Quick Heal Technologies, which provides IT security solutions, is offering 1.43 crore shares in the price band of Rs 311-321 through its initial public offer (IPO). The issue opened today and will close on February10. Investors can apply for a minimum of 45 shares.
Here are the 10 things to know about this IPO:
1) Pune-based Quick Heal Technologies has a 30 per cent market share in the domestic IT security software market. It had an active license user base of 7.3 million as of December 31, 2015.
2) Quick Heal earns 97 per cent of its revenues from India, of which 87 per cent comes from retail sales and remaining 13 per cent comes from corporate clients and government organisations.
3) As of December 31, 2015, Quick Heal had 1,396 employees including a research & development (R&D) team of 547 employees. The company has steadily increased its R&D spends from 9.6 per cent of sales in FY13 to 19.6 per cent of sales as of the first half of FY16.
4) Out of the total issue size of Rs 450 crore, Rs 250 crore is fresh issue and the remaining is an offer for sale. Promoter holding in the company will come down to 72.9 per cent post this issue from 87.9 per cent currently.
5) From the IPO proceeds of Rs 250 crore, Quick Heal wants to use Rs 111 crore for advertising and sales promotion, Rs 42 crore on capital expenditure for R&D and Rs 28 crore for renovation of office premises in Kolkata, Pune and New Delhi. Sanjay Kakkar, managing director at Quick Heal Technologies, told NDTV Profit that the company wants to use the IPO proceeds to develop products for the small and medium enterprises (SME), in which competition is less compared to large enterprise solutions. Scope of revenue growth is very high in the segment, he added. (Watch)
6) Quick Heal's revenues have grown at a compound annual growth rate of 16.9 per cent over FY12-15 with FY15 revenue coming at Rs 286 crore. However, its net profit has been inconsistent due to increased investment on product development for enterprise business and brand building. Quick Heal's net profit declined from Rs 68 crore in FY12 to Rs 54 crore in FY15. In the first half of FY16, it reported a net profit of Rs 24 crore on sales of Rs 148 crore.
7) As of September 30, 2015, Quick Heal had a debt free balancesheet with cash balance of Rs 107 crore.
8) 10) Quick heal has already raised Rs 134 crore at the upper price band of Rs 321, from 10 anchor investors, which include BNP Paribas, Nomura India, ICICI Prudential, Reliance Mutual Fund, indicating strong interest among institutional investor community.
9) At the upper price band of Rs 321, its shares are valued at 41 times its FY16 estimated earnings per share compared to Quick Heal's competitor Symantec Corporation, which trades at 23.8 times on Nasdaq.
10) Low entry barriers, intense competition, lack of pricing power and technological changes are key risks in the business of Quick Heal, say analysts.