Upcoming Fidel Softech IPO: How Strong Is The DRHP?

Upcoming Fidel Softech IPO: How Strong Is The DRHP?

The upcoming Fidel Softech IPO has already been declared. The IPO is about to go live on the 30th of May, 2022 and will end on the 2nd of June, 2022. Earlier the company was known by the name Fidel Softech Pvt. Ltd. The Fidel IPO GMP or IPO Grey Market is still unknown.

Let us have a closer look at the upcoming IPO details and see what potential the company has.

Overview Of The Global IT Industry

The Information Technology or IT market comprises sales of the information technology services as well as the related goods by the organizations, partnerships and the sole traders. These entities apply computers, computer peripherals and telecommunications equipment for storing, retrieving, transmitting and maneuvering data. The IT market entails services like computer networking, system design services, broadcasting and information distribution technologies such as telephones, television and other equipment that are used in the process. Sales of goods such as computers, computer peripherals and telecommunications equipment are also a part of this market that are used in offering the IT services. 

The key kinds of information technology include computer hardware, IT services, software products and telecom. Computer hardware is described as the physical components that a computer system requires for functioning and encompassing everything within a laptop or PC. The services are utilized by small, medium and large companies for their financial, retail and wholesale services, healthcare, manufacturing and others. 

The market size of global information technology had been anticipated to grow from $8,384.32 billion in 2021 to $9,325.69 billion in 2022 at a CAGR of 11.2%. The market growth is primarily owing to the companies rearranging their operations and recovering from the impact of Covid-19. This had earlier resulted in the restrictive containment measures that involved remote working, social distancing and the closure of the commercial activities giving rise to the operational challenges. The IT market size had been anticipated to reach $13,818.98 billion in 2026 at a CAGR of 10.3%.

The demand for cloud computing services is anticipated to be a key demand driving factor for the IT services during the forecast period. In cloud computing, the model data is stored on the internet by a cloud computing provider, who operates and manages the data storage as a service. Several companies are now choosing the applications that are hosted in the cloud for their daily operations. 

For instance, as per the statistics offered by hostingtribunal.com, 60% of the computing workloads had been running in the public cloud back in 2019. In the same way, the cloud data centers had been anticipated to process 94% of the enterprise workloads in 2021. The companies are also opting for cloud-based data storage. This is thus boosting the demand for IT services. 

The global Coronavirus (Covid-19) outbreak has been a significant restriction on the information technology or IT market back in 2020. This was due to the fact that the supply chains had been disrupted following trade restrictions and frequent lockdowns. Thus the employees working for these sectors had faced challenges related to communication and infrastructure. Employees had been forced to work from home.

Covid-19 is considered to be an infectious disease having flu-like symptoms including cough, fever and breathing trouble. The virus was first spotted in Wuhan, Hubei province of the People’s Republic of China back in 2019. Gradually it spread globally and infected North America, Western Europe and Asia. 

The national governments had taken serious steps to contain the transmission that had resulted in a decline in the economic activity with the countries entering a state of lockdown. The outbreak had a negative impact on the businesses throughout 2020 and also in 2021. Nevertheless, it is anticipated that the IT market will soon recover from the shock across the forecast period as it is a “black swan” event and is not related anyway to the fundamental or ongoing weaknesses in the market or the global economy. 

The IT services market has been expected to register a CAGR of around 10.36% during the forecast period of 2022-2027. Considering the global scenario, the increased IT spending with the widespread adoption of software-as-a-service and the heightened cloud-based offerings indicates that there is a demand for IT services in the industry. 

As the IP infrastructure has improved, it has paved the way for various threats related to data leading to the rise in data breaches. This calls for advanced security solutions over the traditional ones. As this is gaining a grip in the market, the companies have actively started to invest their resources in enhancing their advanced security offerings. 

Various trends such as Blockchain, AI, AR, and 5G are most likely to have an impact on the IT services’ offerings. With the commencement of the 5G technology, it will surely ensure that the companies might set up networks on their premises. The digital transformation has also been anticipated to enable either the new networks setup based on the local frequencies or upgrading the existing networks on LTE. This also requires the creation of real-time IT locations that facilitate the automation and the autonomy of the complex systems. 

