Delaplex
- Delaplex is coming out with initial public offering (IPO) of 24,00,000 shares of Rs 10 each in a price band Rs 186-192 per equity share.
- The issue will open on January 24, 2024 and will close on January 29, 2024.
- The shares will be listed on NSE Emerge Platform.
- The face value of the share is Rs 10 and is priced 18.60 times of its face value on the lower side and 19.20 times on the higher side.
- Book running lead manager to the issue is Shreni Shares.
- Compliance Officer for the issue is Manishraj Bhuwanchan Bhatt.
Profile of the company
Delaplex is a technology and software development solution and consulting provider, helping client companies to achieve in deriving growth, revenue and marketplace value. The company has developed expertise and partnerships with various industry players that provide the latest technology, tools, and software development solutions. The company is a global technology partner in Supply Chain Consulting, Custom Software Development, Cloud Services, and Data Science. Further the company, offers various tech solutions encompassing software-defined data centers, integrated infrastructure, cloud technologies, DevOps, security solutions, data analytics, and artificial intelligence. Built for its channel partners and end users i, it creates next-gen solutions to address IT problems.
As an end-to-end integrated omni-channel supply chain consulting and software solutions provider, it assists businesses worldwide in optimizing their supply chains. The company’s focus is on automation, IT initiatives, digital tools, and value driven approaches, ensuring its clients can meet their unique demands quickly and efficiently. It offers its services across industries and a diversified customer base majorly in the United States of America which include clients from Broadcasting, Petroleum, Retail, 3PL, WFM, QSRs, Hospitality, IT & ITES, Telecom etc. The company’s diversified customer base allows it to insulate ourselves from sector fluctuations and industry concentration risks.
The company caters mainly to international markets. The company’s customer base is spread across the globe with presence in countries majorly United States of America. It also has a presence in international markets by way of its foreign holding Company and foreign Group Company such as delaPlex INC and Xperity LLC. The company has entered into various Business Support Agreements wherein it has agreed to provide business support and strategy services. The company has signed various Business Partnership Agreements offering solutions such as digital innovation platform that helps corporations Fastrack their technology adoption and innovation projects. As a business model, the company is in investing in future technologies by entering into business partnership agreements and investing in companies that are working on deep tech technology solutions. Apart from making strategic investments in a select few, it enters into agreements with the solutions providers by identifying joint go-to-market strategies. This model of making strategic investments and business partnership agreements right from the beginning has helped the company get access to technologies and solutions across the globe.
Proceed is being used for:
- APAC - Advertisement, Sales and Marketing expenses towards enhancing the awareness.
- Funding Working Capital Requirements of the company.
- Funding of capital expenditure requirements of the company towards purchase of office laptops.
- General corporate purposes and unidentified inorganic acquisition.
Industry overview
Information technology (IT) industries are dealing with the application of computers, computer peripherals, and telecommunications equipment to store, retrieve, transmit and move data. It contains broadcasting, computer networking, systems design services, and information distribution technologies like television and telephones. Information Technology Market was valued at $519.61 Bn in 2022 and is expected to reach $1358.79 Bn by 2029, at a CAGR of 14.72% during the forecast period. Internet of Things (IoT) was the latest development observed in information technology services as of 2019. IoT is the network of physical objects like vehicles, devices, buildings, and other items that are surrounded by electronics, sensors, software, and network connectivity that allows these objects to collect and exchange data and have various applications. For example, Microsoft and Rolls-Royce have announced a partnership centring on future Rolls-Royce intelligent engines, which will be integrating Microsoft Suite into its service solutions to develop its digital skills.
The Indian IT industry will continue to do well over the long term, as any new technological advancement will have its fair share of IT services. The growth rates will differ from year to year, but the trend will remain upward. Skill enhancement and adaptation will remain the keys to the success and growth of the Indian IT services industry. Recently, the IT sector in India has shifted in favour of more advanced technologies like cloud computing, AI, and the IoT. The government has launched several initiatives to promote the development of these technologies in the country, including the NeGP (National e-Governance Plan), the Digital India initiative and the National Cyber Security Policy. Overall, favourable government initiatives, a sizable pool of qualified workers, and rising demand for digital technology are projected to fuel the Indian IT sector’s continued strong growth in the years to come. Yet, the industry may encounter difficulties, including skill gap, rapidly evolving technologies, increased manpower prices, and heightened international competition.
Meanwhile, the software industry is one of the key subsectors of the IT industry in India. The IT-BPM industry has played a significant role in India’s socio-economic development. India had a rather unassuming beginning in the field, lacking proper infrastructures for software development. However, due to the strong governmental support, a large well-educated population with proficient English skills, lower wages in comparison to the West, and the open market, this sector saw an exponential growth after the economic liberalization of 1990s. With strong support from the government as well as improvements in digital and educational infrastructure, India’s software sector is in a unique position to lead technological innovations alongside the IT industry. In financial year 2023, the computer hardware and software sector saw the biggest inflow of foreign direct investments among all sectors. Over the past three decades, India has risen as an IT and software pioneer bolstered by the entire ecosystem. Some of the components of this system include the government, local and international enterprises, and start-ups. With a strong and stable footing, the country is on its way to further establish itself as a leading force in the software sector.
