Trust Fintech Limited is a Nagpur based SaaS Product focused company which has carved a niche in providing Core Banking Software, IT Solutions, ERP Implementation and Customized Software Solutions Development, SAP B1 and Offshore IT services for the BFSI sector. Company has invested in developing more than 10+ (ten) banking related products for Commercial and Cooperative Banks and Financial Institutions, which comprise Core Banking Software, Loan Origination software, GST compliance software, Financial Accounting & Billing Software, GST Suvidha provider, SAP B1 Services (for Implementation, Support and Add-on Development), Various add-on modules for Statutory Report Generation, ATM Reconciliation, Anti-Money Laundering, Agency Banking, Mobile Banking leveraging end to end solutions to address the evolving needs of banking Solutions. Since they provide banking solutions, therefore all the product solutions are built by keeping in mind the RBI compliance requirements, which the banks have to follow and also the product is designed in configurable architect, which gives the flexibility to incorporate the changes which may be required to be complied by the banks, pursuant to the change in the policy and compliances as notified by the RBI. The company is majorly involved in the Implementation, and deployment of Core banking Software i.e TrustBankCBS or MicroFinS. TrustBankCBS mainly serves the needs of medium to large banks & financial institutions and MicroFinS serves the needs of Small & growing Co-operative Societies, SACCOS & similar banking institutions. The flagship product, TrustBankCBS, is a web-based software. It is available 'on-premises with infrastructure' i.e. it offers the flexibility to the customer to deploy TrustBankCBS on their premises with customized infrastructure. Alternatively, it is also available as off-the-shelf banking software solution in a 'Software as a Service' (SaaS) model. This covers bundled solutions of software and hosting infrastructure on a rental basis for those preferring a hassle-free solution. With 25+ years of operational excellence and a dedicated team of 250+, they provide advanced software services to Public Sector Banks, Co-Operative Banks, District Co-Operative Banks, Regional Rural Banks, Large Credit Societies, NBFC, Large commercial Banks (Add-on Business), PACS, Credit Unions in USA and South American countries that meet international quality. Currently, they are serving customers in more than 15 States of India and in more than 10 countries including California, Nepal, Gambia, Ghana, Liberia, Nigeria, Sri Lanka, Tanzania, Zimbabwe, Siberia, Central Africa Republic. The organization currently operates through its offices located in Nagpur, Pune, and Mumbai spread across total area of 1064.42 sq. mtr. accommodating a workforce of over 250+ employees. As per financial performance, Trust Fintech Limited has posted total income / net profits of Rs 24.18 Cr / Rs 2.20 Cr (FY21), Rs 18.00 Cr / Rs 1.34 Cr (FY22), Rs 22.70 Cr / Rs 4.02 Cr (FY23) and Rs 18.83 Cr / Rs 7.28 Cr (upto Q2 FY24). So as per previous financials data, company has shown average results, but sudden rise in net-profit just before IPO raises doubts. Also trade receivables is around 37% of FY23 total income. Company has posted an average EPS of Rs 5.44 and average RoNW of 16.06% for last three fiscals. Issue is priced at a P/BV of 2.52 as per NAV of 40.02 as on post issue. 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 179.98, 59.83 and 16.53 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Corporate Capital Ventures Private Limited is associated with this SME IPO and handled 11 SME IPOs and 1 Main Board IPO in last 3 year. From last 10 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing and from last 1 Main board IPO, that is opened above issue price. As of now from last 10 SME IPOs, one is trading below issue price and remaining trading above or at par issue price and from last 1 Main board IPO, that is trading above issue price. ( As on 20.03.24 ) As per financials, Trust Fintech Limited has shown good results, RoNW is 20.96% and P/E is respectively 179.98, 59.83 and 16.53 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit just before IPO is very surprising. Company is in business of SaaS Product, which is highly competitive and fragmented segment. Performance of BRLM is good. 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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