The data-driven analysis with the help of technology is globally driving the strategic decisions. In addition to this, the amount of the worldwide generated data is also increasing significantly. As per Seagate Technology PLC, the volume of the data created throughout the world has been anticipated to rise to 47 zettabytes and 163 zettabytes in 2020 and 2025 respectively from 12 zettabytes in 2015. In the bid to optimally use these data reserves, the IT service providers are required to develop smart It services and platforms for analyzing the extraction data and analysis.

The IT services market is highly competitive and comprises a couple of major players. In the market share aspect, some players are currently dominating the market. Nevertheless, with the advancement in IT consultancy services, the new entities are increasing their presence in the market. Thus, they are expanding their business footprint across the rising economies.

As of February 2022, in collaboration with the global partners, Cisco promises to introduce private 5G to enterprises. It reduces the technical, operational and financial risks associated with managing enterprise private 5G networks of the enterprise customers. Cisco has also worked closely with two of the leading ORAN vendors for incorporating the ORAN technology into Cisco’s private 5G. This is currently in the customer trials with JMA and Airspan. Various private 5G projects and pilots in entertainment, education, manufacturing, government and real estate are currently in process.

Segmentation Of Global Information Technology Market

The global information technology market is segmented as follows:

  • By Type: Computer Hardware, IT Services, Software Products, Telecom.
  • By Organization Size: Large, Medium and Small Enterprise.
  • End-User Industry: Retail and Wholesale, Financial Services, Healthcare, Manufacturing and others. 

The following are the subsegments that are covered under the technology market:

  • Business Analytics and Enterprise Software
  • Cloud Services
  • Communications Hardware
  • Computer Peripheral Equipment
  • Computers
  • Computer Storage Devices and Servers
  • Database, Storage and Backup Software Publishing
  • Design, Editing and Rendering Software.
  • Hardware Support Services
  • Operating Systems and Productivity Software Publishing
  • Satellite and Telecommunication Resellers
  • Software and BPO Services
  • Video Game Software
  • Wired Telecommunication Carriers
  • Wireless Telecommunication Carriers

Key Market Trends Of Global Information Technology Market

Cloud services are gaining popularity owing to the emergence of Cloud-based platforms. Over the past few years, cloud computing has experienced a tremendous breakthrough as the solutions offer several advantages. However, this exposes data to substantial risks that are hosted in the cloud-based platforms including identity theft among the others. The organizations that are adopting cloud-computing must be aware of implementing the IT services that are capable of analyzing all the executions, applications and network connections. 

Owing to the IT operations advancements across the cloud-based platforms, the information technology services have become even more data-driven as well as real-time. This has created immense value for the business, specifically in the areas of operational efficiency, remote access optimization and discovery of business opportunities. 

As per a report published by the Cloud Ward in 2022, Google Drive was by far the most used cloud storage service globally standing at overwhelming 94.44% usage. The next place was occupied by Dropbox which is used for collaboration in cloud storage with a usage of 66.2%. These are followed by OneDrive (39.35%), iCloud (38.89%), MEGA (5.09%), Box (4.17%), and pCloud (1.39%).

Overview Of The Indian IT Industry

India is the largest sourcing destination in the world having the largest qualified and talented pool of technical graduates. As per the National Association of Software and Service Companies (Nasscom), the revenue of the Indian IT industry was estimated to reach $194 billion in the Financial Year 2021 with an increase of 2.3% YoY. The sector is considered to be the largest employer within the private sector. 

As per the Gartner estimates, the It spending in India had been estimated to reach $93 billion in the Financial Year 2021 with a YoY growth of 7.3%. This was further anticipated to reach $98.5 billion in 2022. As of the Financial Year 2021, the IT industry employed 4.5 million people.

This forceful entry into the cloud services has boosted the hyper-scale data center investments having global investments that are estimated to go beyond $200 billion annually by 2025. India has been anticipated to gain a significant share in the global market, with the investment of the country that is expected to hit ~$ 5 billion annually by 2025.

