ArMee Infotech Limited IPO

01At a glance

What the company does — supplies, installs, integrates and maintains IT hardware and software, with trained staff under service-level agreements; it has expanded into solar EPC, solar power-purchase projects and retail through Experience Zones, of which one is operating, in Ahmedabad (DRHP p.16, DRHP p.208).

Who pays it — mostly government and PSU clients, 57.47% of FY25 revenue; the top five clients were 74.04% (DRHP p.19). Gujarat and Maharashtra provided more than 73.29% of FY25 revenue (DRHP p.19).

Why it is raising money — ₹1,550.00 million to expand by bidding for new government and PSU projects, ₹600.00 million for working capital, ₹75.00 million to repay borrowings, and the rest for general purposes (DRHP p.16). Converted from ₹ lakh. The ₹1,550 million is for fixed deposits placed with banks as collateral for performance bank guarantees and bid deposits (DRHP p.97).

How fast it has grown — revenue from ₹5,027 million in FY23 to ₹10,206 million in FY24 and ₹13,133 million in FY25 (DRHP p.18). Converted from ₹ lakh.

The one thing to understand — a low-margin reseller and integrator that needs cash to win tenders. Gross margin fell from 13.04% in FY23 to 6.77% in FY25, receivables rose more than fivefold to ₹5,899 million, and operating cash flow was negative in FY23 and FY25 (DRHP p.35, DRHP p.70, DRHP p.113).

02The business, in plain words

An IT system integrator bids for government and PSU tenders to supply computers, networks and software, installs them, and maintains them with its own staff; it earns a margin over the price paid to technology makers.

A state department tenders computers and networking for its offices → ArMee bids and wins → it sources the equipment from its technology partners, installs it and supports it under a service agreement → the department pays on the contract's terms.

The top three technology partners supplied 77.96% of its purchases from technology partners in FY25 (DRHP p.19).

Earnings equation: Profit ≈ contract value × gross margin − staff and overheads − interest. Gross margin was 6.77% and EBITDA margin 4.47% in FY25 (DRHP p.113).

03Where the money comes from

Source: DRHP p.36, DRHP p.113. In FY25, government and PSU clients were 57.47% of revenue and Gujarat and Maharashtra more than 73.29% (DRHP p.19).

04The growth record

Source: DRHP p.18, DRHP p.35, DRHP p.113. Converted from ₹ lakh. FY25 figures are consolidated; the KPI table marks the earlier years as standalone (DRHP p.113).

05What the growth is made of

Larger contracts at thinner margins. Revenue doubled in FY24 and rose 28.68% in FY25, while gross margin halved over two years and FY25 profit fell (DRHP p.113). The document does not split revenue by IT, solar and retail in the pages read.

06Earnings quality

Operating cash flow over FY23 to FY25 was ₹304.27 million against profit of ₹1,083.71 million (our arithmetic, DRHP p.18, DRHP p.35). The company cites a ₹3,309.38 million rise in trade receivables among the reasons for the FY25 outflow (DRHP p.35). Receivables were ₹5,899.15 million at March 2025, about 164 days of revenue, and inventory ₹799.41 million (our arithmetic, DRHP p.70).

07The balance sheet

Source: DRHP p.18, DRHP p.70. Converted from ₹ lakh.

08What the money is for

Source: DRHP p.16, DRHP p.97. Converted from ₹ lakh. Deployment is planned in FY2027 and FY2028 (DRHP p.16). The company says guarantees typically run at 3% to 10% of project value (DRHP p.97).

09Who is selling

Nobody. The issue is a fresh issue only, of up to ₹3,000 million (DRHP p.16).

10Promoters

The promoters are Ami Ridhish Patel, Kiritkumar Chimanbhai Patel and Ridhish Kiritbhai Patel (DRHP p.16). Proceedings against the promoters are three tax matters and one other, involving ₹0.29 million (DRHP p.18).

11Who already owns it

Source: DRHP p.17. The last row is our arithmetic.

12What changed just before the IPO

• Bonus issue — 5 shares for every 1 held, allotted in February 2024 (DRHP p.18).
• New lines — solar EPC, solar power projects and an Experience Zone (DRHP p.16).
• Receivables — doubled in FY25 (DRHP p.70).

13Capacity and expansion

Capacity is bidding capacity, which depends on bank guarantee limits; the proceeds add collateral for more guarantees (DRHP p.97). The company plans to enter battery energy storage (DRHP p.208).

14Market size and industry structure

The D&B report cited in the offer document says India's IT industry contributed 7.24% of GDP in FY2025, and cites a national target of 280 GW of solar capacity by 2030 against 105.6 GW installed in 2025 (DRHP p.16). Those figures are the report's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• A record with government and PSU clients that keeps it qualified to bid (DRHP p.36).
• Technology partnerships for hardware and software (DRHP p.19).

Against that: dependence on a few clients, two states, three technology partners, competitive bidding and bank guarantees (DRHP p.19).

16Peers the company named

Source: DRHP p.112. Converted from ₹ lakh. The peers' average P/E is 22.26 (DRHP p.111).

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Two states. Gujarat and Maharashtra, over 73% of revenue (DRHP p.19).
• Government. Over 57% of revenue (DRHP p.19).
• Clients. Five clients were 74% of revenue (DRHP p.19).
• Cash. Negative operating cash flow in FY25 (DRHP p.19).
• Guarantees. Contracts need bank guarantees that can be invoked (DRHP p.19, DRHP p.20).

18Litigation and regulatory matters

Source: DRHP p.18. Converted from ₹ lakh.

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• Revenue by business line — IT, solar and retail — in the pages read.
• Who the top five clients are, in the pages read.
• Why gross margin halved in two years, in the pages read.
• What the criminal case against the company concerns, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why has gross margin fallen from 13% to under 7%?
2. How quickly do government clients pay, and how much of the ₹5.9 billion of receivables is overdue?
3. Why raise equity to place in bank deposits rather than arrange larger guarantee limits?
4. How much revenue do the solar and retail lines bring in?
5. Who are the five clients that provide three-quarters of revenue?

1Sources and cited facts

This study was read from 1 document the company filed. The 30 figures it cites are listed under the document each came from, with the page and the sentence as printed.