Network People Services Technologies coming with an IPO to raise around Rs 14 crore

Network People Services Technologies

• Network People Services Technologies is coming out with an initial public offering (IPO) of 17,12,000 equity shares of face value of Rs 10 each in a price band Rs 76-80 per equity share.
• The issue will open on July 28, 2021 and will close on Aug 02, 2021.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 7.60 times of its face value on the lower side and 8.00 times on the higher side.
• Book running lead manager to the issue are Holani Consultants and BOI Merchant Banker.
• Compliance Officer for the issue is Shreya Agarwal.

Profile of the company

The company is a banking technology service provider (TSP) and is engaged in providing software and mobility solutions to banking and finance sector primarily focusing on mobile banking applications, digital transaction solutions such as IMPS, UPI, digital wallet, etc. and smart transaction solutions. It is equipped to provide end-to-end services related to payment platforms including mobile banking solutions and are currently rendering its services to Canara Bank, Syndicate Bank, Kerala Gramin Bank, Karnataka Gramin Bank, IBM India and Cosmos Co-operative Bank. The company is also engaged in rendering software service consisting of designing, consulting, development, quality and manpower provisioning under software SDLC.

With a mission to create the largest network of technology enabled merchants / users, the company has developed a digital ecosystem for the cashless economy through its flagship application named and styled as TimePay. It is also registered as Third-Party Application Provider (TPAP) facilitating UPI payment services through TimePay. In this regard, it has entered into Tripartite agreement dated February 05, 2020 with the National Payment Corporation of India, The Cosmos Co-operative Bank for Merchant PSP and Sponsoring company payment handle styled as ‘@TimeCosmos’. Under this mobile application, it has created a digital ecosystem to include society management and merchant digitization, providing digital technology to large, medium and micro setups to transact and operate seamlessly in financial value chain.

Proceed is being used for:

• Developing mobile application in the name of TimePay.
• Acquiring IT hardware and equipments.
• Marketing and promotion of TimePay.
• Meeting general corporate expenses.

Industry Overview

IT comprises of design, development, implementation and management of computer-based information systems, particularly software applications and computer hardware. The IT-enabled Services (ITeS) industry provides services that are delivered over telecom or data network to a range of external business areas. Therefore, IT acts as a facilitator, an enabler and also assumes the role of custodian. It facilitates large volumes of information to be stored, processed and/or transferred at lightning speed. The IT sector is comprised of entities that produce software, hardware or semiconductor equipment’s, or entities that provide internet or related services. These three industry groups are further divided into industries and sub-industries. IT spending budgets will be largely driven by the needs to upgrade outdated infrastructure, address security issues, and accommodate growth. The amount of spending and the mix of services will vary by company size. For software spending specifically, small businesses will focus their spending on operating systems. Mid-size companies will have a larger budget for productivity software and business support applications. Large enterprises will be spending more of their money on virtualization, database management, and communications software. Cloud services and recovery software will represent major budget allocations in the coming year and cloud spend will vary by company size.

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55 per cent market share. Indian IT & ITeS companies have set up over 1,000 global delivery centres in about 80 countries across the world. India has become the digital capabilities hub of the world with around 75 per cent of global digital talent present in the country. IT-BPM sector in India stood at $177 billion in 2019 witnessing a growth of 6.1 per cent year-on-year and is estimated that the size of the industry will grow to US$ 350 billion by 2025. India’s IT & ITeS industry grew to $ 181 billion in 2018-19. Exports from the industry increased to $ 137 billion in FY19 while domestic revenues (including hardware) advanced to $ 44 billion. IT industry employees 4.1 million people as of FY19. Spending on information technology in India is expected to reach $ 90 billion in 2019. Revenue from digital segment is expected to comprise 38 per cent of the forecasted $350 billion industry revenue by 2025.

