Updater Services Limited is an ISO 9001:2015 certified integrated engineering, procurement and construction ('EPC') company with experience in design and construction of various infrastructure projects for the Central and State Government, autonomous bodies, and private bodies across 9 States and 1 Union territory in India. The principal business operations are broadly divided into four categories: (i) Water SupplyProjects ('WSP') (ii) Railway Projects (iii) Road Projects and (iv) Irrigation Network Projects. Company undertakes projects on EPC basis, with or without operation and maintenance services ('O&M'). The scope of the services includes detailed engineering of the project, procurement of key materials, and project execution at the sites with overall project management up to the commissioning of these projects. In addition, they also undertake operation and maintenance of projects in accordance with the contractual arrangements. As on July 15, 2023, they have fifty-one (51) on-going projects with total work awarded amounting to Rs 61,835.81 million, of which Rs 23,840.53 million worth of work has been executed and the remaining work amounting to Rs 37,995.28 million constitutes the Order Book. Out of the fifty-one (51) on-going projects, they are executing thirty-nine (39) projects independently while for the remaining projects they have entered into joint venture arrangements with other infrastructure and construction entities. The revenue from operations increased from Rs 4,857.31 million in FY 2020-21 to Rs 11,684.04 million in FY 2022-23 at a Compounded Annual Growth Rate ('CAGR') of 55.10%, while the profit for the year increased from Rs 189.82 million in FY 2020-21 to Rs 906.43 million in FY2022-23 at a CAGR of 118.52%. As per financial performance, Updater Services Limited has posted total income / net profits of Rs 1216.35 Cr / Rs 47.56 Cr (FY21), Rs 1497.89 Cr / Rs 57.36 (FY22) and Rs 2112.09 Cr / Rs 34.60 Cr (FY23). So as per previous financials data, company has shown good sales growth. Company has an average EPS of Rs 8.23 and average RoNW of 12.75% for last three fiscals. Issue is priced at a P/BV of 4.17 as per NAV of 71.93 as on 31.3.23. If we attribute latest earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 34.88 and as per FY23 earnings P/E is around 57.83, which looks fully priced. As per RHP, peers comparison is shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 58 IPOs in last three fiscals. IIFL Securities Limited : This is 36th IPO from this BRLM. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now, from last 10 IPOs, all are trading above issue price or at par. (As on 21.09.2023) Motilal Oswal Investment Advisors Limited : This is 10th IPO from this BRLM. From last 9 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 9 IPOs, one is trading below issue price and remaining above or at par of issue price. (As on 21.09.2023) SBI Capital Markets Limited : This is 15th IPO from this BRLM. From last 10 IPOs, 4 opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, 7 are trading below issue price and remaining are trading above issue price or at par. (As on 21.09.2023)As per financials, Updater Services Limited has shown good growth, RoNW is 18.80% and P/E is respectively 34.88 and 57.83 as per FY22 and FY23 earnings, which looks aggressively priced. Company offers facility management services and business support services, which is highly fragmented and competitive. But we may see good growth in this sector in next couple of years. Performance of BRLM is good. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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