Business Profile of the Aditya Infotech Limited
Aditya Infotech is largest Indian-owned company in the video security and surveillance industry. Under its brand CP PLUS, the company offers a comprehensive range of advanced products and solutions for enterprise and consumer segments. The company deploys security technologies such as artificial intelligence and machine learning, and offers a range of products including high-definition cameras, digital video recorders, and IoT-based surveillance services. CP PLUS operates over 500 stores in India and operates 10 strategically located warehouses across the country.
The company is the third largest global manufacturer of surveillance products in FY24, and the largest manufacturer outside China. The company has a manufacturing facility in Kadapa, Andhra Pradesh with an installed capacity of 15.59 million units per annum. The company has a dedicated R&D facility in Noida, Uttar Pradesh, and a joint service arrangement with Dahua Technology. In 2017, the company entered into a joint venture agreement with Dixon Technologies (India) Limited to expand its manufacturing operations. The company is led by an experienced management team, an experienced Board of Directors, and skilled workers.
Aditya Infotech Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to XXXX Equity Shares aggregating up to Rs. 8, 000 million. Nothing from those proceeds of OFS will be allotted to company.
- Aditya Infotech IPO offer only has fresh issue of Rs. 5, 000 million. As per DRHP document, the company aims to utilize IPO proceedings towards payment of certain outstanding borrowings availed by company.
| Particulars | Estimated amount |
| Payment of certain outstanding borrowings availed by company | 3750 |
| General corporate purposes | XXXX |
| Total | XXXX |
(₹ Million)
IPO Details of Aditya Infotech Limited:
| IPO Open Date | Not yet declared |
| IPO Close Date | Not yet declared |
| Basis of Allotment | Not yet declared |
| Listing Date | Not yet declared |
| Face Value | ₹1 per share |
| Price | Not yet declared |
| Lot Size | Not yet declared |
| Total Issue Size | XXXX Equity Shares |
| Aggregating up to ₹13, 000 million | |
| Fresh Issue | XXXX Equity Shares |
| Aggregating up to ₹ 5,000.00 million | |
| Offer For Sale | XXXX Equity Shares |
| Aggregating up to ₹ 8,000.00 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not less than 75% of the Net Issue |
| Retail Shares Offered | Not more than 10% of the Net Issue |
| NII (HNI) Shares Offered | Not more than 15% of the Net Issue |
Issue Price & Size: Aditya Infotech Limited IPO
The issue price of Aditya Infotech Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 440 crores as well as offer for sale of Rs. 1060 crores.
Launch Date of Aditya Infotech Limited IPO
The IPO opening date of Aditya Infotech hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Aditya Infotech Limited Financial Statements
| Particular | FY24 | FY23 | FY22 |
| Income | |||
| Revenue from operations | 27824.26 | 22845.47 | 16462.11 |
| Other income | 135.34 | 110.09 | 154.35 |
| Total income | 27950.6 | 22955.56 | 16616.46 |
| Expenses | |||
| Purchases of stock-in-trade | 22698.63 | 21083.83 | 15870.63 |
| Changes in inventories of stock-in-trade | 20.77 | -2093.31 | -2324.12 |
| Employee benefits expense | 1338.57 | 1032.46 | 844.14 |
| Finance costs | 309.09 | 232.23 | 203.81 |
| Depreciation and amortization expenses | 157.13 | 88.52 | 75.47 |
| Other expenses | 1536.86 | 1217.01 | 742.85 |
| Total expenses | 26061.05 | 21560.74 | 15412.77 |
| Restated Profit before tax | 1646.19 | 1431.82 | 1293.49 |
| Restated Profit after tax | 1151.72 | 1083.11 | 969.31 |
| Key Performance Indicators (KPIs) | FY24 | FY23 | FY22 |
| Financial KPIs | |||
