Capillary Technologies India Ltd is gearing up for a major initial public offering (IPO) that could test investor appetite for enterprise-SaaS plays in the Indian market.
Key Details
- The IPO aims to raise around ₹ 877 crore, with a fresh issue component of approximately ₹ 345 crore and an offer-for-sale (OFS) of about ₹ 532 crore.
- The price band is set between ₹ 549–577 per share.
- The company is a Bengaluru-based SaaS firm specialising in customer engagement, loyalty, rewards and analytics solutions for global brand clients.
What works in its favour
- Capillary has shown growth in its branded services, expanding from 339 brands in FY 23 to over 410 brands across 47 countries recently.
- Its business model is resilient, with a large recurring revenue component (subscription-based) and a software platform that can scale globally.
- The IPO is backed by strong anchor interest and reputed institutional participation.
Key risks to consider
- Valuation appears steep: The P/S (price-to-sales) multiple works out close to ~10x, and the firm has no listed domestic peer for direct comparison.
- Profitability remains volatile, driven by amortisation from past acquisitions and concentrated client exposure (top five customers account for ~43% of revenue).
- Competitive intensity in global SaaS markets is high; global players and newer startups pose upgrading risk.
Bottom Line
For investors with a long-term horizon and higher risk appetite, Capillary Technologies presents a compelling story: exposure to global brand loyalty software, recurring revenue streams, and growth potential. However, for those seeking short-term listing gains, the aggressive valuation and execution risks suggest a cautious approach. A “subscribe for the long haul” rather than “quick flip” stance may be the prudent way.
