TechD Cyber NSE SME IPO review

•    The company is a customer centric cybersecurity solutions provider.
•    It has global presence as a B2B segment player in the field of its operations.
•    The company marked growth in its top and bottom lines for the reported periods.
•    Quantum jump in its bottom lines from FY24 onwards is a bit surprising.
•    Based on its recent financial data, the IPO appears aggressively priced.
•    Well-informed/cash surplus/risk seekers may park moderate funds for long term.

ABOUT COMPANY:
TechD Cybersecurity Ltd. (TCL) is a customer-centric cybersecurity solutions provider delivering end-to-end services to enterprises to help businesses stay secure in the digital world. The company offers a comprehensive range of services, including Managed Security Services Provider (MSSP) solutions, Cyber Program Managed Services, Vulnerability Assessment and Penetration Testing (VAPT), Compliance Services, Specialised Services and Staff Augmentation Services tailored to meet diverse client needs.

Through its services, the company empowers organizations to protect their critical data, prevent cyber threats, and ensure smooth business operations. Its solutions are designed to eliminate data privacy risks, safeguarding businesses from unauthorized access and security breaches. The company is committed to providing reliable, customer-focused cybersecurity services to keep the business of clients safe. As a CERT-In empanelled organization, it upholds the highest cybersecurity standards, serving clients across BFSI, NBFCs, Manufacturing, Healthcare, Aviation, Government Institutions and many more. With a presence in both domestic and international markets, it caters to enterprises across industries, ensuring effective cybersecurity frameworks for businesses worldwide. 

Its clientele, including Adani Group, Zensar Technologies Limited, Astral Limited, Kedia Capital, 1 Cyber Valley, ETO GRUPPE Technologies GmbH, and IQM Corporation, benefits from its cutting-edge solutions that strengthen their cyber resilience. As an ISO 27001 certified and Cert-In empanelled organization, Company has a well-defined Cyber Risk Management process in place and maintain a regularly updated Risk Register to track, assess, and mitigate cybersecurity risks effectively. As of June 30, 2025, it had 147 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its book building route maiden IPO of 2020200 equity shares to mobilize Rs. 38.99 cr. (at the upper cap). The company has announced a price band of Rs. 183– Rs. 193 per share of Rs. 10 each. The IPO opens for subscription on September 15, 2025, and will close on September 17, 2025. The minimum application to be made is for 1200 shares and in multiple of 600 shares thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.01% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 26.09 cr. for investment in human resources, Rs. 5.89 cr. for capex on global security operation center at Ahmedabad, and the rest for general corporate purposes.

The IPO is solely lead managed by GYR Capital Advisors Pvt. Ltd., while Purva Sharegistry (India) Pvt. Ltd., is the registrar to the issue. Giriraj Stock Broking Pvt. Ltd., is the market maker. GYR Capital is a syndicate member and Intellect Stock Broking Ltd. is a sub-syndicate member.

The company has issued initial equity shares at par, and issued further equity shares at a fixed price of Rs. 126 in September 2024. It has also issued bonus shares in the ratio of 474 for 1 in August 2024.The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.01, and Rs. 2.10 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 5.46 cr. will stand enhanced to Rs. 7.48 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 144.36 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 7.59 cr. / Rs. 0.94 cr. (FY23), Rs. 15.36 cr. / Rs. 3.24 cr. (FY24), and Rs. 30.23 cr. / Rs. 8.40 cr. (FY25). Surge in bottom lines from FY24 onwards surprises one and all.  There appear to be some window dressing for fancy valuation of the IPO. It is operating in a highly competitive and fragmented segment.

For the last three fiscals, the company has reported an average EPS of Rs. 10.82, and an average RoNW of 51.52%. The issue is priced at a P/BV of 4.76 based on its NAV of Rs. 40.55 as of March 31, 2025, but its post-IPO NAV data is missing from the offer documents.

If we attribute its FY25 earnings on post-IPO expanded equity base, then the asking price is at a P/E of 17.19, and based on its FY24 earnings, the P/E stands at 44.57. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has posted PAT margins of 12.45% (FY23), 21.51% (FY24), 28.18% (FY25), and RoCE Margins of 40.29%, 72.07%, 54.25%, 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 TAC Infosec, Sattrix Information, as its listed peers. They are currently trading at a P/E of around 93.1, and 37.0 (as of September 11, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 47th mandate from GYR Capital in the last five fiscals (including the ongoing one). Out of last 10 listings, 1 opened at par, and the rest with premium ranging from 4.18% to 90.00 % on the date of listing.