Frog Cellsat
Frog Cellsat is coming out with a 100% book building; initial public offering (IPO) of 40,75,200 Equity Shares of face value of Rs 10 each in a price band Rs 97-102 per equity share.
The issue will open on September 29, 2022 and will close on October 04, 2022.
The shares will be listed on NSE Emerge Platform.
The face value of the share is Rs 10 and is priced 9.70 times of its face value on the lower side and 10.2 times on the higher side.
Book running lead manager to the issue is Sarthi Capital Advisors.
Compliance Officer for the issue is Manisha Makhija.
Profile of the company
The company is engaged in manufacturing of telecom equipment’s used by telecom operator’s especially in Telecom Towers. It manufactures 2G/3G/4G Multi-band Digital RF Repeaters, Multi-band Frequency Shift Repeater, Multi-band Optical DAS system, relative software and accessories. It also offer In-Building Coverage Planning and Design services along with Radio Access Network (RAN) and Backhaul Network installation services. The company has two production unit one is located in Noida and second one is in located in Dehradun. Its end-to-end RF enhancement solutions are well positioned in the industry for being price competitive, field proven, future-ready, and highly reliable. Its design, development, manufacturing, and quality control processes are ISO 9001:2015 certified. Its success is an outcome of strategic focus on innovative R&D, to produce a unique range of RF products conforming to the applicable standards from ETSI, 3GPP, TEC, and other standardization bodies.
It is one of the most experienced and focused Telecommunication equipment suppliers. Since inception, it has been expanding and diversifying its product portfolio to offer the widest range of indoor and outdoor coverage solutions in the industry today. It directly sale its products in the market and are not dependent upon any dealers/distributors for sale of products. The company is providing its products and services across Asia, Europe, Africa, and the Middle East. Its main products are 2G/3G/4G Multi-band Digital RF Repeaters, Multi-band Frequency Shift Repeater, Multi-band Optical DAS system, relative software and accessories. Also, its Production line is equipped with anti-static equipment, all products are subject to rigorous and reliability tests. It has been awarded the India-Israel Industrial R&D and Technology Innovation Fund (I4F) established by Department of Science & Technology (DST), Government of India from the Indian side and Israel Innovation Authority (IIA) from the Israeli side for development of Cellular Interface Mitigation Solution for Indian Market, based on UBiFiX Solution. UBiFiX solution assists mobile operators to protect and extract the most out of their licensed spectrum by cancelling external interference at the input of a cellular base-station receiver.
Proceed is being used for:
Industry overview
The Telecom industry in India is the second largest in the world with a subscriber base of 1.17 billion as of April 2022 (wireless + wireline subscribers). India has an overall tele-density of 84.88%, of which, the tele-density of the rural market, which is largely untapped, stands at 58.16% while the tele-density of the urban market is 134.70%. India surpassed the US to become the second largest market in terms of number of app downloads. By the end of December 2021, the total number of internet subscribers increased to 829.3 million (narrowband + broadband subscribers), out of which 37.25% of the internet subscribers belong to the rural areas. The number of broadband subscribers has increased to 788.77 million as of April, 2022. The industry’s exponential growth over the last few years is primarily driven by affordable tariffs, wider availability, roll-out of Mobile Number Portability (MNP), expanding 3G and 4G coverage, evolving consumption patterns of subscribers, Government’s initiatives towards bolstering India’s domestic telecom manufacturing capacity, and a conducive regulatory environment. To further expedite digital connectivity, the Government has approved the auction of IMT/5G spectrum for deployment of 5G services within the country.
The Telecom sector is the 3rd largest sector in terms of FDI inflows, contributing 7% of total FDI inflow, and contributes directly to 2.2 million employment and indirectly to 1.8 million jobs. Between 2014 and 2021, the FDI inflows in the Telecom sector rose by 150% to $20.72 billion from $8.32 billion during 2002-2014. 100% Foreign Direct Investment (FDI) has now been allowed in the Telecom sector under the automatic route. The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The Government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to consumer at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms have made the sector one of the fastest growing and the top five employment opportunity generator in the country.
Pros and strengths
Quality product at competitive price: The company is ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certified. The company has deployed state of art technology and infrastructure. Its product matches the same quality of products that are manufactured by well-known large companies across the globe. Since the company is small in size, it enables it to efficiently manage the overall all expenditure and as a result it is able to offer products at very competitive price with same quality to its client across the globe.