| Total Income (₹ in million) | 27959.6 | 22955.56 | 16616.46 |
| Revenue from Operations (₹ in million) | 27824.26 | 22845.47 | 16462.11 |
| Revenue Growth (year on year) (%) | 21.79 | 38.78 | 43.28 |
| Revenue CAGR Fiscal 2022 to Fiscal 2024 (%) | 30.01 | ||
| EBITDA (₹ in million) | 2364.77 | 1810.45 | 1572.76 |
| EBITDA Growth (year on year) (%) | 30.62 | 15.11 | 119.46 |
| EBITDA CAGR Fiscal 2022 to Fiscal 2024 (%) | 22.62 | ||
| EBITDA Margin (%) | 8.46 | 7.89 | 9.47 |
| Profit After Tax (₹ in million) | 1151.72 | 1083.11 | 969.31 |
| PAT Growth (year on year) (%) | 6.33 | 11.74 | 230.51 |
| PAT CAGR Fiscal 2022 to Fiscal 2024 (% | 9.00 | ||
| PAT Margin (%) | 4.12 | 4.72 | 5.83 |
| PAT before Exceptional Items (in ₹ in million) | 1404.08 | 1140.98 | 969.31 |
| PAT Growth before Exceptional Items (y-o-y) (%) | 23.06 | 17.71 | 230.51 |
| PAT before Exceptional Items CAGR FY22 to FY24 (%) | - | - | 20.36 |
| PAT Margin (%) before Exceptional Items | 5.02 | 4.97 | 5.83 |
| Return on Equity (%) | 27.15 | 34.76 | 33.78 |
| Return on Capital Employed (%) | 23.57 | 23.07 | 31.4 |
| Debt to Equity Ratio | 0.96 | 1.31 | 0.66 |
| Net Debt / EBITDA | 1.42 | 0.21 | - |
| Net Working Capital Cycle (days) | 39.92 | 38.14 | 40.43 |
| Operational KPIs | |||
| Installed Capacity (in units) | 15586500 | 10068000 | 9540000 |
| Capacity Utilisation (%)# | 64.09 | 72.66 | 78.72 |
| Number of Distributors | 842 | 974 | 720 |
| Number of System Integrators | 2208 | 2018 | 1290 |
Aditya Infotech Limited Promoters & Shareholding
As of date, there are four promoters of the company, including corporate and individual.
The promoter along with promoter group in aggregate collectively holds 74.46% of the paid-up share capital of company.
| Name of Shareholder | No. of Equity Shares held as on the date of DRHP | % of pre- offer paid-up Eq. share capital | Selling Shareholders |
| Promoters | |||
| Hari Shanker Khemka | 1,97,19,250 | 17.96 | |
| Aditya Khemka | 6,11,14,950 | 55.66 | Aggregating up to ₹5,240.04 million |
| Ananmay Khemka | 9,25,400 | 0.84 | Aggregating up to ₹123.16 million |
| Total | 8,17,59,600 | 74.46 | |
| Members of the Promoter Group | |||
| Rishi Khemka | 1,47,16,749 | 13.4 | Aggregating up to ₹2,000.00 million |
| Hari Shankar Khemka (HUF) | 7,80,350 | 0.1 | Aggregating up to ₹426.40 million |
| Shradha Khemka | 4,64,000 | 0.42 | Aggregating up to ₹198.90 million |
| Aditya Khemka (HUF) | 21,050 | 0.02 | Aggregating up to ₹11.50 million |
| Total | 1,59,82,149 | 14.55 | |
| Grand Total | 9,77,41,749 | 89.01 | |
Should You Subscribe to Aditya Infotech Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Aditya Infotech Limited:
Largest Indian Player in the Security and Video Surveillance Market
Aditya Infotech is the largest provider of video security and surveillance products, solutions, and services in India, with a market share of 20.2% as of FY24. The company's suite of security-related services and end-to-end solutions helps customers meet their security requirements and save operational and administrative costs. The company has invested significant resources in enhancing its brand, creating a consumer brand for the security and surveillance industry in India.
The company has established 48 dedicated CP PLUS Galaxy stores across India and provides comprehensive after-sales services through mobile applications and websites.
Pan-India Sales to diversified customer base
The company has expanded its pan-India sales and distribution network, with products sold in over 500 cities and towns. It operates through 40 branch offices and nine RMA centres across India, and has sold its surveillance products through over 800 distributors and 2,200 system integrators. It also provides pickup and drop services for select customers and partners.
