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Canarys Automations IPO plans to raise Rs 47.03 crores. The issue is entirely a fresh issue of 151.72 lakh shares. Canarys Automations Limited provides IT solutions in the space of Digitalization, Modernization, Automation, and Intelligence. .

About Canarys Automations IPO

• Canarys is a leading IT solutions provider with over 30 years of existence in the industry.
• Its expertise lies in enabling digital transformation for businesses through our comprehensive range of software solutions in the space of Digitalization, Modernization, Automation and Intelligence.
• With a team of 500+ technology solutions professionals, it delivers innovative and tailored solutions to meet client needs.
• It is mianly in two business segments:
  • Water Resource Management Solutions include automation solutions to modernize irrigation water conservation, and improve water use efficiency, Turnkey flood risk assessment and mitigation, cloud based water utilisation process automation for water sharing in rivers and canals and SCADA gate control systems.

• Technology solution offerings include Technology solution offerings include multiple array of consulting solutions in Digitalization, Modernization, Cloudification, Automation, Transformation and Intelligence
• Promoters: Mr. Metikurke Ramaswamy Raman Subbarao, Mr. Danavadi Krishnamurthy Arun, Mr. Raghu Chandrashekhariah, Mr. Sheshadri Yedavanahalli Srinivas, Mr. Pushparaj Shetty and Mr. Nagaraju Vineeth

Financials: Canarys Automations IPO

Anchor: Canarys Automations IPO

Canarys Automations IPO: Salient Points

• Promoter holding will come down from 100% to 73.6% after the IPO.
• Company proposes to utilize the Net Proceeds towards the following objects:

• In Fiscals 2023, 2022 and 2021, its customers located in the US contributed 23.52%, 17.39% and 24.82% of revenue from contracts with customers, respectively.
• Canarys Automations has an order book worth Rs. 57.93 cr. as of August 31, 2023.
• It has has posted steady growth.
• Top 10 clients contributed approximately 50.54% of its revenue from operations.
• Its average debtor cycle was 168 days, 129 days and 102days in Fiscals 2023, 2022 and 2021, respectively. The trade receivable and trade payables cycle is projected to be lower for FY24 and FY25 as compared to the previous three financial years as per RHP.
• Company intend to set up new delivery centre in the State of Karnataka, India, to accommodate the envisaged expansion of up to 700 member team.

• The total attrition rates among our IT professionals who have worked for Company for at least six months were 23% 23% and 25% for Fiscals 2023, 2022 and 2021, respectively.
• Growth plan projected by company:

• Revenue trend of the Company during the last three financial years

• The order book as on August 31, 2023 consists of following:
  • Water Resource Management Solutions business: INR 2,176.00 Lakh
  • Technology Solutions business: INR 3,617.00 Lakh
• Peers: Company has listed All E Technologies Limited & Happiest Minds Limited as its peers. All E Technologies Limited is more comparable and rules at a PE of 23.8x.
• Canarys Automations IPO is coming at a PE ratio of 20.4x(fy23 earnings) .
• I intend to apply in Canarys Automations IPO subject to availability of funds.
• GMP as reported on social media has been around Rs. 5
• Indorient Financial Services Ltd is the Lead Manager and has a reasonable but limited record. Past issues handled by them include Techknowgreen Solutions Limited, eMudhra Limited, SecMark Consultancy Limited.
• SME IPO are quite illiquid and volatile and exit options sometimes is delayed.
• There are reports that SEBI is of view that SME stocks prone to more market manipulation and SEBI may be looking to curb speculation in SME stocks.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.