Pace Digitek
- Pace Digitek is coming out with a 100% book building; initial public offering (IPO) of 3,93,92,343 shares of 2 each in a price band Rs 208-219 per equity share.
- Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
- The issue will open for subscription on September 26, 2025 and will close on September 30, 2025.
- The shares will be listed on BSE as well as NSE.
- The face value of the share is Rs 2 and is priced 104.00 times of its face value on the lower side and 109.50 times on the higher side.
- Book running lead manager to the issue is Unistone Capital.
- Compliance Officer for the issue is Meghana M P.
Profile of the company
Pace Digitek is a telecom infrastructure solution provider with a significant focus on the telecom infrastructure industry including telecom towers and optical fibre cables. It undertakes manufacturing, installation and commissioning services of products at the site and undertake operation and maintenance of site including tower erection and optical fiber cable laying as turnkey solution. It generates its revenue from operations from 3 verticals i.e., telecommunications, energy, and information and communication technology (ICT).
It has established operational presence in Maharashtra, Gujarat, Karnataka, Andhra Pradesh, Jammu and Kashmir, Uttarakhand, Assam, Manipur, Arunachal Pradesh, Mizoram, Nagaland, Sikkim among others along with operations in Myanmar and Africa. The company commenced its operations as an electrical equipment product manufacturer for the telecom industry, and over the years it has expanded its Telecom Infra operations to comprise products, projects, operations & maintenance (O&M), and services and solutions.
With the acquisition of the business of GE Power Electronics India and rights over the ‘Lineage Power’ brand in Fiscal 2014, it commenced ‘end to end’ manufacturing of direct current systems which are tailored for telecom tower companies and operators and has helped it to enhance its market position in the energy management solutions. From Fiscal 2023, it has backward integrated its supply of Telecom Infra products through its Subsidiary, Lineage Power Private Limited (Lineage) for the projects that it undertakes. The company has also been undertaking projects for solarization of telecom towers (which comprises supply of solar modules and along with lithium-ion batteries and the related equipments to telecom towers, installation, commissioning and O&M) since Fiscal 2013.
Proceed is being used for:
- Funding capital expenditure requirement for investment in its Subsidiary, Pace Renewable Energies Private Limited, for setting up battery energy storage systems (BESS) for a project awarded by the Maharashtra State Electricity Distribution Company Limited (MSEDCL) (Capital Expenditure)
- General corporate purposes
Industry Overview
Telecommunication has been playing a pivotal role in India’s economic growth. It is the backbone of many industries, including e-commerce, media and entertainment, finance, information technology (IT), healthcare, transportation and logistics. The sector facilitates seamless movement of data worldwide through wired or wireless channels and significantly influences economic progress. The telecom market is constantly evolving with the integration of cutting edge technologies over the years. This has widened the coverage of telecom services globally and made them an indispensable part of the daily lives of consumers. Telecom proved to be an essential service especially during the Covid-19 pandemic, enabling people to remain connected amid worldwide lockdowns. The telecom industry mainly comprises wireless services or mobile services, and wireline services or fixed-line services. In India, wireless services accounted for 97.2% of the total telecom customer base as of fiscal 2024, followed by wireline services (2.8%).
The tower segment, traditionally divided into ground-based towers (GBT) and roof-top towers (RTT), has marginally diversified into IBS (in-building solutions), micro-cell (small-cell) sites, and Wi-Fi-hotspots due to an increase in data traffic and technological advancements. These new technologies, having begun to proliferate in the Indian subcontinent on a small scale, are expected to expand their presence in the future as telecom service providers (TSPs) look to densify their existing network coverage. Additionally, within telecom towers, the industry can be further subdivided on the basis of active and passive infrastructure. Passive infrastructure forms the majority at around 70% of the capital costs of setting up a wireless network in India and includes towers, shelters, power-regulation equipment, battery back-ups, diesel generator (DG) sets, air-conditioners, fire extinguishers and security cabins required at sites where telecom towers are installed.
Further, the Indian optical fibre EPC industry is defined according to service offerings, such as optical fibre laying and rollout, network deployment, and system integration across end-use sectors, such as telecommunications, defence, railways, smart cities, IT, and enterprises, etc. In fact, the optical fibre network is the backbone of the burgeoning digital economy of India. The industry, which was estimated at Rs 84 billion as of fiscal 2024, is expected to grow to Rs 135-140 billion by fiscal 2028, which is a CAGR of 12.5-13.5%, supported by drivers such as digital transformation across sectors, growing 5G coverage and infrastructure, fibre to the home (FTTH), government schemes and policies (BharatNet, Digital India, Smart Cities, Fiberisation targets, etc), and systems and network modernisation across sectors such as defence, railways, etc. Going forward, the outlook of the Indian telecom industry seems positive, with the shift towards 5G and premium plans, rising data consumption and demand for digital services. The improving financial performance along with declining capital expenditure (capex) intensity of leading players after completion of 5G rollout is expected to improve free cash flow and support the sector's overall credit profiles.
Pros and strengths
End-to-end solutions provider: The company provides end-to-end solutions with integrated operations in the telecom tower sector, ranging from manufacturing and supply of power management systems, project execution through EPC or turnkey mode, product life cycle management services, and O&M. Passive infrastructure forms the majority at around 70% of the capital costs of setting up a wireless network in India and includes towers, shelters, power-regulation equipment, battery back-ups, diesel generator (DG) sets, etc.
