Will iValue Infosolutions’ IPO unlock value for investors?

ET Intelligence Group: iValue Infosolutions (IISL), an enterprise technology services provider, plans to raise upto ₹560 crore through an offer for sale. The promoter group's stake will fall to 32.7% after the IPO from 40%. iValue acts as a technology aggregator across verticals including cyber security, data centre infrastructure, cloud solutions and application lifecycle management.

A rising focus on digital transformation and adoption of new technologies augurs well for the company. The company has shown a steady trend in profit over the past three years. However, revenue from operations dipped in FY24 before recovering in FY25.

In addition, the cash flow from operations has been erratic and the operating margin before depreciation and amortisation (Ebitda margin) has remained lower at around 5%. Given these factors, investors may wait to see a stable pattern in financials after the listing.

Business
Incorporated in 2008 at Bengaluru, the company partners with the international companies (OEMs) that develop software tools and packages and deploy customised solutions using such tools to enterprise clients with the help of system integrators (SIs). The number of OEM partners that iValue works with increased to 109 in FY25 from 93 in FY23 while the number of SIs rose to 2,877 from 567. It has offices at eight locations in India and at six locations overseas including Singapore, Bangladesh, Sri Lanka, UAE, Cambodia, and Kenya. Revenue from overseas markets forms over 10% of total revenue. The company's days sales outstanding (DSO) increased to 125 in FY25 from 116 in FY24 while net working capital cycle rose to 42 from 34.

Financials
Revenue from operations (gross revenue less cost of software and allied services) rose to ₹922.7 crore in FY25 after dropping to ₹780.2 crore in the previous year from ₹796.8 crore in FY23. Net profit increased to ₹85.3 crore from 59.9 crore between FY23 and FY25. The return on equity fell to 20.5% from 29.2% during the period.

Valuation
The company demands a trailing price-earnings (P/E) multiple of 18.8. It has not identified any direct listed peer in India. Orient Technologies, a provider of IT infrastructure, cloud management and related services and which was listed in August 2024, trades at a P/E of 29.7.