In house R&D facility: The company’s R&D Centre is well equipped with all the advanced testing & measuring instruments/standards and test set-ups from Keysight Technologies, Rohde & Schwarz. It has experts in core fields of DSP (Digital signal processing), FPGA (Field Programmable Gate Arrays), Embedded System and application development. It has worked on 2G/3G/4G FPGA based Digital Repeaters, Digital Filters, DSP based Interference Cancellation System (ICS), LTE-TDD (Long Term Evolution-Time division Duplex) synchronization algorithms, DSP based DPD & CFR (Digital Pre Distortion &Crest Factor Reduction )for MCPA (Multicarrier Power Amplifier), CPRI Protocol interface, 3G/4G PHY & MAC (Physical layer/Medium Access Control) protocols, DDR4 (Dynamic Random-Access Memory), Xilinx Ultrascale+, EMS/NMS (Element Management System/ Network Management System), SNMPv3 (Standard Network Management Protocol). It also has a complete set-up & processes for prototype design & development followed by production.
Strong sales and service team: The company has strong technical service team for Installation and Roll-out Services and network Maintenance services, spread across India to serve its clients with higher turnaround time. This enables it to provide prompt services as and when required by the client at different locations. Its prompt response and quality services make the company to remain in good books of its client and also ensures trust and continuing business relationship.
Risks and concerns
High working capital requirements: The company’s business requires a significant amount of working capital for smooth functioning. It meets its requirement for working capital majorly through banking facilities or by way of internal accruals. In future, its inability, if any to meet its working capital requirements through banking arrangements or internal accruals can adversely impact its business operations and financial position.
Dependent on third party vendors: The company uses third party transportation providers for delivery of its goods. Any transportation strikes may have an adverse effect on its business. In addition, goods may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of products which may also affect its business and results of operation negatively. An increase in the freight costs or unavailability of freight for transportation of its raw materials may have an adverse effect on its business and results of operations. Further, disruptions of transportation services due to weather-related problems, strikes, lock-outs, inadequacies in the road infrastructure, or other events could impair ability to procure raw materials on time. Any such disruptions could materially and adversely affect its business, financial condition and results of operations.
Face competition: The industry, in which the company is operating, is highly and increasingly competitive and its results of operations and financial condition are sensitive to, and may be materially adversely affected by, competitive pricing and other factors. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow its market share, any of which could substantially harm its business and results of operations. There can be no assurance that it can effectively compete with its competitors in the future, and any such failure to compete effectively may have a material adverse effect on its business, financial condition and results of operations.
Outlook
Frog Cellsat is one of the leading manufacturers of RF Equipments and is headquartered in India. People at Frog Cellsat are passionate about developing and delivering coverage as well as capacity enhancement solutions and services for next-generation wireless and mobile broadband networks. The company is providing its products and services across Asia, Europe, Africa, and the Middle East. Its main products are 2G/3G/4G Multi-band Digital RF Repeater, Multi-band Frequency Shift Repeater, Multi-band Optical DAS system, relative software and accessories. Also, its Production line is equipped with anti-static equipment, all products are subject to rigorous and reliability tests. The company’s end-to-end RF enhancement solutions are positioned in the industry for being price competitive, field proven, future-ready, and highly reliable. Its design, development, manufacturing, and quality control processes are ISO 9001:2015 certified. Its success is an outcome of strategic focus on innovative R&D, to produce a unique range of RF products conforming to the applicable standards from ETSI, 3GPP, TEC, and other standardization bodies. On the concern side, the company requires several statutory and regulatory permits, licenses and approvals to operate the business. Many of these approvals are granted for fixed periods of time and need renewal from time to time. Due to the nature of its business, it face a risk of its products containing quality issues or undetected errors or defects, especially when first introduced or when new models or versions are released. These may result from the design or manufacture of the product, or from the software or other components used in the product.
The issue has been offered in a price band of Rs 97-102 per equity share. The aggregate size of the offer is Rs 39.53 crore to Rs 41.57 crore based on lower and upper price band respectively. On performance front, total revenue increased by Rs 589.40 lakh and 4.55% from Rs 12,939.84 lakh in the fiscal year ended March 31, 2021 to Rs. 13,529.24 lakh in the fiscal year ended March 31, 2022. Net Profit has increased by Rs 8 lakh and 0.56% from profit of Rs 1,425.76 lakh in the fiscal year ended March 31, 2021 to Rs 1,433.76 lakh in the fiscal year ended March 31, 2022. Meanwhile, as a part of expansion of business activity the company is setting up Manufacturing cum Corporate Building at C-3,Sector 80, Noida-201301, Uttar Pradesh to manufacture Wireless telecom equipments like RepeatersActive & Passive product range, Active DAS, Jumper, RF Feeder and Interference Mitigation.
