Ace Alpha Tech coming with IPO to raise Rs 32.22 crore

Ace Alpha Tech

• Ace Alpha Tech is coming out with an initial public offering (IPO) of 46,70,000 equity shares in a price band Rs 65-69 per equity share.
• The issue will open on June 26, 2025 and will close on June 30, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 10 and is priced 6.50 times of its face value on the lower side and 6.90 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Priyanka.

Profile of the company

Ace Alpha Tech is serving financial industry with its comprehensive suite of trading solutions catering to all types of clients, ranging from institutional investors to retail traders via brokers. Its institutional-grade trading strategies on existing setup, sophisticated integration with order management systems of prop desks, and consultancy for direct market access capabilities ensure seamless and efficient trading experiences for its clients, minimizing risk exposure and optimizing execution practices.

The company provides customized trading solutions in which it uses advanced, institutional-grade algorithms that work as a front-end layer over existing order management systems/ RMS which are connected with stock exchanges. Its solutions also enable clients to work on simulated environment of their own platform for back testing their solutions. These customized solutions enable clients to execute their trading strategies automatically and without manual intervention, offering enhanced efficiency and performance, backed by robust risk management tools. Since these strategies are back tested and checked on simulated environment they ensure the safety and smooth operation of trading activities. Its user management and risk management system further streamline operations, automating processes like user onboarding, access management, and ongoing risk monitoring. This comprehensive approach not only enhances operational efficiency but also ensures security and compliance across businesses of all sizes.

Additionally, its trading solution caters to high-volume traders, offering advanced electronic trading solutions, low-risk strategies, and organized management tools. With algorithmic trading capabilities, risk management features, and comprehensive market analysis tools, its Proprietary Trading System empowers traders to execute trades efficiently and optimize their strategies for maximum returns on their current setup. Coupled with custom trading solutions tailored to specific business requirements and market coverage across various sectors, it provides clients with scalable and adaptable solutions that drive success in the dynamic financial landscape. It provides various solutions to its clients including set up for institutional trading, B2B Retail Trading, User Management, Proprietary Trading solutions and custom trading. Along with this, it ensures the redressal of client issues its support system and provides end to end solutions.

Proceed is being used for:

• Meeting capital expenditure of the company
• Meeting the expenses of Unidentified acquisition and general corporate purposes

Industry Overview

The global information technology (IT) market size was $11681.64 billion in 2024 and the market is projected to touch $29886.75 billion by 2033 at a CAGR of 11.0% during the forecast period from 2025 to 2033. The market is experiencing significant growth, driven by key factors. A primary catalyst is the growing demand for digital solutions and technologies across industries. This heightened need has led to market expansion, with IT services playing a pivotal role in enabling businesses to adapt to the digital age. Leading industry players are investing in innovative IT solutions and services to meet the evolving requirements of organizations, bolstering the market’s positive trajectory. Furthermore, the market is undergoing a transformation due to technological advancements. Innovations in IT infrastructure, cloud computing, and cybersecurity are driving market growth. Businesses increasingly prioritize digitalization, data security, and remote work capabilities, leading to the adoption of advanced IT solutions that enhance productivity and competitiveness.

The Indian IT industry’s revenue touched $227 billion in FY22, a 15.5% YoY growth and was estimated to have touched $245 billion in FY23. By 2025, the Indian software product industry is projected to hit Rs 8,68,700 crore ($100 billion) as companies seek to expand globally. The 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.

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 IT spending in India is estimated to record a double-digit growth of 11.1% in 2024, totalling $138.6 billion up from $124.7 billion last year. India’s public cloud services market grew to US$3.8 billion in the first half of 2023, expected to reach $17.8 billion by 2027. By 2026, widespread cloud utilisation can provide employment opportunities to 14 million people and add $380 billion to India's GDP.  

Pros and strengths

Diverse customer segments: The company caters to a wide range of clients, including institutions, proprietary desks, and retail traders, which diversifies its revenue streams and reduces dependency on a single market segment.

Strong revenue model: The company has multiple revenue streams, including subscription models, licensing fees, consultation services, and support and maintenance services. This diversified approach helps in ensuring steady revenue growth.

End to end solution: Brokers engage directly with vendors for commercial deals related to OMS and RMS, while outsourcing their IT package including hardware to Ace Alpha. This allows brokers to focus on commercial aspects, leaving Ace Alpha to manage their entire IT package, including hardware and ongoing support. Ace Alpha provides end-to-end solutions ensuring that brokers don’t have to deal with the technical complexities. This streamlines the process and improves efficiency and service delivery.

Risks and concerns

Maximum revenue comes from limited customers: The company derived a substantial portion of its revenue from a limited number of customers. The company has garnered 67%, 99% and 100% of its total revenue from top 10 customers in FY24, FY23 and FY22 respectively. As a significant portion of its revenue is concentrated to a select number of customers, any adverse development with such customer, including as a result of a dispute with or disqualification by such major customers, may result in it experiencing significant reduction in its cash flows and liquidity. The loss of significant clients, or projects from such clients for any reason, including as a result of disqualification or dispute, may have a material and adverse effect on its business and results of operations.

Present promoters of the company are first generation entrepreneurs: The company’s present promoters are first generation entrepreneurs. Their experience in managing the business is instrumental in the growth of the company. The concern is that their limited experience in running a listed company could potentially hinder the company's growth in the future. The statement is being cautious and transparent about this uncertainty, as it cannot assure that the promoters' inexperience won't affect the company's success.

Stiff competition: The company operates in a competitive market, and it anticipates that competition will persist and intensify in the future. The dynamic and growing nature of its market attracts both new and existing competitors who allocate significant resources to enhance their products and services. Its ability to execute its business strategy and achieve growth hinges on several factors, including its capacity to introduce new services, adapt to evolving technologies, respond to competitor pricing strategies, enhance its brand, forge agreements with technology partners, and develop intellectual property. Failing to compete effectively against current or future competitors could have a materially adverse impact on its business, operational results, and financial condition.

Outlook

Ace Alpha Tech (AATPL) is engaged in legal, accounting, bookkeeping, auditing activities, tax consultancy, market research, public opinion polling, business, and management consultancy. The company has customized solutions coupled with diverse customer Segments. On the concern side, the company is dependent on and derives a substantial portion of its revenue from a limited number of customers. Cancellation by customers or a delay or reduction in their orders could have a material adverse effect on its business, results of operations and financial condition. Moreover, the company functions within a competitive landscape and may encounter challenges in effectively competing, potentially leading to a significant adverse impact on its business, operational outcomes, and financial condition.

The company is coming out with a maiden IPO of 46,70,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 65-69 per equity share. The aggregate size of the offer is around Rs 30.36 crore to Rs 32.22 crore based on lower and upper price band respectively. On performance front, the company has reported 3-fold rise in revenue from operations at Rs 1,487.12 lakh in FY24 as compared to Rs 489.26 lakh in FY23. Moreover, the company’s net profit surged over 3-fold to Rs 1,065.40 lakh in FY24 as compared to Rs 332.31 lakh in FY23. 

The company has experienced team of high calibers individuals, driven digitally with a common mission of consistent service delivery to its customers. Honesty, transparency, and consistency are the underlying values in its relationship with the clients to be trusted. The company aims to continue to improve ongoing operational effectiveness. This can be done through continuous business process review and timely corrective measures in case of diversion and technology up gradation with proper analytics base. As a result of these measures, the company will be able to increase its market share and profitability.