margins of 87.68%, 62.56%, 57.25%, 31.09% for the referred periods, respectively. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Kody Technolab, as its listed peer. It is trading at a P/E of 80.9 (as of March 21, 2025). However, they are not truly comparable on an apple-to-apple basis. Peers compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 59th mandate from Beeline Capital in the last three fiscals.  From the last 11 listings so far, all opened at a premium ranging from 0.06% to 146.91% on the listing date.