Optivalue Tek NSE SME IPO review

•    The company is engaged in providing services and solutions for Telecom OSS and BSS systems.
•    While its top line marked inconsistency, its bottom line posted growth.
•    The company is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears aggressively priced.
•    There is no harm in skipping this “High Risk/Low Return” pricey bet.

ABOUT COMPANY:
Optivalue Tek Consulting Ltd. (OTCL) aims to work with efficiency, quality, and top-tier tech solutions. The company started the operations more than a decade back by providing Managed Services to leading Telecom companies. It is one of the implementers of Telecom OSS (Operational Support System)/BSS (Business Support System) Applications. Application & Process Integration for the Various Clients. 

It further developed core strength which includes: 1. Enterprise Application Integration (EAI): It is the process of connecting different software systems within a company so they can share data and work together seamlessly; 2.  API Management: Ensuring smooth communication between different software systems; 3.  Core Banking Applications: Developing systems that help banks manage accounts and transactions; 4. Cloud Solutions: Providing internet-based storage and computing services; 5.  DevOps/ Site Reliability Engineering (SRE):: Improving the development and operation of software to ensure it runs smoothly; and 6. Data Engineering & Data Science: Helping businesses handle and analyse data to make better decisions.

It is focusing new areas to help clients move from traditional on-site systems to the cloud. This includes helping them modernize their data, implement Artificial Intelligence (AI) solutions, and use data analytics more effectively.

The company is developing frameworks and reusable tools to help businesses easily move their old, complex on-site systems to a cloud-based system that’s more flexible and efficient. With the growing demand for IoT (Internet of Things), smart systems, embedded software, and AI solutions, it is focusing a lot of efforts in these areas to stay ahead of the curve. As of March 31, 2025, it had 70 employees on its payroll and additional 82 contract workers.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book-building route IPO of 6169600 equity shares of Rs. 10 each to mobilize Rs. 51.82 cr. at the upper cap. It has announced the price band of Rs. 80 – Rs. 84 per share. IPO opens for subscription on September 02, 2025, and will close on September 04, 2025. The minimum application to be made is for 3200 shares and in multiple of 1600 shares thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.35% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 14.48 cr. for capex on new products development and setting up of a branch office at Bangalore, Rs. 17.52 cr. for working capital, and the rest for general corporate purposes.

The IPO is solely lead managed by Share India Capital Services Pvt. Ltd., while Cameo Corporate Services Ltd. is the registrar to the issue. Choice Equity Broking Pvt. Ltd. is the market maker. The issue is underwritten to the tune of 15.04% by Share India Capital, and 84.96% by Choice Capital Advisors Pvt. Ltd. 

The company has issued/converted initial equity shares at par, and issued further equity shares at a fixed price of Rs. 40 per share in December 2024. It has also issued bonus shares in the ratio of 1499 for 1 in August 2024. The average cost of acquisition of shares by the promoters is Rs. 0.007, per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 17.24 cr. will stand enhanced to Rs. 23.41 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 196.66 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 39.27 cr. / Rs. 2.77 cr. (FY23), Rs. 36.73 cr. / Rs. 5.49 cr. (FY24), and Rs. 56.47 cr. / Rs. 12.19 cr. (FY25). Boosted profits for FY24 raise eyebrows and concern over its sustainability. The net profit figure differed on page no. 54 (Rs. 1213.90 lakh) and on page no. 103 and 104, its (Rs. 1218.60). Clarification is needed from the concerned parties.

For the last three fiscals, the company has reported an average EPS of Rs. 5.24, and an average RoNW of 33.21%. The issue is priced at a P/BV of 10.46 based on its NAV of Rs. 8.03 as of March 31, 2025, but its post-IPO NAV data info is missing from offer documents. 

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 16.19, and based on its FY24 earnings, the P/E stands at 35.75. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has posted PAT margins of 7% (FY23), 15% (FY24), 22% (FY25), and RoCE Margins of 21.59%, 40.28%, 50.26%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for any financial year. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown Dev Info, Euphoria Infotech, as their listed peers. They are currently trading at a P/E of 18.4, and 9.62 (as of August 29. 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORDS:
This is the 19th mandate from Share India Capital in the last three fiscals (including the ongoing one). Out of the last 17 listings, 2 opened at discount, 4 at par, and the rest with premium ranging from 5.33% to 120% on the date of listing.