Market Size

The revenue of the IT and business service industry had been estimated at $6.96 billion in the first half of 2021, which is an increase of 6.4% YoY. The export revenue of the industry had been estimated at $150 billion in the Financial Year 2021. As per the Gartner estimates, the IT spending in India had been estimated to reach $93 billion in 2021, which is a 7.3% YoY growth. 

A further increase had been expected to $98.5 billion in 2022. India’s BPM sector currently employs more than 1.4 million people while the IT and BPM conjointly possessed more than 4.5 million workers as of the Financial Year 2021.

indian-it-and-business-service-industry
Indian IT & Business Service Industry

The software services exports of India, excluding the exports through the commercial presence, had increased by 4% in the Financial Year 2021 as compared to the Financial Year 2020. They are estimated at $133.7 billion from 2020 to 2021.

The Indian software product industry is anticipated to achieve $100 billion by the year 2025. Currently, the Indian companies are focusing to invest internationally for expanding their global footprints as well as enhancing their global delivery centers. Simultaneously, in February 2021, Tata Consultancy Services or TCS announced plans to recruit ~1,500 technology employees across the UK over the next year. The development was expected to build the capabilities for TCS in delivering efficiently to the UK customers.

As of the Financial Year 2021, the IT industry employed 4.5 million people.

In India, the data annotation market stood at ~$250 million in the Financial Year 2020, of which the US market had contributed ~60% to the overall value. The market is also anticipated to reach ~$7 billion by 2030 owing to the accelerated demand for AI or Artificial Intelligence.

Investments & Recent Developments

The core competencies and strengths of Indian Information Technology have drawn significant investments from the major countries. The computer hardware and software sector in India had attracted increasing Foreign Direct Investment (FDI) inflows worth $74.12 billion between the period April 2000 and June 2021. According to the data released by the Department For Promotion of Industry and Internal Trade (DPIIT), the IT sector had ranked 2nd in the FDI inflows. In addition to this, the Japanese investments in the Indian IT sector had also grown 4X between the years 2016 and 2020. The investments stood at $9.2 billion during the review period.

sector-wise-breakup
Sector-wise Breakup

The leading Indian IT firms such as TCS, Wipro, Infosys and Tech Mahindra are currently diversifying their offerings. They are also showcasing leading ideas in the blockchain and Artificial Intelligence to the clients making use of the innovation hubs and the R&D centers for creating differentiated offerings. Below are some of the major developments that occurred in the Indian IT and ITeS sector:

  1. Back in November 2021, Wipro had partnered with TEOCO for building solutions for communication service providers or CSPs in the bid to improve their efficiency, network automation, reliability and flexibility. 
  2. In August 2021, SAP India as well as Microsoft had announced the introduction of Tech Saksham. It is a collaborative skilling initiative that has been aimed at enabling young women from underprivileged regions to pursue careers in technology. They mentioned that 62,000 female students will be trained in AI, web design, cloud computing and digital marketing through this collaboration. 
  3. In August 2021, TCS was declared a leader in the Nelson Hall NEAT for CX Services in Banking, Financial Services and Insurance (BFSI).
  4. In August 2021, a business process management company known as Startek announced a plan to increase its minority stake in the CSS Corp for reaching a wider market. It had additionally announced a plan for recruiting more than 2,000 employees in India in the Financial Year 2022.
growth-in-export-revenue
Growth In The Export Revenue

Fidel Softech Pvt. Ltd.: Business

The company Fidel Softech Limited is basically a LangTech Consulting firm that offers technology services with the local language User Interface (UI) and/or User Experience (UX). The services that the company offers include IT services comprising Infrastructure & Cloud support, Software development, Localization including translation, interpretation, software localization & multilingual data creation and Consulting & Staffing services including training.  

The company helps their clients with Technology-Languages-People. They assist their customers to deliver their products/solutions/services to their end-users in their local languages by implementing localization solutions, technology and Consulting. The IT company also offers Software development & Cloud infrastructure support services, and localization services such as Translation, Interpretation, Content creation, Multi lingual data creation, transcription & Annotation for training AI engines, Video subtitling and other video audio services, Data engineering, testing, scripting & tooling services and Consulting & Staffing services. 

