CAPILLARY TECHNOLOGIES INDIA LIMITED IPO Explain

Capillary Technologies IPO Overview

Bengaluru SaaS leader in AI-powered loyalty solutions raising ₹877.50 cr (₹345 cr fresh + ₹532.50 cr OFS). Price: ₹549-577. Lot: 25 shares (₹14,425 min). Funds for cloud infra (₹143 cr), R&D (₹71.6 cr). 410+ brands, 47 countries, 19 Fortune 500 clients, 1.82B consumers managed.

Lead: JM, IIFL, Nomura. 10% retail. Competes with Salesforce (P/E 40x), Adobe (29x), HubSpot. High valuation, modest profitability, 60.7% OFS concerns.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	Mainboard
IPO Open Date	14 November 2025 (Friday)
IPO Close Date	18 November 2025 (Tuesday)
Anchor Investor Bidding	13 November 2025 (Thursday)
Allotment Date	19 November 2025 (Wednesday) – Expected
Credit to Demat	20 November 2025 (Thursday) – Expected
Refund Initiation	20 November 2025 (Thursday) – Expected
Listing Date	21 November 2025 (Friday) – Tentative
Price Band	₹549 – ₹577 per share
Face Value	₹2 per share
Lot Size	25 shares
Min Investment (Retail)	₹14,425 (1 lot of 25 shares at upper band)
Max Investment (Retail)	₹1,87,525 (13 lots of 325 shares)
sHNI Investment	₹2,02,300 (14 lots / 350 shares)
bHNI Investment	₹10,09,850 (70 lots / 1,750 shares)
Issue Size	₹877.50 crore total
Fresh Issue	₹345 crore (39.3%) – 59,79,202 shares
Offer for Sale (OFS)	₹532.50 crore (60.7%) – 92,28,796 shares
Total Shares Offered	1,52,07,998 equity shares
Listing	BSE & NSE (Mainboard)
Post-Issue Market Cap	~₹7,000-7,500 crore (at upper price band)
P/E Ratio	298.93x (FY25 basis)
EPS	₹1.93 (FY25 basis)
ROE	2.85% (FY25) – recovered from -21.52% (FY24), -135.93% (FY23)

Issue Break-up

Category	Allocation
QIB (Qualified Institutional Buyers)	75% of Net Offer (unusually high)
NII (Non-Institutional Investors)	15% of Net Offer
Retail Individual Investors	10% of Net Offer (lower than typical 35%)

Note: Heavily skewed toward institutional investors with only 10% retail allocation – similar to Groww, Lenskart IPO structure.

Selling Shareholders (OFS ₹532.50 crore)

Promoters & Investors Selling 92,28,796 shares:

1. Capillary Technologies International Pte Ltd (Promoter) – Singapore parent company
2. Trudy Holdings (Investor) – Partial exit

Post-IPO: Capillary International remains significant shareholder

Note: OFS represents 60.7% of total issue. Majority (60.7%) goes to existing shareholders exiting, only 39.3% fresh capital to company.

Objects of the Issue (Fund Utilization)

Fresh Issue Proceeds (₹345 crore) will be used for:

1. Cloud Infrastructure Costs – ₹143 crore (41.4%)
   • Expansion and scalability of AWS, Google Cloud, Microsoft Azure infrastructure
   • Supporting 1.82 billion consumer profiles and 0.16M transactions/hour capacity
2. Research & Development – ₹71.581 crore (20.7%)
   • AI/ML enhancements, product innovation
   • AskAira (AI-powered research assistant) development
   • New feature development for Loyalty+, Engage+, Insights+, Rewards+, CDP
3. Purchase of Office Premises – ₹10.342 crore (3%)
   • Corporate office space acquisition
4. Inorganic Growth (Acquisitions) – Portion of balance
   • M&A for strategic expansion (history: Persuade, Brierley+Partners, Kognitiv acquisitions)
5. General Corporate Purposes – Balance amount (~35%)
   • Working capital, strategic initiatives

Strategic Focus:

• Scale cloud infrastructure for global growth
• Continuous AI/ML innovation to stay ahead of competition
• Inorganic growth through strategic acquisitions (proven playbook)
• International expansion beyond current 47 countries

OFS Proceeds (₹532.50 crore):

• Goes entirely to Capillary International Pte Ltd and Trudy Holdings
• Company receives zero funds from OFS

Note: High OFS (60.7%) signals investor exit rather than growth capital infusion.

