Euphoria Infotech India
- Euphoria Infotech India is coming out with initial public offering (IPO) of 9,60,000 shares of Rs 10 each in a price band Rs 96-100 per equity share.
- The issue will open on January 19, 2024 and will close on January 23, 2024.
- The shares will be listed on BSE SME Platform.
- The face value of the share is Rs 10 and is priced 9.60 times of its face value on the lower side and 10.00 times on the higher side.
- Book running lead manager to the issue is Khandwala Securities.
- Compliance Officer for the issue is Md. Talha.
Profile of the company
Euphoria Infotech (India) Limited is a full-stack IT and ITes solution, based out at Kolkata, West Bengal. The company was started off in 2001 by its founder and Managing Director Shamba Bhanja with a vision to encourage multiple aspects of networking, software design, quality assurance and internet technology. Currently, the company provides high-end IT and ITes solution in the field of Citizen Centric Application, Enterprise Resource Planning (ERP), E-Commerce, Application programming interface (API), Internet of Things (IoT), cloud based tools and application, data management etc. using standard software practices or through customised software development model depending upon the requirement of the clients which is backed by advanced technology and efficient team of software developers who tend to keep themselves abreast by undergoing continuous R&D activity.
The company’s offerings can be classified into five broad categories namely, customized software, e-commerce, IoT, Artificial Intelligence and Machine Learning. The company is engaged in the business of customized web application development for industry and general citizens. The applications range from Online Recruitment, Online Application, Urban Local Body services, University management system, Online Ticket Booking Systems, E-commerce and IoT-based dashboards for Sewerage Treatment Plant (STP) and similar industry specific requirements. The company is developing different products for the education domain and citizen-centric services. The company is providing consultation to different clients from multiple-spectrum to develop, implement and maintain different customized software to enhance the efficiency and growth of the company. It has become a technology partner to different government and financial organizations including various municipalities in West Bengal.
Proceed is being used for:
• Working Capital requirement.
• General Corporate Expenses.
Industry overview
The IT & BPM sector has become one of the most significant growth catalysts for the Indian economy, contributing significantly to the country’s GDP and public welfare. The IT industry accounted for 7.4% of India’s GDP in FY22, and it is expected to contribute 10% to India’s GDP by 2025. As innovative digital applications permeate sector after sector, India is now prepared for the next phase of growth in its IT revolution. India is viewed by the rest of the world as having one of the largest Internet user bases and the cheapest Internet rates, with 76 crore citizens now having access to the internet. The current emphasis is on the production of significant economic value and citizen empowerment, thanks to a solid foundation of digital infrastructure and enhanced digital access provided by the Digital India Programme. India is one of the countries with the quickest pace of digital adoption. This was accomplished through a mix of government action, commercial innovation and investment, and new digital applications that are already improving and permeating a variety of activities and different forms of work, thus having a positive impact on the daily lives of citizens. India’s rankings improved six places to the 40th position in the 2022 edition of the Global Innovation Index (GII).
According to National Association of Software and Service Companies (Nasscom), the Indian IT industry’s revenue touched $227 billion in FY22, a 15.5% YoY growth. According to Gartner estimates, IT spending in India is expected to increase to $101.8 billion in 2022 from an estimated $81.89 billion in 2021. Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing on investing internationally to expand their global footprint and enhance their global delivery centres. The data annotation market in India stood at $250 million in FY20, of which the US market contributed 60% to the overall value. The market is expected to reach $7 billion by 2030 due to accelerated domestic demand for AI. Exports from the Indian IT industry stood at $149 billion in FY21. Export of IT services has been the major contributor, accounting for more than 51% of total IT export (including hardware). BPM and engineering and R&D (ER&D) and software products export accounted for 20.78% each to total IT exports during FY21. The ER&D market is expected to grow to $42 billion by 2022. The IT industry added 4.45 lakhs new employees in FY22, bringing the total employment in the sector to 50 lakhs employees.
Artificial Intelligence (AI) is expected to boost India's annual growth rate by 1.3% by 2035, as per NITI Aayog. A substantial increase in AI by Indian firms can result in a 2.5% increase in India’s Gross Domestic Product (GDP) in the immediate term. India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. The industry is expected to grow to $350 billion by 2025 and BPM is expected to account for $50-55 billion of the total revenue.
Pros and strengths
Scalable business model: The company’s business model is technology driven and comprises of optimum utilization of its ability to put together a successful team for its creative software solutions, efficient working of its marketing team, management expertise in identifying upgraded technology, acquiring new customers, budgeting the production lifecycle and achieving consequent economies of scale. This business model has proved successful and scalable for it since its incorporation. The company can scale upward as per the requirement generated by the company. The business scale generation is basically due to the exponential online digital possibilities open to the company.
