Karachi, September 07, 2021 (PPI-OT): Pakistan Technology – IPO: Octopus Digital – subscribe till cap of PkR40.6
Octopus Digital is set to go public where it plans to raise an amount of PkR793mn by offering 27.4mn shares at a floor price of PkR29/sh. Octopus Digital Ltd. is a wholly owned subsidiary of Avanceon Ltd. Company plans to develop 29 independent intellectual properties under different categories from which company will be providing two main offerings, Topware and Omni Connect.
Pakistan is going through an increase in acceptance of digitization where the industrial sector is also trying to catch up with the global norms, driving phenomenal growth in revenues of SYS/AVN at a CAGR of 41/41% for CY15-20.
Octopus Digital expects revenue to stage a CAGR of 60% for CY20-26 while bottomline is expected to increase by 63% over the period where initial growth is expected to arise from AMS services while from 2023 onwards, Topware and then later Omni Connect are to form the backbone of growth as company expands its services overseas.
Even though the prospects remain bright, projections provided by the management look optimistic given historically AVN’s revenue has grown at a CAGR of 41% over CY15-20 while revenues form AMS have grown at a CAGR of 19%. Also, Topware and Omni Connect will be new products and can potentially take time to create a space for themselves.
We have used P/E and P/S based on a mix of projections provided by the company and latest reported result to incorporate a toned down version of growth and even after that, our TP comes out at PkR63.7/sh, and hence we adopt the stance of ‘subscribe till cap of PkR40.6/sh’ for the stock.