Excelsoft Technologies Ltd.

Record (60:1) bonus to promoters before the IPO

Excelsoft Technologies Ltd., promoted in 2000, is a global vertical SaaS company primarily engaged in the learning and assessment markets. The company provides technology-driven solutions for e-learning, digital content development, digital assessment and student success platforms.

Excelsoft designs, develops and delivers a suite of digital learning and assessment products used by enterprise clients, publishers, universities and certification agencies worldwide. Its flagship platforms include Saras (learning and assessment technology), OpenPage (digital interactive ebook ecosystem), and CollegeSPARC (student success suite). These platforms leverage proprietary AI models, cloud-based architectures and scalable APIs to deliver specialized solutions for education, training and professional certification. The company operates an asset-light, scalable, innovation-focused business model supported by structured contracts and milestone-based billing.

Offer Details:

The company is raising Rs 180 crore through a fresh issue of shares. One of the promoters, Pedanta Technologies Pvt. Ltd. is offering shares worth up to Rs 320 crore through an Offer for Sale (OFS).
Proceeds from the fresh issue will be utilised for the following:

1. Setting up new facilities at Mysuru – Rs 61.8 crore

2. IT infrastructure upgradation – Rs 54.6 crore

3. Upgrading existing facilities’ electrical systems – Rs 39.6 crore

4. General corporate purposes – Rs 24.0 crore

Promoters’ pre-IPO holding of 94.6% will decline to 59.1% post-issue. At the upper price band of Rs 120 per share, the company is seeking a market capitalization of Rs 1,381 crore.

Financial performance:

Excelsoft Technologies serves clients across multiple geographies with a substantial revenue concentration in the USA, UK and Singapore. The USA accounts for 60% of its total income while the UK and Singapore together contribute 25%. The company aims to diversify further by expanding into newer markets such as Egypt, France, Brazil and the Philippines, which is expected to support incremental revenue growth.

Education technology services contribute 55% of its revenue, followed by 27% from assessment and proctoring solutions, 13% from student-related services and the remaining 6% from learning design and content solutions.

Between 2023 and 2025, Excelsoft recorded moderate revenue growth of 9.4% while net profit rose 24%, partly supported by higher interest income on deposits. Its equity capital expanded sharply from Rs 1.6 crore to Rs 100 crore owing to the substantial 60:1 bonus issue declared prior to the IPO.

The global learning and assessment (edtech/SaaS) market continues to expand, driven by strong digital adoption in North America and Europe and emerging growth trends in India and China.

Risk Factors:

1. Customer and Geographic Concentration Risk:

As per the RHP, Excelsoft has a high dependence on the USA, UK, and Singapore, which together contribute 85% of its income. Such concentration exposes the company to macroeconomic shifts, regulatory changes or adverse events in these regions, which could significantly impact revenue.

2. Sector-Specific Vulnerability:

The edtech/SaaS sector is characterized by rapid technological changes, price-sensitive clients and evolving regulatory requirements related to data protection, cybersecurity and privacy compliance making the operating environment inherently dynamic and challenging.

3. Complex Related Party Transactions (RPT):

Excelsoft has significant related party transactions that may raise investor concerns. The company paid a large rent deposit of Rs 245 crore to its promoter entity—an amount exceeding its FY25 revenue of Rs 233.3 crore—for lease rentals of only Rs 2 crore.

Additionally, at the time of repaying this deposit, the promoter company borrowed Rs 300 crore from a bank. Excelsoft provided a bank guarantee for this borrowing and allowed a charge on its properties.

The promoter company is expected to repay the Rs 300 crore NCDs using the OFS proceeds. Such transactions could ideally have been kept outside the company’s books to maintain cleaner financial reporting.

Peer Comparison:

The company has identified Sasken, Infobean Technologies, Silver Touch, MPS and Ksolves India as its peer competitors. All peers operate across digital content, assessment, cloud/SaaS and consulting services. Excelsoft maintains a focused vertical SaaS positioning in learning and assessment while the others span broader segments such as embedded solutions, digital transformation, IT services, and content platforms.

In comparison with these companies, key observations emerge. On the revenue scale, larger players like MPS and Sasken operate significantly above Excelsoft, positioning it in the mid-cap bracket within its segment.

On profitability metrics, Excelsoft demonstrates strong EBITDA and PAT margins, outperforming most peers except Ksolves, which remains an outlier due to its unusually high margin profile. Excelsoft’s margin strength is notably superior to Silver Touch and Infobeans and remains competitive even against the larger MPS and Sasken.

Excelsoft at its upper price band of Rs 120 per share is valued at 5.9 times its FY25 revenue, the highest among its peer companies. With the IPO priced at 35 times its diluted EPS, it appears that most of the company’s positives have already been factored into the valuation.

Disclaimer:

The writer is not a SEBI-registered analyst. He and his friends or relatives may or may not participate in the IPO. This article is intended purely for educational purposes. Investors are advised to consult their financial advisors before making any investment decisions. The grey market premium should be viewed only as an indicator and not as a reliable benchmark for listing performance.