CIEL to file papers for Rs 450-cr IPO on Friday, will be 2nd listed HR firm

Public offer expected to comprise a fresh issue of around Rs 350 cr and an offer for sale by earlier shareholders

CIEL HR Services (CIEL), which uses technology to provide human resources solutions, will on Friday file draft papers for an initial public offering (IPO) estimated to be around Rs 450 crore in size, according to sources.

 

It will become the second HR solutions firm to be listed, after Teamlease Services. Teamlease does recruitments and CIEL provides end-to-end HR solutions.

 

The public offer is expected to comprise a fresh issue of around Rs 350 crore and an offer for sale by earlier shareholders, according to investment banking and industry sources. The IPO’s lead managers are Ambit, Centrum Capital and HDFC Bank.

 

CIEL is promoted by Pandiarajan Karuppasamy (chairperson and executive director of CIEL HR Group), Hemalatha Rajan, Aditya Narayan Mishra, Santhosh Kumar Nair and Doraiswamy Rajiv Krishnan.

 

The promoters’ long experience in the staffing industry has helped the company establish relationships with stakeholders and grow at a “significant pace” over the last few years, according to a report by credit rating agency ICRA in August.

 

CIEL, which was founded in 2015, has 92 offices in 43 cities in India, according to its website. It has served 3,958 companies in various sectors as on June 30, 2024.

 

The company reported an operating income of Rs 1085.7 crore in FY24, crossing the Rs 1,000 crore revenue milestone. It posted Rs 10.8 crore as profit after tax. Revenue improved at a compound annual growth rate of 42.3 per cent over FY19 to FY24. Revenue growth was around 54 per cent and 36 per cent in FY23 and FY24, according to ICRA.

 

The company’s revenues come from diverse sectors such as manufacturing and engineering, consumer retail and services, information technology, banking and financial services. The top 20 customers accounted for 52 per cent of its total revenues in FY24 (57 per cent in FY2023).

 

The company had free cash and bank balance of Rs 10.6 crore as on March 31, 2024. It had a total sanctioned working capital limit of Rs 60 crore in June 2024. The company has debt repayments of Rs 1.12 crore and Rs 4.14 crore in FY25 and FY26, respectively. It had capital expenditure (capex) plans of Rs 10 crore each in FY25 and FY26. ICRA noted that the company has to pay Rs 22 crore in FY25-FY27 for acquiring the balance stake in its subsidiaries.

 

ICRA’s report noted that the company’s strategy of acquiring entities in the technology and consulting segment has supported its inorganic growth and diversification. Formalisation of the economy and new labour codes are likely to support the company’s revenue growth.

 

ICRA expects the company’s cash flows to be adequate to fund its working capital requirements and capex plans, and the incremental payouts to acquire stake in its subsidiaries to be funded through a mix of internal accruals and equity.