Unicommerce eSolutions IPO Day 3: Should you apply? Check subscription, GMP and other details

The initial public offering (IPO) of Unicommerce eSolutions, promoted by Kunal Bahl, opened for subscription on August 6 and will close today, August 8. The price band of the IPO is set in the range of ₹102-108 apiece. Investors can apply for a minimum of 138 equity shares and its multiples thereafter. At the upper price band, one lot will cost investors ₹14,904.

This IPO is entirely an offer for sale (OFS) of up to 2.56 crore shares with a face value of Re 1 per share. Through the OFS, AceVector Ltd and SB Investment Holdings (UK) plan to sell part of their stakes. Since the IPO is completely an OFS, Unicommerce eSolutions will not receive any proceeds from the issue.

About 75% of the offer is reserved for qualified institutional buyers, 10% for retail investors and the rest 15% for non-retail investors.

IIFL Securities and CLSA India are the book-running lead managers for the IPO, while Link Intime India is the registrar. Share allocation for the IPO is expected on Friday, August 9, 2024, and the company is likely to be listed on both the BSE and NSE on Tuesday, August 13.

Unicommerce eSolutions IPO subscription status

By 1:20 AM on day three of bidding, the public issue had been subscribed a massive 51.8 times. Investors have bid for 72.95 crore shares as against 1.4 crore on offer. The NII portion of the book build issue was subscribed the most 117.86 times followed by the retail category, which was booked 83.52 times. Meanwhile, the QIB quota was bid 8.19 times. It has witnessed a subscription of 2.48 times on Day 1 and 12.35 times on day 2.

Anchor investors

Ahead of its IPO, Unicommerce eSolutions raised ₹124.5 crore from 11 anchor investors by allocating 1,15,23,831 shares at ₹108 each. The anchor investors included notable names such as Morgan Stanley, Aditya Birla Sun Life Trustee, The Prudential Assurance Company, SBI Mutual Fund, ICICI Prudential, HDFC Mutual Fund, and Kotak Mahindra Trustee, among others.

About the firm

Founded in February 2012, Unicommerce eSolutions is a SaaS platform that provides solutions for managing e-commerce operations for brands, sellers, and logistics providers. The company offers a suite of software products designed to help businesses streamline their post-purchase e-commerce processes. It serves a large and growing base of marquee clients in India including Lenskart, Fabindia, Zivame, TCNS, Mamaearth, Emami, Sugar, BoAt, Portronics, Pharmeasy, GNC, Cello, Urban Company, Mensa, Shiprocket, Xpressbees and others.

Besides India, Unicommerce also has clients in six other countries, primarily in South East Asia and the Middle East.

For the fiscal year ending March 31, 2024, Unicommerce reported a net profit of ₹13.08 crore, up from ₹6.48 crore the previous year. The company's revenue for FY24 was ₹109.43 crore, compared to ₹92.97 crore in the prior fiscal year.

Should you subscribe to the IPO or not? Here's what a host of brokerage firms say about the issue:

Analysts have suggested that aggressive investors may consider subscribing to the IPO for potential listing gains, as the issue is priced at a premium.

Swastika Investmart: Subscribe with caution

Unicommerce eSolutions is a leading e-commerce enablement SaaS platform, serving as a critical infrastructure for its diverse client base across India and globally. The company's robust product suite, coupled with a proven track record of profitable growth, positions it well for continued expansions.

While Unicommerce benefits from a strong market position and upselling/cross-selling opportunities, it faces competitive pressures, negative cash flows, and operational dependencies on third-party service providers. Its business is subject to seasonal fluctuations.

The IPO is aggressively priced at a P/E of 84x, reflecting a premium valuation. In the absence of listed peers, a comprehensive valuation comparison is challenging. Given these factors, we recommend a cautious approach and suggest that only well informed investors consider this IPO for potential listing gains.

Tapan Doshi, SEBI registered analyst, and founder of Thoughtful Investors Hub: Subscribe

Financially analysing Unicommerce showcases increased revenue, equity levels and profits thereby increasing EPS as well as RoNW, which are indicators of healthy business and perfect financial health. Even though the valuation would be right; an initial IPO may offer 30% to 40% appreciation after listing on stock market exchanges. However, IPO subscription status could be affected by a global market sell-off as a result of Yen carry trade unwinding fears about a recession in the US economy amidst increasing tensions between Iran and Israel.

Nonetheless, long-term investors have been advised to “SUBSCRIBE” to the IPO despite these concerns. Potential investors should take note of the shortsighted volatility risk that exists in these markets at such times. Unicommerce must continuously innovate to maintain its market share against the backdrop of changing e-commerce dynamics.

Stoxbox: Subscribe

On the upper price band, the issue is valued at a P/E of 93.1x based on FY24 earnings. Though the issue looks rich in terms of valuation, we believe that the company’s strong business performance along with industry tailwinds provide an opportunity from a medium to long term perspective. We, therefore, recommend a SUBSCRIBE rating for the issue.

Hem Securities: Subscribe

The Company is bringing the issue at price band of ₹102-108 per share at p/e multiple of 85x on post issue FY24 PAT basis. It being largest e-commerce enablement SaaS products platform in the transaction processing or nerve centre layer, comprehensive and modular suite of products with a wide range of plug-and-play integrations makes it an integral part of client’s tech stack, large, growing and diversified base of marquee Indian and global clients with long-term relationships and the capability to upsell or cross-sell new and additional product. Hence, we recommend “Subscribe” on issue.

Arihant Capital Market: Subscribe

Unicommerce Esolutions, with nearly a decade of expertise in leading Saas solutions and platforms that integrate operational efficiency and services and has a strong presence in the Indian market, could benefit in the future. Clients including Boat, Mamaearth, Lenskart, and Urban Company benefit from this company's services.

It enjoys being a single contributor to the Indian SaaS sector while supporting global organizations. Its strong market position, diverse clientele, and scalable business model based on transaction value make it an advantageous choice. The lower entry barrier and possible failure to advance technology may pose a challenge and vulnerability to the firm. Given the positive, we have a 'subscribe' rating on the issue.

Unicommerce eSolutions GMP

The company's shares in the grey market continued trading at ₹50, indicating a 46.3 percent premium versus IPO price at listing. The estimates listing price for the issue is ₹158. It has been the same since the previous session.

However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.

The consensus among brokerages is largely favorable toward subscribing to Unicommerce eSolutions’ IPO, though with varying degrees of caution. Analysts appreciate the company’s robust business fundamentals and growth prospects but also acknowledge the premium valuation and potential market volatility. Investors should weigh these factors carefully and consider their investment horizon before making a decision.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.