Post-sale customer service is also provided, offering comprehensive maintenance, troubleshooting, and technical assistance. The diversity of the customer base is due to its sales channel split, which avoids concentration on sourcing through a single medium.
In previous period from FY24 to FY22, the company had 3072, 2814, and 2261 customers.
| Particulars | FY24 | FY23 | FY22 |
| % of revenue from operations | |||
| Distributor | 80.61% | 81.12% | 86.99% |
| System Integrated Operations / Projects | 14.20% | 16.94% | 11.71% |
| Retail | 0.31% | 0.26% | 1.18% |
| Online and e- commerce | 4.89% | 1.68% | 0.12% |
Comprehensive Portfolio
The CP PLUS and Dahua brands are prominent brands in India for CCTV and security products, offering a diverse range of products and solutions. They offer CCTV cameras, body-worn cameras, thermal cameras, explosion-proof cameras, integrated central command and control software, AI/deep learning-based video analytics solutions, access control, time-attendance solutions, biometric products, video doorbells, and other accessories.
In FY24, they offered 2,937 SKUs of products across various price points. They also offer local customized software solutions, such as a device health monitoring system and proprietary customer relationship management software. They provide command and control center services to enhance security and surveillance capabilities.
They offer high-resolution, advanced algorithms and intelligent recorders, and have integrated AI into their products. They provide design services and project coordination for different industry sectors, enabling better communication, collaborative management, and efficient problem-solving.
Collaborates with technology partners
The company collaborates with technology partners to design and innovate products and provide solutions for specific customer requirements. They acquired Dixon's stake in a joint venture and subscribed to 7,305,805 equity shares. They also collaborate with L&T Semiconductor Technologies Limited to develop indigenous Indian IP SoCs and advanced AI IP CCTV products. They also partner with VVDN Technologies Private Limited for product engineering, design, and manufacturing. They also have an exclusive arrangement with Dahua India for product distribution in India.
Future plans
- The company plans to expand its product portfolio and introduce new products and next-generation technologies, focusing on collaborations with third parties and external agencies. They aim to integrate AI solutions into their surveillance products, providing businesses with a comprehensive edge over traditional solutions.
- The company aim to expand their retail presence through advertising and sales campaigns and association with celebrities.
- The company is also focusing on service-led models and enterprise customers, undertaking large-scale projects with system integrator partners to offer customized security and surveillance solutions.
Risk Factors of Aditya Infotech Limited:
Segment concentration
The company's success relies on its ability to anticipate and respond to customer requirement in this evolving technological environment. The financial performance of the company relies on the sales of CCTV cameras, NVRs, DVRs, and PTZs cameras. However, technological changes, increased competition, and pricing pressures could lead to a decline in these sales.
If the company cannot keep up with tech advancement, it may fail to attract customers or keep their existing clients, leading to the decline in business fundaments, and financial performance.
| Particulars | FY24 | FY23 | FY22 |
| % of revenue from operations | |||
| Revenue from sale of CCTV cameras, NVRs, DVRs and PTZs cameras | 79.92 | 81.28 | 88.87 |
| Revenue from sale of other products and provision of services | 21.08 | 18.72 | 11.23 |
Dependence on limited supplier
The company relies on a limited number of suppliers for the procurement of parts and materials for its manufacturing operations and products. The company's ability to manufacture surveillance equipment relies on the availability of materials and the manufacturing process of its suppliers, including Taiwan and China.
The company strategically onboards certain suppliers for a period of one to three years to maintain consistency in quality and quantity of supplies. Dahua Technology India Private Limited is one of the leading suppliers for products, contributing to 28.41% of the company's revenue in fiscal 2024. Any disruption in the supply of products or demand may adversely affect the company's business, results of operations, cash flows, and financial condition.
| Particulars | FY24 | FY23 | FY22 |
| % of revenue from operations | - | ||
| Largest supplier | 49.03% | 44.37% | 47.80% |
| Top 5 suppliers | 89.54% | 87.56% | 92.18% |
| Top 10 suppliers | 94.02% | 93.02% | 95.64% |
Company’s top suppliers for FY24 include AIL Dixon, Dahua Technology India, Wirelux Cables, Shenzhen Sworix Technology Co. Ltd, Orient Cables India, etc.
