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IPO REVIEW

Omnitech, an information technology (IT) player in the infrastructure management, software testing and system integration space, is stepping into the bourses to raise Rs 35 crore, with a fresh issue of 3.3-3.8 million shares.

The offer is priced between Rs 90-105. The public shareholding in the company will range between 25-29 per cent, depending on the issue price.

Approximately Rs 19.5 crore from the issue proceeds will go toward funding acquisitions, both in India and overseas. Further, Rs 8 crore will be invested in two of the company's joint ventures in the middle-east. It also plans to grow its operations in the UK, the US and Japan, for which it will make an investment of Rs 2.7 crore. The rest will be used to set up a new technology centre. 
 

STEADY STRIDE
Rs crore	FY06	FY07	FY08E
Revenue	54.10	77.70	110.00
Operating profit	9.40	18.00	27.50
OPM (%)	17.40	23.20	25.00
EPS (Rs) @ Rs 90/105*	4.5/4.7	11.5/9.2	13.6/14.2
P/E @ Rs 90/105*	-	8/11.4	6.6/7.4
*based on post-issue capital

Apart from providing technology services to its clients, Omnitech also has a number of proprietary software products in IT infrastructure management (OmniManageIT), asset tracking (OmniAudit) and an infrastructure and application monitoring appliance (OmniMonitor) catering to industry segments like banking, financial services and insurance (BFSI), manufacturing, utilities, government bodies and services.

Omnitech now plans to increase its focus on its higher margin product offerings in order to improve profitability. The issue appears reasonably priced for a small-cap IT outfit, at 6.6-7.4 times its estimated FY08 earnings. Considering Omnitech's growth plans, and steady financials, there appears to be little downside.

Issue opens: July 19
Issue closes: July 25