Xtranet Technologies
IPO Size: Rs. 170 cr, Entirely Fresh Issue
- For working capital Rs. 102 cr
- Repayment Rs. 20 cr of Rs. 85 cr debt
- Purchase of systems and hardware Rs. 8 cr
Price band: Rs. 120-127 per share
M cap: Rs. 667 cr, implying 25% dilution
IPO Date: Thu 23rd Jul to Mon 27th Jul 2026, Listing Thu 30th Jul 2026
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Bhopal-based IT Goods and Services Company
Xtranet Technologies is a 24 year old IT company providing managed services, enterprise applications, digital services and proprietary platforms, contributing to 40%, 33%, 16% and 10% of Rs. 365 cr topline respectively.
About Rs. 67 cr or 18% of FY26 topline was generated from data centre operations. While this is a growing space, company’s revenue from data centres was Rs. 64 cr in FY23 too, indicate no meaningful growth in past 3 years, when industry more than doubled in size.
Mediocre Financials
FY26 revenue stood at Rs. 365 cr, with net profit of Rs. 41 cr, leading to a net margin of 11%. On equity of Rs. 39 cr (face value Rs. 10 each), EPS stood at Rs. 10.40.
As nearly half of the business is generated from government and PSU clients, mainly in Madhya Pradesh, Maharashtra and Delhi, trade receivables outstanding have historically been over 6 months. Just as of 31.3.26, outstanding debtors reduced to 3.75 months at Rs. 114 cr, which is still quite high.
Over-Priced Nano Cap
M cap of Rs. 667 cr leads to a PE multiple of 12x, on historic basis. This is quite high for a nano-cap stock with no unique moats. India’s largest IT services company TCS, with 70 times topline of Xtranet and 18% net margin, as against 11% for latter, is ruling at a PE of 15x, having contracted sharply due to advent of artificial intelligence (AI).
Share price of recently listed IT peer, CSM Technologies, serving Government clients, is down 15% since its listing on 2nd Jul 2026, indicating primary markets are not rewarding IT small caps and nano caps currently.
