Excelsoft Technologies made a strong debut on the Indian stock market today, November 26, listing at ₹135 on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This represents a premium of 12.5% over the initial public offering (IPO) price of ₹120 per share.

IPO Details and Subscription

The ₹500 crore IPO, which was open for subscription from November 19 to November 21, comprised a fresh issue of 1.50 crore shares worth ₹180 crore and an offer for sale (OFS) of 2.67 crore shares totaling ₹320 crore. The IPO was priced in the range of ₹114 to ₹120 per share, with a minimum lot size of 125 shares, requiring a minimum retail investment of ₹15,000. The IPO allotment was finalized on November 24.

The IPO witnessed significant investor interest and was oversubscribed by 43.19 times overall. The retail category was subscribed 15.62 times, the Non-Institutional Investors (NII) segment saw a subscription of 101.69 times, and the Qualified Institutional Buyers (QIBs) category was subscribed 47.55 times.

Financial Performance and IPO Proceeds

Excelsoft Technologies is a global vertical SaaS company focused on the learning and assessment space. The company intends to use the net proceeds from the IPO to fund capital expenditure for a new building at its Mysore property, upgrade its IT infrastructure, and for general corporate purposes.

For the fiscal year ending March 31, 2025, Excelsoft reported a total revenue of ₹248.8 crore, compared to ₹200.7 crore in the previous fiscal year. The company's Profit After Tax (PAT) surged by 172% to ₹34.69 crore in FY25 from ₹12.75 crore in FY24.

Grey Market Premium (GMP) and Market Sentiment

Ahead of the listing, the Grey Market Premium (GMP) for Excelsoft Technologies IPO was around ₹7 per share, indicating an expected listing price of approximately ₹127, which is a premium of 5.83% over the upper end of the issue price band. The actual listing price exceeded these expectations, debuting at a 12.5% premium.

Concerns and Considerations

Despite the positive listing, some analysts have expressed concerns about the company's valuation and dependence on a single major client.

• Valuation: At the upper price band of ₹120, the company's post-IPO market cap will be about ₹1,381 crore, valuing the stock at a P/E ratio of 39.8x based on FY25 earnings.
• Client Concentration: Excelsoft Technologies depends heavily on Pearson, which contributes approximately 59% of its revenue.

Analyst Recommendations

Given the strong listing, investors who were allotted shares in the IPO may consider the following:

• Book Profits: Investors could consider booking profits, especially if the listing gains were in line with or exceeded their expectations.
• Hold for Long Term: Investors with a higher risk appetite and a positive outlook on the company's long-term growth potential in the EdTech sector may choose to hold the shares.
• Monitor Performance: Closely monitor the company's performance in the coming quarters, paying attention to revenue growth, profitability, and client diversification.

For investors who did not receive an allotment, here are some points to consider:

• Evaluate Fundamentals: Before making any investment decisions, carefully evaluate the company's fundamentals, growth prospects, and risk factors.
• Consider Valuation: Assess whether the current market price justifies the company's valuation, taking into account its P/E ratio and other financial metrics.
• Long-Term Perspective: Consider your investment horizon and risk tolerance before investing in the stock.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.