Agile engineering and delivery: The company helps its customers deliver effective, quality software. With broad software engineering capabilities, it has the ability to choose the methods, technologies and tools which is best suited to customers’ business needs. The company’s engineers use a broad range of technologies including web technologies, cloud, data, mobile, testing, hardware & embedded, integration and APIs, IoT, AI/ML, analytics and DevOps. Its tools provide it with a flexible approach to running large software projects. It constantly experiments with the latest tools and techniques, allowing it to select technologies with the right balance between innovation and predictability. It reviews customers’ current architectures and provide support in building architectural capability which allows it to plan, adapt and deliver solutions that increase responsiveness, mitigate risks and achieve continuous improvement.
Exclusive agreement for certain domains with Webel Technologies: The company is empaneled with Webel Technologies and has entered into collaboration agreement for certain domains with Webel Technologies Limited which is a nodal agency for the Government of West Bengal for implementation of IT, ITes and related services. Being a nodal agency and having a government order for the purpose of implementation of various automation process apart from given consultation for office and process automation, it become advantageous for the company to have an edge over its competitors and to win projects.
Risks and concerns
Substantial working capital requirements: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards employee cost. As on September 30, 2023, it has Rs 213.22 lakh outstanding working capital loan. The company’s growing scale and expansion may result in increase in the quantum of current assets. The company’s inability to maintain sufficient cash flow, credit facility and other sourcing of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations. Further, it has high inventories and outstanding amount due from its debtors which may adversely affect its cash flows and its business operations.
Business is dependent on the contractual arrangement: The company enters contracts with its clients which impose several contractual obligations upon it. If the company is unable to meet these contractual obligations and / or its clients perceive any deficiency in its services, it may face legal liabilities and consequent damage to its reputation which may in-turn adversely impact its business, financial condition and results of operations. There are also some contracts, which terminable by its clients in writing upon committing any breach or non-observance of any conditions of the Agreements entered into viz. fraud by the company or any misconduct of its associate employees which could adversely affect the reputation of its clients.
Geographical constrain: Presently, the company is concentrated in the state of West Bengal. The company’s maximum revenue comes from this state only. The company generated Rs 728.32 lakh (98.86%), Rs 457.90 lakh (98.44%) and Rs 527.57 lakh (95.09%) in FY23, FY22 and FY21, respectively. For getting business, the company is registered with Webel Technologies Limited which is a nodal agency for the Government of West Bengal for implementation of IT and ITes. The company participate in the orders floated by Webel Technologies Limited for its IT and ITes and similar jobs from the different departments of the Government of West Bengal. While, it considers all factors internally prior to taking such orders, it cannot assure that it could continue to be rewarded with such orders from Webel Technologies Limited. In case of loss of orders or de-registration of the company by Webel Technologies Limited, the company’s business, operating results and financial condition will be materially adversely affected.
Outlook
Euphoria Infotech India is a full-stack IT and ITes solution, based out at Kolkata, West Bengal. The company offers IT and ITES solutions for ERP, E-commerce, IoT, cloud-based tools, and data management. As of May 31, 2023, the company employs a total of 29 people across various departments, including Accounts, Business Development, Software Development, and Legal and Compliance. Additionally, the company has contracted 16 IT professionals who are responsible for software development and project implementation as of the same date. On the concern side, the company is registered with Webel Technologies Limited which is a nodal agency for the Government of West Bengal for implementation of IT and ITes. In case it loses its registration with Webel Technologies Limited, its business and results of operations may be adversely affected.
The company is coming out with an IPO of 9,60,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 96-100 per equity share. The aggregate size of the offer is around Rs 9.22 crore to Rs 9.60 crore based on lower and upper price band, respectively. On performance front, the company’s total revenue has increased by Rs 271.57 lakh and 58.38% from Rs 465.16 lakh in the fiscal year ended March 31, 2022 to Rs 736.73 lakh in the fiscal year ended March 31, 2023. The increase in revenue was on account of increase in operation of the company. Moreover, Net Profit after Tax increased 551.73% from Rs 19.90 lakh in the fiscal year ended March 31, 2022 to profit of Rs 129.69 lakh in the fiscal year ended March 31, 2023.
Over the years, the company has developed long standing relationships with its customers. It devotes significant attention to being able to understand the behavior, preferences and trends of its customers through research and a consultation process. This gives it a distinct perspective that it brings to its engagements. The company is focused on continuing to expand its relationships with existing customers by helping them solve new problems and become more engaging, responsive and efficient. The company has a demonstrated track record of expanding its work with customers after an initial engagement. As it has done previously, it aims to sustain the annual revenue contribution of a customer in subsequent years after the year of customer acquisition. Expansion of its relationships with existing active customers will remain a key strategy going forward as it continues to leverage its domain expertise and knowledge of emerging technology trends in order to drive incremental growth for its business.
