Updater Services has an off day on listing. Should you buy, sell or hold?

Updater Services had an off day at the bourses on debut with the stock listing 5% below the IPO price at Rs 299. The company's aggressive pricing, mixed financial performance, and associated risks likely contributed to the negative response in the market.

Analysts advised investors to exit the company and adopt a wait-and-watch approach before investing in the future.

"Investors who received allotments in the IPO should consider all these related risks and exit their position after this listing," said Shivani Nyati, Head of Wealth, Swastika Investmart.

"Though the company is a leading player in the integrated facilities management (IFM) market in India and has business support services (BSS) with a pan-India presence, we believe that the issue is aggressively priced and factors in most of the positives of the company," said Shreyansh Shah, Research Analyst, StoxBox.

The Rs 640-crore IPO of Updater Services was subscribed 2.9 times overall at close. The issue comprised fresh equity of Rs 400 crore and an offer for sale (OFS) of 80 lakh shares by promoter and other selling shareholders.

Updater Services is a leading integrated facilities management services and business support services provider to their customers, with a pan-India presence.

Its portfolio of services evolved over the years to cater to diverse customer segments across sectors including FMCG, manufacturing and engineering, BFSI, healthcare, IT /IteS, automobiles, logistics and warehousing, airports, ports, infrastructure, and retail, among others.

The company also offers employee background verification check services through Matrix, which is the third largest company in this segment with a share of 5.4% in FY23.

"We advise investors who have received allotment to sell their shares on the listing day and consider other avenues for investment," Shah added.

Net proceeds will be used towards funding working capital requirements, repayment of debt, pursuing inorganic initiatives, and other general corporate purposes.

The company's revenue from operations jumped 42% year-on-year (YoY) to Rs 2,099 crore for the year ended March 2023. In the same period, net profit fell 39% to Rs 34.6 crore.

IIFL Securities, Motilal Oswal, and SBI Capital Markets acted as the book-running lead managers to the issue, and Link Intime India was the registrar.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)