Open for Subscription till 16 June 2017
The company builds optical and data networking products for telecom companies, internet service providers, utility and defense companies, is asset light; the manufacturing is outsourced to reputed firms and has a 15% market share in the optical equipment market.
Its customers are distributed across 60 countries while 63% of its revenues comes from India. The company is focused on countries with economies similar to India such as Latin America, South East Asia, and Africa.
- R&D lies at the core of the firm; they have filed 300+ patents across the world while 56 have been granted. This acts like a wide moat.
- The company is not using the IPO proceeds to clear debt
- Revenue is growing at a CAGR of 24% for the last four years.
- Telcos must ramp up their infrastructure as 3G/4G data speeds and consumption increases and 5G is rolled out.
- Client concentration: The company derives 58% of its revenue from just 5 customers.
- Ongoing legal issues: the company has 40 tax proceedings against it for an amount of Rs 160 crores and another 19 crores in civil suits.
- Currency risk: the company derives a third of its revenues in US dollars.
Our Take: We would recommend an investment in this IPO.