Pros and strengths

Quality and secure platform: The company conform to meet the requirements of its clients by providing best quality solution. It stands ahead of its competitors in delivering end to end, friendly user interface, and services to serve various needs of the end customers. Quality is a pivotal metric to fuel growth of a company; and it do not compromise on the quality of the application. It is necessary to understand the pulse of target clientele while developing of the application. The application is regularly upgraded with the updated versions.

Wide range of solutions: The company plans to offer a range of solutions to the users based on the current requirements. All the tools required for merchants, banks and well as other customers to fuel their growth and ease day to day activities are available through its business model. Maintaining a wide range of products in its business provides it with an opportunity to cater to needs of different customer segment. From providing digital payment gateway to helping the vicinity merchants digitize their operations, its goal is towards digitalizing India.

Frequent team trainings: The company’s team always update themselves with the avant-garde technologies deliver the best and maintains the market standards. It strive on being constricted and persistent on quality. The developers are well versed with latest technologies and processes. The team undergoes relevant training on a regular basis to be relevant and updated.

Risks and concerns

Substantial portion of revenues depends upon few clients: The company’s top 10 and top 5 customers contributed 92.61% and 75.38% of its revenues for the year ended March 31, 2021 respectively. The loss of a significant client or clientele would have a material impact on its financial results. It cannot assure that it can maintain the historical levels of business from these clients or that it will be able to replace these clients in case it lose any of them. Furthermore, major events such as bankruptcy, change of management, mergers and acquisitions and recent outbreak of pandemic COVID-19 affecting its clients which could adversely impact its business operation and profitability.

Rely on limited number of suppliers for support services: The company’s top 10 and top 5 service providers contributed 91.48% and 76.87% of its support service procurement for the year ended March 31, 2021 respectively. The loss of a significant service provider would have a material impact on its financial results. It cannot assure that it can maintain the historical levels of business from these entities or that it will be able to replace them in case it lose any of them. There can be no assurance that it will be able to maintain strategic relationships with its suppliers or diversify its supplier base.

Industry segment in which company operate is fragmented: The market for IT services specifically banking services that it operate in, is highly competitive, and it expects competition to persist and deepen. The principal competitive factors in its markets are reputation and track record, industry expertise, breadth and depth of service offerings, quality of the services offered, language, marketing and selling skills, scalability of infrastructure, ability to address customers’ timing requirements and price.

Outlook

Incorporated in 2013, Network People Services Technologies (NPST) is a banking technology service provider that offers software and mobility solutions to the banking and finance sector. The company offers digital transformation solutions i.e. IMPS, Digital Wallet, UPI, and other smart art solutions. The company further offers software designing, consulting, development, and manpower provisioning services. The company is managed by a team of experienced and professional personnel with experience in different aspects of the FinTech industry. Its business model is scalable across customer, industries, functions and geographies. In addition to its spread, it has also developed key operational drivers delivering it steady growth. On the concern side, the company’s profitability is significantly impacted by its utilization levels of fixed-cost resources, including human resources as well as other resources such as computers and office space, and its ability to increase its productivity levels. It requires certain statutory and regulatory empanelment, registrations and approvals to operate its business, some of which are granted for a fixed period of time and need to be renewed at regular intervals.

The issue has been offered in a price band of Rs 76-80 per equity share. The aggregate size of the offer is around Rs 13.01 crore to Rs 13.69 crore based on lower and upper price band respectively. On performance front, the company’s total revenue has increased by 1.01% to Rs 1,538.00 lakh for financial year 2020-21 from Rs. 1,524.72 lakh for financial year 2019-20 bifurcated into revenue from operations and other income. Its profit after tax increased by Rs 1.88 lakh, showing a percentage increase of 1.81%. The company plans to further enhance the functionality and features of its products and develop cutting-edge technologies to improve user engagement. It also intends to add more social elements to its platform, which will lead to greater interaction and better engagement. It is focused on continuing expansion of its relationships with existing customers by helping them solve new problems and become more engaging, responsive and efficient. As it expand its product portfolio, it also plans to internationalize its branding strategy in order to attract a more global user base.