Pros and strengths
Software product and solutions for supply chain management: As an end-to-end integrated omni-channel supply chain consulting and software solutions provider, it assists businesses worldwide in optimizing their supply chains. The company’s focus is on automation, IT initiatives, digital tools, and value driven approaches, ensuring its clients can meet their unique demands quickly and efficiently. The company is on a constant journey to expanding its offerings through collaborations and strategic acquisitions. The company assists in aligning supply chain strategies with clients’ business objectives to ensure an efficient network ecosystem. It transforms clients’ approach to managing their supply chains and offer them a modernized solution with a competitive edge. The company optimizes networks, minimize inefficiencies, enhance visibility with real-time analytics, and enable businesses to outshine competitors.
Tailored tech solutions: The company specializes in designing customized software solutions and crafting them as per client’s unique requirements. Beyond just addressing challenges on surface level, the company’s solutions optimize operations, drive efficiency.
Clients in international market: The company caters mainly to international markets. The company’s customer base is spread across the globe with presence in countries majorly United States of America. The company also has a presence in international markets by way of its foreign holding Company and foreign Group Company such as delaPlex INC and Xperity LLC.
Risks and concerns
Maximum revenue comes from few customers: The substantial portion of the company’s revenue is significantly dependent on few of its key customers. The company’s key customers also include its holding Company i.e., its body corporate promoter (delaPlex INC) and one of its Group Company, Xperity LLC. For instance, its top five customers accounted for 99.37% for the period ended September 30, 2023 accounted for 98.51% and 99.4%, each for the financial years ended March 31, 2023 and March 31, 2022 of its revenue from operations, respectively, out of which revenue from its body corporate promoter accounted for 62.56% for the period ended September 30, 2023 and 47.55%, 31.25%, and 13.07% each financial years ended March 31, 2023, March 31, 2022 and March 31, 2021, respectively of its revenue from operations and revenue and 75.67% from its Group Company accounted for 20.67% for the period ended September 30, 2023 and 30.78%, 47.27%, and 75.67% each financial years ended March 31, 2023, March 31, 2022 and March 31, 2021, respectively of its revenue from operations. The company’s reliance on a limited number of customers for its business exposes it to risks, that may include, but are not limited to, reductions, delays or cancellation of orders from its key customers, a failure to negotiate favourable terms with its key customers or the loss of these customers, all of which would have a material adverse effect on the business, financial condition, results of operations, cash flows and future prospects of the company.
Revenue highly dependent on customers located in the United States: For the period ended September 30, 2023 and for the financial years ended March 31, 2023, 2022 and 2021, the company’s external customers located in the United States contributed 83.41% and 78.82%, 78.79% and 88.74% of its revenue from operations, respectively. Existing and potential competitors to its businesses may increase their focus on the United States market, which could reduce its market share. The concentration of its revenues from operations from the United States heightens its exposure to adverse developments related to competition, as well as economic, political, regulatory and other changes. The company’s reliance on a select group of customers located in the United States may constrain its ability to negotiate its arrangements, which may have an impact on its profit margins and financial performance.
Stiff competition: The industry in which the company operates is fairly 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, lost market share or a failure to grow its market share, any of which could substantially harm its business and results of operations. The domestic segment which it caters to is fragmented and fairly competitive. The company competes primarily on the basis of quality of its services, customer satisfaction and marketing. Thus, some of its competitors may have certain other advantages over it, including established track record, superior service offerings, larger portfolio of services, technology and greater market penetration, which may allow its competitors to better respond to market trend. 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
DelaPlex Limited is a subsidiary of delaPlex INC., which is a U.S.-based enterprise. DelaPlex INC. holds 51% of the company's shares. The Company provides technology and software development solutions and consulting services to help clients achieve growth, revenue, and marketplace value. The company also provides various tech solutions including software-defined data centers, integrated infrastructure, cloud computing, DevOps, security solutions, data analytics, and artificial intelligence. On the concern side, the company is dependent on few of its customers for its revenues, mainly its body corporate promoter and one of its Group Company. Further it does not have any long-term commitments from customers and any failure to continue its existing arrangements could adversely affect its business and results of operations. The company’s revenues from operations are highly dependent on customers located in the United States. Worsening economic conditions or factors that negatively affect the economic conditions of the United States could materially adversely affect its business, financial condition and results of operations.
The company is coming out with an IPO of 24,00,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 186-192 per equity share. The aggregate size of the offer is around Rs 44.64 crore to Rs 46.08 crore based on lower and upper price band respectively. On performance front, the company’s total revenue increased by 9.69% to Rs 5,521.81 lakh for the FY 2023 from Rs 5,034.06 lakh for the FY 2022. This increase was due to an increase in revenue from operations. Moreover, the company’s Profit after Tax increased by 29.23% to Rs 790.72 lakh in FY 2023 from Rs 611.87 lakh in FY 2022.
The company intends to explore and evaluate strategic acquisition and technology alliance opportunities to gain access to new clients and sectors, add new technology capabilities to its offerings that drive synergies with its existing business ventures. It has entered into various Business Support Agreements wherein it has agreed to provide business support and strategy services. As a business model, the company is investing in future technologies by entering into business partnership agreements and investing in companies that are working on deep tech technology solutions. This model of making strategic investments and business partnership agreements right from the beginning has helped the company get access to technologies and solutions across the globe. The company shall continue to enter into such agreements with more technology solutions companies to eventually increase its service portfolio.
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