The company is capable enough to offer bilingual software development and possesses engineers speaking diverse languages working for the Asian markets. Fidel Softech claims to train its engineers in several languages and technology as well as work closely with Asian clients. They accept turnkey projects, operational support & manpower augmentation and product design & development.

The company is ISO/IEC 27001: 2013 and ISO 9001: 2015 certified compliant with the Information Security Management System standard and Quality Management System standard. 

Fidel Softech mentions that its customer base is spread across the globe having a presence in the following countries:

  • Argentina
  • Belgium
  • China
  • Cyprus
  • Czech Republic
  • Dubai
  • Egypt
  • Germany
  • Hong Kong
  • Ireland
  • Italy
  • Japan
  • Kingdom of Saudi Arabia
  • Malaysia
  • Mauritius
  • Netherlands
  • New Zealand
  • Poland
  • Portugal
  • Russia
  • Singapore
  • South Africa
  • South Korea
  • Spain
  • Sweden
  • Taiwan
  • Ukraine
  • United Arab Emirates
  • The United Kingdom
  • The United States of America

The sales of the IT company via their exports have contributed to 86.09%, 86.89% and 82.40% respectively from their revenue from operation for the year ended March 31, 2022, 2021 and 2020 respectively.

What Services Can You Opt For From The Company?

The following are the services that you can enjoy from their portfolio:

  • Application Development & Maintenance Services 
  • Customized software development and Support 
  • Engineer-as-a-Service 
  • Product Development as a Service (PDaaS)

Their Cloud Infrastructure, Virtualization and Managed Services Include:

  • Complimentary Services (Training & 3rdparty solution/service implementation) 
  • Enterprise Product Support 
  • Managed Services 
  • Project-based Services 
  • Remote IT Support Services 
  • RPA – Automation Anywhere offering 
  • ServiceNow offering

Who All Are Managing The Fidel Softech Limited?

Fidel Softech Limited is managed by a number of talented and experienced personnel. Have a look before you plan to buy IPO stock or go for upcoming Fidel Softech IPO!

  • Sunil Sudhakar Kulkarni

Sunil Sudhakar Kulkarni, aged 50 years, is the Promoter, Chairman and Executive Director of our Company. He holds a degree of Bachelor of Mechanical Engineering, Pune University, Pune, India in the year 1993 and also completed a summer program in Technical Japanese for Materials Science and Related Engineering, Massachusetts Institute of Technology, in the year 1996. He has been on the Board of our Company since August 23, 2005. He has more than 20 years of experience in the field of Information Technology Consultancy. He is currently responsible for the overall management and marketing affairs of the Company. 

  • Prachi Sunil Kulkarni

Prachi Sunil Kulkarni, aged 46 years, is the Promoter and Managing Director of our Company. She holds a degree of Bachelor of Engineering (Computer Science), Dr. Babasaheb Ambedkar Marathwada University, Aurangabad, India in the year 1998. She has been on the Board of our Company since 2011. She has an experience of more than 20 years in the financial domain in terms of functional and technical. She is responsible for the product development, functional and technical department of our Company. 

  • Shyamak Sunil Kulkarni

Shyamak Sunil Kulkarni, aged around 21 years is the Non-Executive Director of our Company. He was appointed on March 20, 2022. Presently, he is pursuing a Bachelors of Econometrics and Quantitative Economics from Purdue University, USA. 

  • Apurva Pradeep Joshi

Apurva Pradeep Joshi, aged around 33 years is the Independent Director of our Company. She has been appointed as Additional Non-Executive Independent Director of our Company with effect from April 15, 2022 and has been Regularized as Independent Director w.e.f April 15, 2022. She has completed Bachelors of Commerce from the University of Pune. She has completed Certified Anti Money Laundering Expert Course, Certified Bank Forensic Accounting Course and Certified Forensic Accounting Professional Course from the Forensic Accounting Research Foundation. She is a Certified Fraud Examiner. She has passed the Professional Competence Examination conducted by The Institute of Chartered Accountant of India. 

