Karachi, April 12, 2022 (PPI-OT): Pakistan Technology: Supernet Limited IPO: Subscribe

Supernet Limited is all set to be listed on PSX under GEM board where 21.1mn shares are on offer at a base price of PkR22.5/sh. SNL was founded as a Data Network Operator and Internet Service Provider in 1995, and the mainstay of its business has been providing Connectivity Solutions.

SNL topline has grown with a CAGR of 5% for FY17-21 where turnkey projects have shown the highest growth of 77%, increasing the contribution to revenue from 1% in FY17 to 10% in FY21. However, main contributor to the topline has remained the services business, contributing 89/75% to revenue for FY20/21.

SNL along with its subsidiaries is in prime position to capitalize on the increased adoption of cyber security measures by public and private sector, particularly in the aftermath of recently approved Pakistan’s Cyber Security Policy.

SNL expects revenue from high-capacity satellite solutions to improve as well with increasing data usage and connectivity across the country where a decline in satellite costs can further propel telecom operators towards increased usage of satellite against cables.

SNL’s profitability/topline is expected to increase with a CAGR of 27/24% for FY21-24 while the stock is being offered at forward P/E and P/S of 7.0x and 0.6x, respectively. Aforementioned multiples are at a discount compared to benchmarks (TELE and AVN are currently trading at P/E of 11.0x and 16.2x, respectively) hence we adopt a Subscribe stance on the offering.