Esconet Technologies IPO (NSE SME) Overview

Esconet Technologies a leading system integrator in the IT infrastructure, cloud computing, managed services and data security sectors. Esconet Technologies IPO envisages to raise Rs 28.22 crores. The issue is entirely a fresh issue of 33.6 lakh shares.

IPO opensFeb 16, 2024
IPO ClosesFeb 20, 2024
IPO Size (Rs.)₹28.22 Cr
IPO Size (shares)3,360,000 share
BreakupFresh issue only
Face Value:₹ 10
IPO Price in Rs :₹80 to ₹84 per share
Minimum Lot1600 Shares
Listing AtNSE SME
QIB ~50 %
NII Quota~15%
Retail Quota~35%
 Lead ManagerCorporate Capitalventures Pvt Ltd
Market makerSs Corporate Securities

About Esconet Technologies Limited:

  • Esconet was founded in 2012 &  is located in Delhi
  • Esconet Technologies is engaged in the business of meeting a wide range of IT requirements such as high-performance supercomputing solutions, data centre facilities, encompassing storage servers, network security, virtualization, and data protection. Our comprehensive solutions cater to the needs of SMEs, large enterprises, and public sector clients.
  • In addition to its HexaData servers line, the company caters to diverse client demands by reselling premium IT Infrastructure Hardware and Software in areas such as Servers and Graphics Workstations, Virtualization software for Servers, Desktops, Applications, Backup and Disaster Recovery solutions, Datacentre and Access Networks, Advanced Software Defined Networks, Network Security tools, both hardware and software-based, Email Communication Systems complemented by robust Email Security, Databases with an emphasis on High Availability, Cutting-edge Log Management and Analytics software.
  • Recognizing the demand in the Indian market, Esconet introduced its brand, HexaData, specializing in high-performance Servers, Workstations, and storage systems.
  • Esconet has extend its capabilities into the cloud services domain through its wholly owned subsidiary, ZeaCloud Services, ensuring that our clients have access to cutting-edge technology and a seamless IT infrastructure experience.
  • The promoters of Company are Mr. Santosh Kumar Agrawal, Mr. Sunil Kumar Agrawal and Mr. Vineet Agrawal.

Financials: Esconet Technologies Limited

Particulars/ Rs. LacsSept 30, 2023FY23
Profit after Tax305.47304
Share Capital77.7876.71
Net Worth902.97554.19
Earnings per share39.7439.63
Net Asset Value116.0672.29
Total Borrowing
– Long Term251.1341.07
– Short Term757.85762.82
Post issue Share Capital1,236 
IPO price84 
EPS Fy232.5 
PE Fy2334.2 
EPS Fy24 (annualized)4.9 
PE Fy24  (annualized)17.0 
Market cap in Lacs10,382.4 
Market Cap/sales135.3 