Restriction on imports
The company's operations and suppliers' ability to provide parts and materials at competitive prices are influenced by global commodity prices, inflation, and effective negotiation with suppliers. Factors beyond the company's control, such as economic conditions, geopolitical tensions, weather changes, import duties, tariffs, and foreign currency exchange rates, can affect commodity pricing and availability.
The company primarily imports parts and materials from countries like Taiwan and China. Uneven political or geo graphical tension between nations could impede the company's supply chain and operations. Their Joint venture could face further damages as a consequence of import restriction.
The table below sets forth the cost of parts and materials sourced from India and outside India by Aditya Infotech:
| Particulars | FY24 | FY23 | FY22 |
| Purchase of parts and materials sourced from India (₹ in million | 21073.32 | 19092.83 | 14646.71 |
| Purchase of parts and materials sourced from India,
as % of cost of materials consumed (%) |
92.84% | 90.56% | 92.20% |
| Purchase of parts and materials sourced
from outside India (₹ in million) |
1625.31 | 1991 | 1223.91 |
| Purchase of parts and materials sourced from outside India,
as a % of cost of materials consumed |
7.16 | 9.44 | 7.71 |
Earlier, Dixon tech and Aditya Infotech were in 50:50 joint ventures for bringing together their synergies. The joint venture was diluted as Dixon acquired stake in Aditya Infotech in exchange of diluting stake n JV. Table below shows cost of parts and materials sourced from India and outside India by AIL Dixon for the periods indicated:
| Particulars | FY24 | FY23 | FY22 |
| Purchase of parts and materials sourced from India (₹ in million | 929.33 | 1293.94 | 1237.84 |
| Purchase of parts and materials sourced from India,
as % of cost of materials consumed (%) |
8.12 | 13.84 | 15.22 |
| Purchase of parts and materials sourced
from outside India (₹ in million) |
10515.56 | 8056.14 | 5696.53 |
| Purchase of parts and materials sourced from outside India,
as a % of cost of materials consumed |
91.88 | 86.16 | 84.78 |
Risk to manufacturing facility
As per DRHP, the company owns a manufacturing facility in Kadapa, Andhra Pradesh, which may be prone to operational or another risks. Any significant disruptions, such as power failure, fire, or equipment malfunction, could require temporary or permanent closures, additional expenditure, and significant repair to the unit. These risks could negatively impact the business, financial condition, results of operations, cash flows, and prospects.
Stringent quality standards
Their success depends on the design and implementation of quality control policies, and any significant failure could lead to defective or substandard products, delays in delivery, and the need for additional expenditure. Non-adherence to these standards could result in product recalls, customer cancellations, and damage to our reputation.
Disruption at warehouse facilities
As of March 31, 2024, AIL Dixon has 10 warehouses across India, where products are distributed. They monitor inventory through an ERP system and closely track capacity and utilization. Any disruptions or shutdowns can affect supply chain and operations, impacting contractual obligations and legal claims. In Jan 2024, AIL Dixon experienced a loss of around Rs. 170 crores due to a fire at a custom bonded warehouse. Inefficiencies in operations could negatively affect business fundamental and future financial performance.
Identifying new customers
They manufacture and install security systems, generate revenues from the sale of these systems, and maintain them. The company's revenue from integrated security-related projects is primarily from existing customers, and they do not expect significant revenue from existing customers in future years. To maintain a level of revenues, the company must identify and retain new customers. If business development, marketing, and sales techniques do not result in projects of comparable size and value, the company's business, results of operations, cash flows, and financial condition may be adversely affected.
| Particulars | FY24 | FY23 | FY22 |
| Revenue from integrated security related projects | 14.20% | 16.94% | 11.71% |
Reliance on online marketplace
The company relies on online marketplaces for the sale of some of its products, with revenues from these marketplaces varying from FY24 to FY22. They also cannot control the prices of products sold by online marketplaces, making purchases more lucrative than direct purchases. Purchase orders can be amended or cancelled, and customers may reject the entire consignment if the products are not as per the specifications.
The company may also face pressure to modify trading terms if online marketplaces are unwilling to follow their distribution model.
Aditya Infotech Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Aditya Infotech Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
