IPO Review: Interarch Building Products IPO versus Orient Technologies IPO. Which one should you subscribe?

IPO Review: The subscription for the Interarch Building Products IPO ends today, while the Orient Technologies IPO debuts on the D-Street. Those considering investing may be unsure whether to choose one or apply for both, as both IPOs have garnered positive investor interest.

Non institutional investors have taken the lead in the initial public offering of Interarch Building Products, while retail investors have led the offering of Orient Technologies.

When it comes to the issue size, the Interarch Building Products IPO comprises a fresh issue of shares amounting to ₹200 crore and an offer-for-sale of up to 44.47 lakh shares valued at ₹400 crore, at the higher end of the price band, by the promoters and investor-selling shareholders. This brings the total issue size to ₹600 crore. The Orient Technologies IPO consists of a fresh issue of ₹120 crore and an offer for the sale of up to 46 lakh equity shares valued at ₹95 crore, at the upper end of the price band, by promoters. This aggregates the transaction size to ₹215 crore.

Interarch Building Limited offers comprehensive pre-engineered steel construction solutions, whereas Orient Technologies Limited is a rapidly expanding provider of information technology (IT) solutions.

When comparing the differences between two businesses, Arun Kejriwal, the founder of Kejriwal Research and Investment Services, believes that one can potentially earn a higher return from investing in the Interarch Building Products IPO.

Arun Kejriwal Decodes

Arun Kejriwal, the founder of Kejriwal Research and Investment Services, clarified that Interarch specialises in pre-engineered steel structures, while Orient is involved in hardware, services, and IT-enabled solutions. Their areas of operation, expertise, and customer base are distinct, making a direct comparison inappropriate. Considering the opportunity, the pre-engineered design, construction, and building sectors are not crowded with businesses. There are only a handful of well-known players with a significant market share. Small players may handle basic design and engineering, but expertise is necessary for withstanding climatic conditions, such as seismic activity in fault zones or exposure to cyclonic winds in coastal areas. The company has a strong order book, consistent growth, and healthy profit margins.

Their geographic locations are up north and down south. Contrary to popular belief, building a factory and then sending the building involves a lot of freight, but this is not the case; the company's average freight is about 1.5% of their revenues, which is not a significant amount when looked at from that angle.

In reference to Orient Technologies, Kejriwal mentioned that a significant portion of the company's revenue, approximately 50-52%, is generated from hardware and hardware-related sales, which operate within a challenging and highly competitive margin. The company is strategically downsizing this aspect of the business and transitioning towards offering services instead. Additionally, the company is venturing into a device-as-a-service model for areas that require hardware, implementing a lease or fixed rental model to absorb some of the capital expenditure and bundling services with the device to increase revenue while reducing capital expenditure. Orient Technologies is also diversifying its business by entering two new sectors - data centers and cyber security - in response to the growing demand for cyber security from its existing client base.

In terms of making money, one can earn more in Interarch Building Products IPO, said Arun Kejriwal.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.