Quicktouch Techno NSE SME IPO review (May apply)

Review By Dilip Davda on Apr 13, 2023

•    QTL is engaged in ERP, EIMS and SAAS-related services and products. 
•    The company has posted fantastic results for the last 17 months.
•    The sustainability of margins reported is a major concern.
•    Based on its FY23 annualized earnings, the issue appears lucratively priced. 
• Well-informed/risk takers may consider parking funds for the medium to long-term rewards.

Time and again, we are witnessing non-transparent disclosures from Share India Capital Services Pvt. Ltd. about their track records. We are unable to understand the attitude of this lead manager as we are finding many anomalies in their track record data in the recent mandates filed by them. It is really surprising how NSE has approved such incomplete info offer documents. (Refer to pages 233-234 of the offer document).

Quicktouch Technologies Ltd. (QTL) is engaged in the business of Enterprise Resource Planning (ERP) - A school management software and mobile apps that help simplify administration and organization. It is also dealing with two segments as far as the IT sector is concerned, one of them is providing Software as a Service (SAAS), namely EIMS and the other segment includes consultancy with respect to the development/support of applications/solutions for clients. 

These consulting/support services are related to applications from different industries such as finance, insurance, automotive, banking, etc. QTL's exposure to these industries involves development consulting and/or support services to various payment gateways, insurance and other financial products aggregating platforms and also to the loan management system for some of the financing companies including the development of their applications.

The company launched "QuickCampus", The Edutech Marketplace, on 24th December 2022 which is said to be India's first Edutech Marketplace. As of April 09, 2023, it had 22 employees on its payroll. 

The company is coming out with a maiden IPO of 1530000 equity shares of Rs. 10 each at a fixed price of Rs. 61 per share to mobilize Rs. 9.33 cr. The issue opens for subscription on April 18, 2023, and will close on April 21, 2023. The minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME. The issue constitutes xx% of the post-IPO fully diluted paid-up equity capital of the company. QTL is spending Rs. 0.25 cr. for this IPO process and from the net proceeds, it will utilize Rs. 6.28 cr. for working capital, Rs. 1.40 cr. for the acquisition of the business in similar or complementary areas, and Rs. 1.40 cr. for general corporate purposes. 

For this IPO, we have two joint lead managers i.e. Share India Capital Services Pvt. Ltd. and Khambatta Securities Ltd. while Skyline Financial Services Pvt. Ltd. is the registrar of the issue. Share India group company Share India Securities Ltd. is the market maker for the company. 

Having issued initial equity at par, the company issued further equity shares at a price of Rs. 110 per share in June 2022 and has also issued bonus shares in the ratio of 9 for 10 in March 2022, and 1 for 1 in June 2022. The average cost of the acquisition of shares by the promoters is Rs. 2.63 per share. 

Post-IPO, QTL's current paid-up equity capital of Rs. 4.25 cr. will stand enhanced to Rs. 5.78 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 35.26 cr. 

On the financial performance front, for the last three fiscals, QTL has posted a turnover/net profit of Rs. 2.66 cr. / Rs. 0.23 cr. (FY20), Rs. 7.28 cr. / Rs. 0.53 cr. (FY21), and Rs. 25.53 cr. / Rs. 2.21 cr. For the first seven months of FY23 ended on October 31, 2022, it earned a net profit of Rs. 4.30 cr. on a turnover of Rs. 28.13 cr. Thus the boost in its top and bottom lines for the last 19 months raise eyebrows. 

For the last three fiscals, QTL has reported an average EPS of Rs. 13.14 and an average RoNW of 38.46%. The issue is priced at a P/BV of 2.37 based on its NAV of Rs. 25.70 as of October 31, 2022, and at a P/BV of 1.74 based on its post-IPO NAV of Rs. 35.05 per share. 

If we annualize FY23 super earnings and attribute them to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 4.78. Thus the IPO appears lucratively priced. But it all depends on the sustainability of such margins going forward. 

The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy it has framed in May 2022 post-listing, based on its financial performance and future prospects. 

As per the offer document, the company has shown Silver Touch, Sigma Solve and Cambridge Techno as their listed peers. They are currently trading at a P/E of NA, NA, and 30.15 (as of April 13, 2023). However, they are not truly comparable on an apple-to-apple basis. 

While Share India Capital is not having transparent info on its track record as the offer document shows only 1 mandate while this is its 6th mandate in the last six fiscals (including the ongoing one). Khambatta Securities has 4th mandate in the last three fiscals including the ongoing one. Out of the last 3 listings, all have opened at a premium ranging from 0.20% to 66.67% on the listing date.

Conclusion / Investment Strategy

The company operates in a highly competitive and fragmented segment with many big players around. The sudden boost in its bottom line for 7M FY23 raises eyebrows and concerns over sustainability going forward. Based on such super earnings, the issue appears lucratively priced while based on its track records so far, the issue appears fully priced. Tiny equity capital post-IPO indicates a longer gestation period for migration to the mainboard. Well-informed/risk takers may consider investment for the medium to long-term rewards.

Review By Dilip Davda on Apr 13, 2023

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

Quicktouch Technologies IPO FAQs

  1. 1. Why Quicktouch Technologies IPO?

    The initial public offer (IPO) of Quicktouch Technologies Limited offers an early investment opportunity in Quicktouch Technologies Limited. A stock market investor can buy Quicktouch Technologies IPO shares by applying in IPO before Quicktouch Technologies Limited shares get listed at the stock exchanges. An investor could invest in Quicktouch Technologies IPO for short term listing gain or a long term.

  2. 2. How is Quicktouch Technologies IPO?

    Read the Quicktouch Technologies IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Quicktouch Technologies IPO what should investors do?

    Quicktouch Technologies IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Quicktouch Technologies IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Quicktouch Technologies IPO good?

    Our recommendation for Quicktouch Technologies IPO is to subscribe for long term.

  5. 5. Is Quicktouch Technologies IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Quicktouch Technologies IPO.

  6. 6. When will Quicktouch Technologies IPO allotment status?

    The Quicktouch Technologies IPO allotment status will be available on or around Apr 26, 2023. The allotted shares will be credited in demat account by Apr 28, 2023. Visit Quicktouch Technologies IPO allotment status to check.

  7. 7. When will Quicktouch Technologies IPO list?

    The Quicktouch Technologies IPO will list on Tuesday, May 2, 2023, at NSE SME.