Seshaasai Technologies Ltd. (May Subscribe)

Highlights

Seshaasai Technologies Limited (STL), incorporated on 1993, is a technology driven multi-location solutions provider focussed on offering payments solutions, and communications and fulfilment solutions catering primarily to the BFSI industry, with data security, and compliance at the core of solutions.

STL’s business verticals comprise (i) Payment Solutions, (ii) Communication and Fulfilment Solutions and (iii) IoT solutions.

STL one of the top two payments card manufacturers in India with a market share of 31.9 pct in FY255 for credit and debit cards issuance in India improving from 25 pct in FY23 and it is one of the largest manufacturers of cheque leaves in India.

STL’s solutions are powered by their proprietary platforms that leverage advanced technologies and various communication systems and protocols to ensure that their solutions enhance productivities, enhance end customer experience, and increase business capacities for customers.

Out of the total proceeds of Rs. 8,131 mn, ~Rs. 1,979 mn would be utilized towards funding CAPEX for the expansion of existing manufacturing units, Rs. 2,300 mn would be utilized for repayment of certain borrowings availed by the company, ~Rs 521 mn would go towards general corporate purpose and Rs. 3,331 mn would go towards existing promoter selling shareholders of the company.

Key Highlights

• In 2020, the total market for payment cards in India (including credit cards, debit cards, and prepaid payment instruments), was valued at Rs. 9,071 mn. By 2024, this market had expanded to Rs. 30,804 mn, and it is projected to reach Rs. 61,684 mn by 2030, growing at a CAGR of 12.3 pct from FY24 to FY30.
• They provide an end-to-end traceability solution – from manufacturing custom RFID tags in-house, to custom graphical user interface for customers, to the application software that holds it all together. STL believe, their continued development of proprietary platforms has further strengthened their competitive advantage.
• STL is one of the few vendors in India to have approved facilities for manufacturing of plastic cards, metal cards, sustainable cards, biometric cards, wearables, and payment stickers. STL’s units are certified by global payment schemes and NPCI (RuPay), for manufacturing and personalization of payment cards. Further, their units are certified for Payment Card Industry (PCI) for data security in card production. Their units are also certified by the Indian Banks Association (IBA) for cheque manufacturing.
• STL is among the few players in the industry to manage the entire payments lifecycle right from data receipt to manufacturing to delivery to end customers and ensure such offerings are at scale. STL believe this was aptly demonstrated during demonetization, when the requirement for cheques increased multifold and STL were able to manage the volume surge that the industry demanded during this period.
• STL’s key growth strategies includes (i) Consolidate leadership position in payment solutions (ii) Expand offerings in the IoT and RFID space (iii) Increase wallet share from customers (iv) Focus on entering into international markets (v) Focus on inorganic growth through strategic acquisitions.
• The sales/EBITDA/ profit of the company have grown 13 pct CAGR/33.6 pct CAGR/43.4 pct CAGR over FY23-25. In FY sales of the company stood at Rs. 14,632 mn which fell 6 pct YoY due to a decrease in domestic sale of products, EBITDA came at Rs. 3,704 mn, increased 22.2 pct YoY while margins expanded 580 bps YoY to 25.1 pct. During the year the STL posted profit of Rs. 2,223 mn, up 31 pct YoY.

Key Risk

• STL contracts with customers subject to extensive compliance requirements. Failure to comply with the terms of these contracts may lead to termination of the contract.
• STL may be subject to pricing pressure from their customers, which could have an adverse effect on their business.

Financial Performance

Valuation

Seshaasai Technologies Limited (STL) manage information throughout its entire lifecycle, from creation to dissemination, ensuring its effective use to drive business outcomes. Their scalable, compliance-focused solutions help businesses overcome operational challenges, enhance customer experiences, and achieve their strategic goals. At the upper end of the price band of Rs. 423, the issue is priced at a PE of 30.8x its FY25 earnings on post issue equity capital. One may Subscribe this issue for listing gains.

Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Advisor before making any investment using the app. Making an investment using the app is the investor’s sole decision, and the company or its communication cannot be held responsible for it.