Spectrum Talent Management coming with an IPO to raise upto Rs 105.14 crore

Spectrum Talent Management  

• Spectrum Talent Management is coming out with a 100% book building; initial public offering (IPO) of 6,077,600 shares of Rs 10 each in a price band Rs 169-173 per equity share. 
• The issue will open for subscription on June 9, 2023 and will close on June 14, 2023.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 16.90 times of its face value on the lower side and 17.30 times on the higher side.
• Book running lead manager to the issue is Sarthi Capital Advisors.
• Compliance Officer for the issue is Ajit Singh.

Profile of the company

Spectrum Talent Management is a renowned human resource and staffing service provider. Promoters of the company Mr. Vidur Gupta and Mr. Sidharth Agarwal have an experience in the staffing industry. Driven by the passion for building an integrated staffing company, backed by their experience, its Promoters have been the pillars of the company's growth and have built a strong value system for the company. With their enriching experience and progressive thinking, it aims to continue to grow in the staffing industry. It offers a wide array of services such as Recruitment, Payroll, Onboarding and flexible staffing. Its comprehensive network, structured processes, professionalism and strong work ethics ensure that it remain at the top on the global scale. It satisfy firms' staffing, and recruitment needs globally through this specialised rich knowledge. Its substantial talent pool and deep understanding of the hiring industry has helped it achieve significant strides in the HR market. A proper staffing process allows it to identify the current and future requirements of the clients.

As one of the leading manpower solutions providers in India, Spectrum offers a wide array of services such as recruitment, payroll, onboarding, and flexible staffing to firms globally. Its comprehensive network, structured processes, professionalism, and strong work ethics ensure that it remains at the top on the global scale. With specialized knowledge, it empower businesses across the globe with expert manpower solutions. Its substantial talent pool and deep understanding of the hiring industry have helped it achieve significant strides in the HR market.

Proceed is being used for:

• Funding working capital requirement
• Acquisitions of businesses in similar or complementary areas
• General corporate purposes
• Offer expenses 

It is observed that despite COVID-19’s horrible impact on business around the world. The organized staffing business in India has continued to expand at a rapid pace. According to a survey, the Indian staffing business grew by 3.6% in fiscal year 2020-21, owing to a comeback in the fourth quarter of the previous fiscal year. According to the report, post-pandemic flexi-employment market trends and it has influenced women, young, and high-skilled employees in a good way. It is also noted that regardless the pandemic situation, temporary staffing grew in IT, E-commerce, Logistics and Manufacturing sectors. 

The size of the HR services market in FY2021 was estimated at Rs 1.45 trillion. The market recorded strong growth in the past five years, expanding at a CAGR of 13.1% between FY2016 and FY2020, though this was punctuated by a marginal 4% growth in FY2021, according to Frost & Sullivan. India accounted for 4.3% of the global staffing services market in 2020 in revenue terms. Although this value seems insignificant, in terms of volumes, Indian market is the sixth largest in the world and accounts for 5.8% of the total global market and has the potential to grow exponentially in the long term.

Total turnover of the global private employment services industry in 2020 is estimated at $532 billion. Once again, the agency work sector generated the major share of revenues among all five HR service segments of the industry, contributing 78% of global revenues. Agency work revenues stood at $412.7 billion in 2020. The revenue share of activities which are purely attributed to Managed Services Provision (MSP) is estimated to be around 8% in 2020, while the majority of MSP activities can actually be attributed to the agency work sector. Direct recruitment activities resulted in revenues of $67.8 billion, equivalent to 13% of the global industry turnover. Recruitment Process Outsourcing (RPO) and career management markets remain relatively small in size, at $5.8 billion and $2.5 billion respectively. 

Pros and strengths

High Margin service lines of RPO: It adopts a problem-solving approach and rely on its decades of expertise and foresight to find the right people for the evolving business needs. It offers recruitment solutions that are custom built for specific projects as well as to support employers on an ongoing basis.

Export of services leveraging India based manpower for diversification in reach: It provides locally available talent to companies in multiple countries giving them the added advantage of dealing with 1 vendor for multiple geographies. This is based on leveraging the cost differences in delivering services in the international markets using India as a base.

Long Term business of IT Staffing: Its IT Recruitment Consultants help clients to achieve substantial, positive, and sustainable impact in their performance. Its scale, scope and knowledge allow it to address a wide range of industries and structure solutions successfully for their current recruitment needs.

Risks and concerns

Highly dependent on top 10 customers: Its top 10 customers contributed 63.23%, 67.09% and 73.31% of its revenues during the financial year 2021-22, 2020-21 and 2019-20 respectively, whereas, its top five customers contribute 47.07%, 52.28% and 51.20% of its revenues during the financial year 2021-22, 2020-21 and 2019-20 respectively. Any decline in its services and any change in the demand for its services by these customers may adversely affect its ability to retain them. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability. It intends to retain its customers by offering solutions to address specific needs in a proactive, cost effective and time efficient manner. This helps it in providing better value to each customer thereby increasing its engagement with its new and existing customer base that presents a substantial opportunity for growth. 

Highly competition: The staffing services market is highly fragmented and competitive. It competes in inter-national, national and regional markets with both full-service and specialized temporary staffing companies. A majority of its competitors in terms of revenues and number of Associate Employees, several competitors, including the Indian affiliates or India-based operations of global players such as Adecco S.A., Manpower Inc., Randstad Holding N.V. and Kelly Services, Inc. and Indian human resources companies such as Quess Corp Limited, TeamLease Services Limited and Firstmeridian Business Services Limited have substantial marketing and financial resources at their disposal. It also face competition from various regional players. Price competition in the staffing industry is intense, particularly for qualified industrial personnel. It expects that the level of competition will remain high, which could directly impact the size of its workforce and therefore potentially limit its ability to maintain or increase its market share or profitability. It also face the risk of its current or prospective clients deciding to utilize their internal workforce or use independent contractors or service providers in the unorganized segment.

Inflation: Inflation is typically impacted by factors such as governmental policies, regulations, commodity prices,liquidity and global economic environment. Any change in the government or a change in the economic and deregulation policies could adversely affect the inflation rates. Continued high rates of inflation may increase its costs such as salaries, travel costs and related allowances, which are typically linked to general price levels. There can be no assurance that it will be able to pass on any additional costs to its clients or that its revenue will increase proportionately corresponding to such inflation. Accordingly, high rates of inflation in India could have an adverse effect on its profitability and, if significant, on its financial condition.

Outlook

Incorporated in 2012, Spectrum Talent Management is a renowned human resource and staffing service provide. Spectrum offers a wide array of services such as recruitment, payroll, onboarding, and flexible staffing to firms globally. Its comprehensive network, structured processes, professionalism, and strong work ethics ensure that it remains at the top on the global scale. On the concern side, the staffing services market is highly fragmented and competitive. It competes in inter-national, national and regional markets with both full-service and specialized temporary staffing companies. Any change in the government or a change in the economic and deregulation policies could adversely affect the inflation rates.

The company is coming out with an IPO of 6,077,600 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 169-173 per equity share. The aggregate size of the offer is Rs 102.71 crore to Rs 105.14 crore based on lower and upper price band respectively.  On performance front, the company’s total revenue increased by 59.67% from Rs 30,296.00 lakh in the fiscal year ended March 31, 2021 to Rs 48,372.17 lakh in the fiscal year ended March 31, 2022. The revenue has increased due to increase in the sale of products and sales of services. Net Profit has increased by 225.92% from profit of Rs. 476.41 lakh in the fiscal year ended March 31, 2021 to Rs 1552.71 lakh in the fiscal year ended March 31, 2022.