Diversified business segments with strong order book: The company has been undertaking projects for solarization of telecom towers (which comprises supply of solar modules and the related equipment to telecom towers, installation, commissioning and O&M) since Fiscal 2013. In 2021, the company also ventured into the ICT sector. The company’s diversified order book ensures reflects its demonstrable ability to cater to diverse business verticals and the strength of individual business verticals. While its telecom business vertical has traditionally been its largest source of revenue, the other business verticals are witnessing significant growth. The diversity of its businesses is one of the key aspects enabling it to consistently grow its revenue and its profitability.
Advanced manufacturing facilities with production efficiency: The company, through Lineage, have set up 2 manufacturing facilities in Bengaluru, Karnataka, one manufacturing facility located at Plot No. 27A, 1st Phase, Industrial Estate Mysore Road, Kumbalgodu, Bengaluru, Karnataka for manufacturing Telecom Infra equipments (Manufacturing Facility 1) and the other for manufacturing facility located at Plot No. 30 A-1, 1st Phase, Industrial Estate, Mysore Road, Kumbalgodu, Bengaluru, Karnataka for manufacturing lithium ion battery systems (Manufacturing Facility 2). The company, through Lineage, have recently commenced operations at its manufacturing facility at 73-P, Bidadi Industrial Area, 2nd Phase, Sector-2, Bidadi, Karnataka which is being used for manufacturing BESS (Manufacturing Facility 3).
Experienced Board of Directors buttressed by technically proficient: The industry in which it operates is technically complex and R&D intensive and relies significantly on technically qualified resources. It has endeavoured to inculcate and instill a culture of R&D which is a key element of its growth. The company has continued to strive towards continually developing its product range and have focus on augmenting its R&D capabilities by continuously developing its R&D team to improve its systems design and architecture and to expand its products and solutions suite. It has established an R&D centre located at its Registered and Corporate Office which houses its dedicated 19-member R&D team. The company has led by a ‘technocrat’ Promoter i.e., Maddisetty Venugopal Rao who has over 20 years of experience in telecommunications and energy industry, and its experience Board of Directors is supported by qualified and technically proficient senior management.
Risks and concerns
Maximum revenue comes from limited customers: The company’s business is significantly reliant on certain key customers, and it derived 96.25%, 99.45% and 92.16% of its revenue from operations during the Fiscal 2025, Fiscal 2024 and Fiscal 2023 respectively, from its top 10 customers. Further, its business, results from operations, and financial condition are dependent on maintaining relationship with its customers. Further, its business, results from operations, and financial condition are dependent on maintaining relationship with its customers. Loss of any of these customers or loss of revenue from any key customers could have a material adverse effect on its business, financial condition, results of operations and cash flows.
Significant revenue comes from government related entities: A significant proportion of the company’s orders are from government related entities which award the contract through a process of tender, and it derived 96.17%, 92.08% and 34.14% of its revenue from operations during the Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively, from its public sector customers. Tenders, typically, are awarded to the lower bidder once all other eligibility criteria are met. Its performance could be adversely affected if it is not able to successfully bid for these contracts or required to lower its bid value.
Geographical constrain: The company’s source of revenue is concentrated in in states such as Maharashtra, Karnataka, Jammu and Kashmir, Andhra Pradesh and Tamil Nadu. It has derived 46.05%, 40.62% and 0.13% of its revenue from operations during the Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively, from Western region of India. Its inability to operate and grow its business in such locations may have an adverse effect on its business, financial condition, result of operation, cash flow and future business prospects.
Significantly reliant on a few vendors: The company procures its key raw materials such as lithium ion cells, tower structures and solar panels from vendors. It is significantly reliant on a few key vendors for its raw materials and in Fiscals 2025, 2024 and 2023 it sourced its raw materials from 172, 189 and 114 vendors, respectively. The company’s expense towards procurement of raw materials during Fiscal 2025, Fiscal 2024 and Fiscal 2023 was 34.55%, 72.39% and 19.54% respectively. Any loss of vendors will have a material adverse impact on its business and its revenue.
Outlook
Pace Digitek is a multi-disciplinary solutions provider with a primary focus on the telecom infrastructure industry. The company has end-to-end solutions provider with integrated operations in the telecom tower sector. The company has advanced manufacturing facilities with production efficiency. On the concern side, the company’s business is significantly reliant on certain key customer and loss of any of these customers or loss of revenue from any key customers could have a material adverse effect on its business, financial condition, results of operations and cash flows. Moreover, its source of revenue is concentrated in Western region of India. Its inability to operate and grow its business in such locations may have an adverse effect on its business, financial condition, result of operation, cash flow and future business prospects.
The issue has been offering 3,93,92,343 shares in a price band of Rs 208-219 per equity share. The aggregate size of the offer is around Rs 819.36 crore to Rs 862.69 crore based on lower and upper price band respectively. Minimum application is to be made for 68 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations marginally increased by 0.18% from Rs 24,344.89 million in Fiscal 2024 to Rs 24,387.80 million in Fiscal 2025. Moreover, the company’s profit after tax increased by 21.42% from Rs 2,298.71 million in Fiscal 2024 to Rs 2,791.02 million in Fiscal 2025.
The company intends to expand its geographical reach by offering equipment for Telecom Towers and battery equipments in Kenya and other African markets, with Lineage supplying the Telecom Infra equipment and BESS. Further, it also intends to focus on improving its revenue from the energy sector. The company has been recently awarded a solar power project to generate, develop and supply electricity, with capacity (i.e., the installed capacity of the solar power project and energy storage systems to be set up of 100MW for the solar power project and 50 MW/ 100MWh for the energy storage systems), on a build own and operate model for a period of 25 years. It also intends to backward integrate the manufacturing of solar modules and solar cells.
