Commtel Networks Limited IPO

01At a glance

What the company does — designs, builds and implements integrated telecommunication, security and safety (iTSS) systems for critical national infrastructure, focused on the oil and gas and power sectors; it has completed 600 projects in 19 countries for over 400 customers in 26 years (DRHP p.26).

Who pays it — oil, gas and power operators and their contractors: oil and gas was 85.15% of FY25 revenue, and 54.74% came from customers outside India (DRHP p.29, DRHP p.111). The largest customer was 20.55% of FY25 revenue and the top ten 68.90%; named top-ten customers include Tecnicas Reunidas, Indian Oil and Gujarat State Petronet (DRHP p.37).

Why it is raising money — ₹1,090.00 million to repay borrowings, and the rest for general purposes (DRHP p.27).

How fast it has grown — revenue from ₹4,123 million in FY23 to ₹4,569 million in FY24 and ₹6,393 million in FY25 (DRHP p.28).

The one thing to understand — a lumpy, project-driven business. FY25 revenue and margins were the highest shown, but orders received fell from ₹7,139.52 million in FY24 to ₹4,215.96 million and the backlog from ₹6,729.79 million to ₹4,574.10 million (DRHP p.111).

02The business, in plain words

A systems integrator wins turnkey contracts to equip a refinery, pipeline or power plant with its telecommunication, security and safety systems, buys the equipment from specialist makers, installs and commissions it, and then provides maintenance.

An engineering contractor building a gas-processing plant abroad needs its telecom and safety systems → it awards Commtel a fixed-price package → Commtel designs the system, procures equipment and installs it on site → it bills in milestones.

Turnkey projects and products were ₹6,047.95 million of FY25 revenue and engineering and maintenance services ₹344.56 million (DRHP p.111). The document describes a fixed-price contract model (DRHP p.29).

Earnings equation: Profit ≈ contract value × (margin over equipment and installation cost) − overheads. EBITDA margin was 21.05% in FY25 (DRHP p.111).

03Where the money comes from

Source: DRHP p.37, DRHP p.111.

04The growth record

Source: DRHP p.28, DRHP p.111.

05What the growth is made of

Overseas projects. Revenue from outside India more than doubled in FY25, from ₹1,541 million to ₹3,499 million, while Indian revenue dipped (DRHP p.111). Orders received peaked at ₹7,140 million in FY24 and were lower in FY25 (DRHP p.111).

06Earnings quality

Cash lags profit: operating cash flow was ₹944.99 million over FY23 to FY25 against ₹2,211.64 million of profit (our arithmetic, DRHP p.28, DRHP p.111). FY24 profit was held back by bad debts of ₹45.40 million and exchange losses (DRHP p.343). The business is working-capital intensive, which the document lists among its top risks (DRHP p.29).

07The balance sheet

Source: DRHP p.28.

08What the money is for

Source: DRHP p.27.

09Who is selling

Source: DRHP p.27, DRHP p.28. Together they offer shares worth up to ₹7,500 million, five times the fresh issue; the split was not read for this study (DRHP p.26).

10Promoters

The promoters are Shriprakash R. Pandey and Dinesh Pandey (DRHP p.26). No proceedings are listed by or against the promoters (DRHP p.29).

11Who already owns it

Source: DRHP p.27, DRHP p.28. Dinesh Pandey and other family members hold 28 shares each (DRHP p.27).

12What changed just before the IPO

• Margins — EBITDA margin up to 21.05% in FY25 (DRHP p.111).
• Orders — intake and backlog down in FY25 (DRHP p.111).
• Exports — share of revenue from outside India back above half (DRHP p.111).

13Capacity and expansion

Capacity is engineers and project teams — 418 employees at March 2025 (DRHP p.111). The proceeds repay debt (DRHP p.27).

14Market size and industry structure

The F&S report cited in the offer document estimates the global iTSS market at US$19,702.7 million in FY2025 and projects US$29,544.2 million by FY2030, with India growing 10.9% a year (DRHP p.26). Those projections are F&S's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• A long record — 600 projects in 19 countries over 26 years (DRHP p.26).
• Breadth — experience integrating 44 technology systems (DRHP p.26).

Against that: dependence on oil and gas capex cycles, a few large customers, government tenders in India, fixed-price contracts exposed to equipment prices, and a shrinking backlog (DRHP p.29, DRHP p.111).

16Peers the company named

The document gives the listed peers' P/E range as 60.57 to 220.94, average 136.40 (DRHP p.108). The peer names were not read for this study.

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

17Risks, in plain words

• Overseas customers. Over half of FY25 revenue (DRHP p.29).
• End industries. Oil and gas capex cycles (DRHP p.29).
• Government tenders. Limited pricing power in India (DRHP p.29).
• Fixed prices. Equipment costs can squeeze margins (DRHP p.29).
• Backlog. Down a third in FY25 (DRHP p.111).

18Litigation and regulatory matters

Source: DRHP p.28, DRHP p.29.

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:

• Why order intake fell in FY25, in the pages read.
• What drove the FY25 margin rise, in the pages read.
• What the criminal proceeding against a director concerns, in the pages read.
• Any results after March 2025, as the filing contains no interim period.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why did orders received fall 41% in FY25, and what has come in since?
2. Was the FY25 margin of 21% helped by specific projects?
3. Why is operating cash flow a quarter of profit?
4. Why are the existing holders taking ₹7,500 million while the company raises ₹1,500 million?
5. Which overseas customers drove FY25 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.