Euphoria Infotech India Limited is engaged in the business of customized web application development for industry and general citizens. The applications range from Online Recruitment, Online Application, Urban Local Body services, University management system, Online Ticket Booking Systems, E-commerce and IoT-based dashboards for Sewerage Treatment Plant (STP) and similar industry specific requirements. They are developing different products for the education domain and citizen-centric services. They are providing consultation to different clients from multiple-spectrum to develop, implement and maintain different customized software to enhance the efficiency and growth of the company. They have become a technology partner to different government and financial organizations including more than 100 municipalities in West Bengal. The Information Technology industry is a continuously evolving technological industry and they endeavour to exploit these technological advances to reach audiences in India and globally to provide growth, efficiency and advancement in the business objectives. As per Restated Financial Statements for the fiscal 2023, 2022 and 2021, the total revenues were Rs 737.56 Lakhs, Rs 493.87 Lakhs, and Rs 556.14 Lakhs, respectively. The Profit after Tax for the similar period mentioned above was Rs 129.71 Lakhs, Rs 21.71 Lakhs, and Rs 23.91 Lakhs, respectively. Further, for the half year ended September 30, 2023, the total revenues were Rs 365.48Lakhs and the Profit after Tax for the same period were Rs 60.49 Lakhs. They started the journey in Bangladesh back in 2018 through the JV company namely Euphoria Infotech (Bangladesh) Private Limited with the motto of enabling a self-reliant software development house through technology transfer. They hold 49% stake in the JV Company and balance 51% is held by the JV partners who are resident of Bangladesh. They are proudly associated with many projects with the objective of Citizen’s betterment, safety & security, and ease of work. Some such examples are the Citizen’s Revenue Collection Module and Online Administrative services. They have become a technology partner to different government and financial organizations like Narayangonj City Corporation - NCC (Bangladesh), Agent Banking for South-East Bank Limited (Bangladesh) and Grameen Phone (Bangladesh). As per financial performance, Euphoria Infotech India Limited has posted total income / net profits of Rs 5.56 Cr / Rs 0.26 Cr (FY21), Rs 4.94 Cr / Rs 0.20 Cr (FY22), Rs 7.38 Cr / Rs 1.30 Cr (FY23) and Rs 3.66 Cr / Rs 0.60 Cr (upto Q2 FY24). So as per previous financials data, company has shown growth, but sudden rise in net profit just before IPO raises doubts. Company has posted an average EPS of Rs 3.91 and average RoNW of 19.85% for last three fiscals. Issue is priced at a P/BV of 4.13 as per NAV of 24.24 as on 30.09.2023. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 145.82, 22.37 and 23.98 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Khandwala Securities Limited is associated with this SME IPO and handled 3 SME IPOs in last 1 year. From last 2 IPOs, two are opened above issue price on the day of listing. As of now from last 2 IPOs, two are trading above issue price. ( As on 16.01.24 ) As per financials, Euphoria Infotech India Limited has shown average results, RoNW is 31.62% and P/E is respectively 145.82, 22.37 and 23.98 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. But sudden rise in net profit just before IPO raises doubts and it may be difficult to maintain same margin in future. Company is in business of full-stack IT and ITes solution, which is highly competitive and fragmented segment. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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