Anchors: Esconet Technologies IPO

Esconet Technologies IPO: Salient Points

  • The global supercomputer market is projected to increase at an impressive CAGR of 10.5%.
  • India Server Market was valued at USD 1602.97 million in 2022 and is expected to register a CAGR of 7.19% during the forecast period, owing to a rapidly increasing investment in Data Centre due to increased usage of cloud services in the country.
  • To open data centers (servers) in various states, the Indian government is considering a number of projects. For example, the UP-Data Center Policy FY2021 established a target investment of INR 20,000 Crores (USD 2.5 Billion) for the development of the 250MW data center industry.
  • Esconet manufactures high-end servers, workstations, and storage systems under its brand, HexaData®, catering to the domestic market. 
  • The company plans to expand its manufacturing capacity comprising high-end servers, workstations and storage systems under its own brand ‘HexaData®’. At the same time, it is also expanding its Private Cloud vertical, further strengthening its integrated solutions offerings.Contributing significantly to the flagship initiative ‘Make In India’,
  • Esconet has forged productive collaborations with global IT behemoths such as Intel, AMD and NVIDIA to introduce HexaData, a supercomputer server with a hybrid architecture that combines NVIDIA’s GPGPUs with AMD/Intel CPUs. Microsoft, Dell EMC, Cisco Hewlett Packard Enterprise (HPE), VMware, Nutanix, RedHat, Suse, Veeam, Sophos, and Trend Micro are key technology partners.
  • Net Proceeds of IPO Utilization:
ParticularsAmount( ₹Lacs)
1.Working Capital Requirements of the Company1,600.00
2.Investment in wholly owned subsidiary company, Zeacloud Services Private Limited, to fund its Capital Expenditure expenses250.00
3.General Corporate Purposesrest
  • Esconet has garnered a pool of clientele base of private and public sector organizations mentioned below.
    • Ministry of Defence
    • National Informatics Centre-MeitY
    • Indian Institute of Technology
    • Indraprastha Institute of Technology Limited
    • Bharat Electronics Limited
    • Oil & Natural Gas Commission Limited
    • Engineers India Limited
    • Hindustan National Glass & Industries Limited
    • CE Info Systems Ltd.
    •  Radnik Exports Pvt. Ltd
    • DA Tech Systems LLP
    • RV Forms & Gears etc.
  • Key Performance Indicators of Company
ParticularsFor the period ended on September 30, 2023Financial year ended March 31, 2023Financial year ended March 31, 2022Financial year ended March 31, 2021
Revenue from Operations7141.599465.956856.284411.89
Total number of customers served (Nos.)247384432409
Foreign currency gain / (loss)4.68– 3.050.00181.76
Exports revenue as % of revenue from operations (%)0.139%0.32%0.79%1.24%
Cost of goods sold as % of revenue from operations (%)85.19%82.86%84.44%84.30%
EBITDA margin (%)7.34%6.73%2.95%0.26%
ROCE (%)42.37%59.11%20.76%-8.33%
PAT margin (%)4.28%3.21%1.06%-2.28%
ROE (%)42.06%75.54%33.77%(56.42)%
Net working capital days47.6628.8124.5132.93
Debt to equity ratio (times)1.121.993.093.56
  • Have put in a strong performance for H1Fy24.
  • Government sector contributed about one thirds of its revenue. Exports are quite low.
  • Peers
Company/₹ crCMP (₹)Revenue(cr)Net Profit(₹ cr)NPM %PEMcap (cr)Macp/salesRONW%
Esconet Technologies8496.93.043.1%34(17)103.8241.155%
E2E Networks79967.01014.9%55.41,15717.320.06%
Netweb Technologies 1,458445.74710.5%1448,17218.368.01%
  • Esconet’s strategic collaboration with NVIDIA has resulted in their growth in the Artificial Intelligence (AI) and Machine Learning (ML) domain, enhancing their servers and workstations.
  • There are some indications by management of. 300 crore revenues by March 2026.
  • Esconet Technologies IPO is coming at a PE ratio of 34x(fy23 earnings) and 17x (fy24 annualized earnings)
  • I intend to apply in Esconet Technologies IPO subject to availability of funds. It has presence in high-performance Servers under its own brand as well as others, is expanding capacity of Its servers manufacturing & also extending its presence in private cloud services domain.
  • GMP as reported on social media has been Rs. 75.
  • Corporate Capitalventure is the Lead Manager with a good record. Past issues handled by them include Alpex Solar Limited, Accent Microcell Limited, Rockingdeals Circular Economy, Oriana Power Limite, Crayons Advertising Limited, Droneacharya Aerial Innovations Limited, Annapurna Swadisht Limited, Rajnandini Metal Limited, Swastik Pipe Limited, Uma Exports Limited, Phantom Digital Effects Limited, Nupur Recyclers etc.
  • SME IPO are much more risky and volatile than mainboard IPOs. There seems to considerable speculation in SME segment at this juncture.
  • Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared 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.

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