Enfuse Solutions IPO: AI Stock Empowering India's Digital Landscape

Remember the 1990s when the internet was slowly creeping into Indian homes?

Thanks to its skilled and affordable talent pool, India became the hottest spot for IT outsourcing.

That momentum kept going, transforming India into a powerhouse for product development by the 2000s.

Fast forward to 2016 and Indian firms started leading the pack as multinational companies.

By 2022, India ranked 2nd in terms of new unicorns added in a particular year. Currently, there are 59 SaaS unicorns and potential unicorns.

Deep tech adoption incorporating AI, IoT cybersecurity, is rapidly expanding. With data costs lurking around just Rs 10 per GB, India is attractive to the world.

The Indian IT and business services industry is projected to reach a staggering US$ 19.9 bn by 2025.

By 2025, the Indian IT industry will be a game-changer, contributing 10% to the country's GDP.

And one company that is entering the primary markets from this exciting space is Enfuse Solutions.

The independent digital solutions provider opened its IPO this week and it's all set to make a debut soon!

Here are some crucial details about its IPO.

Enfuse Solutions IPO: 5 Things to Know

Enfuse Solutions has announced a fresh issue of 2.3 million (m) shares with a book-built issue amounting to a total of Rs 224.4 m at a face value of Rs 10 per share.

The company's IPO opened on 15 March 2024 and it will close on 19 March2024.

The company has fixed issue price at Rs 91 to Rs 96 per share.

The allotments will be finalised on 20 March 2024, and the listing date on NSE SME platform will be 22 March 2024.

HNIs are required to purchase at least 2 lots to start investing.

Hem Securities Limited is the company's book-running lead manager, and Bigshare Services Pvt Ltd is the registrar.

The IPO reservations are as follows:

Non-institutional investors NII	Not less than 15%
Qualified institutional buyers (QIB)	Not more than 50%
Retail investors	Not less than 35 %

With the successful IPO issue, the promoter holding will go down to 73.58%.

The funds generated through this IPO will be primarily utilised for debt repayment, working capital requirements, and general corporate purposes.

The Grey Market Premium (GMP) of Enfuse Solutions currently stands at Rs 70 per share, meaning investors are willing to pay a premium of Rs 70 over and above the issue price.

When considering the upper end of the IPO price band and GMP, the estimated listing price comes to Rs 166 per share, 72.9% higher than its IPO price.

About Enfuse Solutions

Founded in 2017, Enfuse Solutions offers a powerful suite of integrated solutions across a wide range of fields - data management & analytics, ecommerce & digital services, machine learning and artificial intelligence (AI), EdTech, and technology solutions.

Enfuse Solutions takes the pain out of complex tasks by building custom data processes.

To get things done, they partner with clients through subcontracting agreements, ensuring a win-win situation for everyone.

Through their clients, Enfuse Solutions has served companies in booming sectors like technology, banking, financial services and insurance (BFSI), retail, fintech, media, healthcare, and education.

They started their operations at scale in 2019 with a delivery centre in Thane, Mumbai. Now, they have expanded to another delivery centre in Vikhroli.

Close Look at its Financials

Enfuse Solutions is built on a foundation of technological brilliance. Their team boasts talented employees with technical expertise and deep industry knowledge.

The company's financials are on an upward trajectory.

Revenue from operations soared to Rs 280.3 m in the December 2023 quarter, compared to Rs 261 m in the same quarter a year ago.

The company's profit margins are also on the rise, inching up to 11.5% in 2023 from 11.2% in 2022.

Financial Snapshot

Key financial performance	31-Dec-23	FY 2022-23	FY2021-22	FY 2020-21
Revenue from operations (in m)	280.3	260.9	255.4	172
EBITDA (in m)	53.1	49.7	32.3	22.1
EBITDA Margin	18.96%	19.05%	12.65%	12.87%
PAT (in m)	32.3	29.3	19.8	15.5
PAT Margin	11.51%	11.22%	7.76%	9.04%
RoE	39.88%	58.42%	77.49%	197.02%
RoCE	24.05%	46.61%	46.71%	133.23%

Data Source: Red Herring Prospectus

Enfuse Solutions' operations are not limited to India. A majority of its revenue comes from exports.

The company has diversified its income stream by working with clients in multiple locations. This makes them less reliant on any one market.

Evaluation the Future Outlook

Enfuse Solutions always stays ahead of the curve. Diversity in its business clients is a core strength. It has clients across booming sectors.

As it does not involve putting all eggs in one basket, it provides a stable foundation for growth. Plus, the company's diverse range of digital services cater to any client's needs.

The promoters have experience in the domain, contributing to the growth of business operations. The comprehensive exposure has enabled the company to expand the business to the USA, Ireland, Netherlands, Canada, etc.

The core business strategy that Enfuse Solutions focuses on is building long-term, sustainable relationships with clients.

While there are significant growth opportunities for additional growth with the existing client base, the company also builds expertise to extend capabilities to capture new clients.

It has scaled up promotional activities by increasing advertising expenses by 82.4% in 2023.

As the technological capabilities entirely rely on the workforce, the company also focuses on attracting and retaining highly skilled employees.

In Conclusion

The government's 'Digital India' program is rapidly expanding with improved digital infrastructure and access. This positions India as a global leader in digital adoption.

It is fuelling a surge in the IT & BPM sector, a proven growth engine for the Indian economy.

Reports predict growth to skyrocket 10% to 15% annually.

However, note that every journey has its bumps.

Businesses in the deep tech sector face challenges like cyber security threats, inflation, and supply chain disruptions.

Internally, companies grapple with talent shortages and data hurdles. And the fact that the company operates in the SME segment makes it even more complex to bet on such a small player.

Nevertheless, Enfuse Solutions has historically been able to navigate these challenges.

The company focuses on aligning BPM services with the client's growth and innovation goals.

Also, it prioritises both employee experience (EX) and customer experience (CX) because it understands that the business rides on its people.

As over 90% of major corporations plan to boost their IT budgets by 10%, there will be increasing demand for digital solutions.

Also, about 50% of businesses want to transform their BPM relationships from transactional to strategic partnerships.

India has the highest concentration of these major corporations currently using and considering India for their BPM needs.

This, combined with the country's highly skilled technical talent, creates a powerful competitive advantage.

That's it for today... for more, check out the current IPOs and upcoming IPOs on our website.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...