Takyon Networks BSE SME IPO review (Apply)

•    The company is engaged in providing comprehensive networking and IT infrastructure solutions.
•    The company is operating in a highly competitive and fragmented segment.
•    It marked inconsistency in its top lines, but posted rising net earnings.
•    Based on its recent financial data, the issue appears reasonably priced.
•    Investors may park funds for medium to long term.

ABOUT COMPANY:
Takyon Networks Ltd. (TNL) is in the business of providing comprehensive networking and IT infrastructure solutions, serving a diverse range of clients, including government agencies and corporate enterprises. Its services include IT networking solutions, data center solutions, IT security and surveillance, cloud and managed services. The company also offers maintenance and support services to clients through formal contracts, providing expert technical support.

TNL’s range of customized offerings and ability to specifically tailor solutions to the specific needs of customers have enabled it to garner prominent customers across different industries. Its clients include major players in sectors like Telecom, IT & ITes, Energy, Public administration enterprise, Education, Railways, and Defense. The company undertakes various activities related to IT infrastructure including infrastructure design and consulting services, turnkey systems integration of large network and data center infrastructures including supply of associated equipment and software; on-site and remote facilities management of multi-location infrastructure of domestic clients. Its key differentiators include an end-to-end services and solutions driven model with a strong focus on quality in every aspect of service and product delivery.

The Company is authorized System/Network Integrator (SI) in National level – Category in UP Circle for establishment of customers Private Network Equipment on Turnkey basis and maintenance of customers and equipment, LAN/WAN etc. for DATA services for Internet Service Provider (ISP) i.e., Bharat Sanchar Nigam Limited. It is also empanelled with UPDESCO, UPELC, ITI, and UPRNN for providing IT solutions & services. TNL is authorized partner to multiple OEM’s including Ruckus (Ruckus Ready Partner Program), Juniper, Sophos, Hitachi, Nokia, HP and Dell Technologies. Its business operations are, currently, concentrated in India, and its revenues are predominately generated from India. Its infrastructure includes adequate office space, high grade desktops for development, support and testing, firewall, IPS and IDS Systems for safeguarding data and systems, redundant internet leased lines, uninterrupted power supply. Additionally, it also has a branch located in New Delhi. As of June 30, 2025, it had 533 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 3792000 equity shares to mobilize Rs. 20.48 cr. at the upper cap. It has announced a price band of Rs. 51 – Rs. 54 for share of Rs. 10 each. The IPO opens for subscription on July 30, 2025, and will close on August 01, 2025. The minimum application to be made is for 4000 shares and in multiple of 2000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.48% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 3.00 cr. for repayment/prepayment of certain borrowings, Rs. 10.00 cr. for working capital, and the rest for general corporate purposes.

The IPO is solely lead managed by Hem Securities Ltd., while Cameo Corporate Services Ltd. is the registrar to the issue. HEM group’s Hem Finlease Pvt. Ltd. is the market maker and a syndicate member.

After issuing initial equity shares at par, the company issued bonus shares in the ratio of 2 for 1 in May 2024. The average cost of acquisition of shares by the promoters is Rs. 3.33 per share.

Post-IPO, company’s current paid-up equity capital of Rs. 10.53 cr. will stand enhanced to Rs. 14.32 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 77.34 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 63.97 cr. / Rs. 2.81 cr. (FY23), Rs. 108.25 cr. / Rs. 5.22 cr. (FY24), Rs. 103.48 cr. / Rs. 6.96 cr. (FY25). Boosted profits from FY24 onwards raise eyebrows.

For the last three fiscals, the company has reported an average EPS of Rs. 5.40, and an average RoNW of 18.09%. The issue is priced at a P/BV of 1.61 based on its NAV of Rs. 33.45 as of March 31, 2025, but its post-IPO NAV data is missing from the 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 11.11, and based on its FY24 earnings, the P/E stands at 14.79. Thus, based on its recent financial data, the issue appears reasonably priced.

The company has reported PAT margins of 4.45% (FY23), 4.86% (FY24), 6.75% (FY25), and RoCE margins of 11.08%, 20.08%, 24.43%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. 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 Allied Digital, and Synoptics Techno., as their listed peer. They are trading at a P/E of around 30.2, and 21.8 (as of July 25, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORDS:
This is the 55th mandate from Hem Securities in the last three fiscals (including the ongoing one). From the last 11 listings, out of which 1 opened at par and the rest with premium ranging from 9.20% to 61.92% on the date of listing.