She has been conferred the Honorary Degree of Doctor of Letter (D. Litt.) from University of South America. She has been awarded by the TATA School of Social Sciences, Center for Social and Organizational Leadership for successful participation and completion of INQUEST: A field-based summer school program on “Organization Development, Change and Leadership in Civil Society Organizations” in India. She has experience of more than 10 years of experience in Due Diligence, Forensic accounting and auditing. 

  • Girish Mohan Desai

Girish Mohan Desai, aged around 50 years is the Independent Director of our Company. He has been appointed as Additional Non-Executive Independent Director of our Company with effect from April 15, 2022 and has been Regularized as Independent Director w.e.f April 15, 2022. He has completed Masters of Engineering (Mechanical-CAD/CAM) from Bharati Vidyapeeth University, Pune and has also been qualified for Doctor of Philosophy from Shri Jagdishprasad Jhabarmal Tibrewala University. He has an experience of more than 20 years in the education industry. 

  • Pradeep Shivshankar Dharane

Pradeep Shivshankar Dharane, aged around 56 years is the Independent Director of our Company. He has been appointed as Additional Non-Executive Independent Director of our Company with effect from April 15, 2022 and has been Regularized as Independent Director w.e.f April 15, 2022. He holds a degree in Masters of Technology (Electronics) from the university of Dr Babasaheb Ambedkar Marathwada University. He has an experience of around 20 years in the engineering industry.

Upcoming Fidel Softech IPO: What Are The Strengths To Consider?

The following are the primary strengths of the IT firm Fidel Softech Limited that you must consider before investing in the Upcoming Fidel Softech IPO:

  • Offers technology services having local language UI/UX.
  • They have clients in both international and domestic markets. 
  • Boasts a diverse service portfolio.
  • Offers quality assurance.
  • Continuously leverage the experience of their promoters.

Upcoming Fidel Softech IPO Offer

Below is the offer for the Upcoming Fidel Softech IPO:

Parameters
Details
Fidel Softech IPO Face Value
₹10 per share
Fidel Softech IPO Price
₹37 per share
Fidel Softech IPO Lot Size
3000 Shares
Issue Size
3,650,000 shares of ₹10 (aggregating up to ₹13.51 Cr)
Fresh Issue
3,650,000 shares of ₹10 (aggregating up to ₹13.51 Cr)
Offer For Sale
Nil

How Is The Financial Of Fidel Softech?

Have a look at the financials of the company which will help you to make a good decision on whether or not to invest in the upcoming Fidel Softech IPO.

assets-and-liabilities
Assets & Liabilities
fidel-softech-cash-flow
Fidel Softech Cash Flow
fidelsoftech-cash-flow
Cash Flow

IPO Watch: Verdict Of The Upcoming Fidel Softech IPO

The Upcoming Fidel Softech IPO does not seem to have much potential considering its DRHP and the current market condition. The IPO might have a low subscription rate. What could be the reasons? Let us analyze.

The performance of the IT industry globally is not that great. The FIIs or the Foreign Institutional Investors, who have once invested in the market during the worst condition of Covid-19, are withdrawing their money from the IT and power sectors. As the company is not that big as compared to the other big IT whales, Fidel Softech is undergoing a challenging competition. The big IT firms or the It whales are currently on discount which makes the investors and the retailers invest in these IT firms rather than Fidel Softech Limited. The company is a family-based one and thus, growth of the company will not be that immense as compared to the other companies.

To conclude, it can be stated that the market conditions are not stable at all. The company will not benefit much until the market becomes a stable one. Thus, the new IPO is not ideal for investment and listing gain. However, we will also offer you a Fidel IPO review after the listing is over.

Sahil Patil

Investing decisions should be precise and correct as that involves huge sums of money. So if you have to consider a good investment advisor, then you can surely count on Sahil Patel. He has been in the investing business for the last 5 years and will surely help you in your investment decisions.

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