Lead Managers & Registrar

Book Running Lead Managers (BRLMs):

• JM Financial Limited
• IIFL Capital Services Limited (formerly IIFL Securities Limited)
• Nomura Financial Advisory and Securities (India) Private Limited

Registrar:

• MUFG Intime India Private Limited (Link Intime India Private Limited)
• Phone: +91-22-4918 6270
• Website: https://in.mpms.mufg.com/Initial_Offer/public-issues.html

Promoters & Management

Key Founders:

1. Aneesh Reddy Boddu – CEO, Founder, Managing Director
   • IIT Kharagpur graduate, founded company in 2008
   • Left CEO role in 2022, returned March 2024 after successor resigned
   • Featured in Harvard Business Review for “reverse innovation”
2. Krishna Mehra – Co-founder
3. Ajay Modani – Co-founder

Parent Company:

• Capillary Technologies International Pte Ltd (Singapore) – Promoter
• Incorporated in Singapore 2008, redomiciled from India

Major Investors:

• Warburg Pincus (largest investor)
• Sequoia Capital (now Peak XV Partners)
• Norwest Venture Partners
• Avataar Ventures
• American Express Ventures
• Qualcomm Ventures
• Total raised: USD 329 million across multiple rounds

Company History:

• 2008: Founded by IIT graduates Aneesh, Krishna, Ajay
• 2009: Won Qualcomm QPrize ($73K windfall)
• 2012: $15.5M from Sequoia, Norwest, Qualcomm
• 2013: Harvard Business Review case study
• 2015: Acquired MartJack ($45M round led by Warburg)
• 2021: Acquired Persuade (US loyalty platform)
• 2023: Acquired Brierley+Partners (Texas), raised $45M
• 2024: Raised $95M secondary, acquired Kognitiv
• 2025: IPO launch

Company Contact:

• Registered Office: 360, 15th Cross Rd, Sector 4, HSR Layout, Bengaluru – 560102, Karnataka
• Phone: +91-80-4122 5179
• Website: www.capillarytech.com

COMPANY OVERVIEW

Establishment & Background:

• Founded in August 2008 by IIT Kharagpur graduates Aneesh Reddy, Krishna Mehra, Ajay Modani
• Industry: Software-as-a-Service (SaaS) – AI-Powered Customer Loyalty & Engagement Solutions
• Headquarters: Bengaluru, Karnataka (Singapore registered parent)
• Recognized as global leader by Forrester, Gartner, Zinnov in loyalty management space
• 17 years of operations building enterprise SaaS for customer loyalty

Business Model:

• AI-based cloud-native SaaS platform helping enterprises develop customer and channel partner loyalty
• Product Suite:
  1. Loyalty+ – Design and manage loyalty programs
  2. Engage+ – Real-time omnichannel customer engagement
  3. Insights+ – AI-driven consumer analytics and behavior prediction
  4. Rewards+ – Digital rewards marketplace and redemption
  5. CDP (Customer Data Platform) – Unified customer profiles
  6. AskAira – AI-powered research assistant (2023 launch)
• Revenue Model: Subscription-based SaaS (annual/multi-year contracts), implementation fees, consulting services
• Value Proposition: End-to-end loyalty solutions (vs modular offerings from CRM giants), AI-driven personalization, omnichannel engagement, deep analytics

Market Position:

• Global leader in loyalty management per Forrester, Gartner, Zinnov (September 2025)
• Among few companies offering end-to-end loyalty solutions (not just a module within CRM)
• 410+ brands served across 47 countries as of September 2025
• 19 Global Fortune 500 clients including Tata, PUMA, Shell, Domino’s, Aditya Birla, Asics, Indigo
• Manages 1.82 billion consumer profiles and processes 0.16 million loyalty transactions per hour (Sept 2025)
• $17 billion addressable market targeted (CEO statement)

Operations:

• 16 global offices: India, USA, UK, Canada, UAE, Singapore, Indonesia, Vietnam, Malaysia, etc.
• Services in 47 countries across retail, FMCG, healthcare, apparel, luxury, travel, auto, hospitality, energy sectors
• Enterprise focus: 98.23% revenue from Enterprise Customers (>₹8M revenue/client) in H1 FY26
• Geographic revenue (H1 FY26): North America 56.01%, India 19.60%, MEA 12.44%, Rest of Asia 11.95%
• Cloud infrastructure: Multi-cloud (AWS, Google Cloud, Microsoft Azure)
• Certifications: ISO 27001, PCI DSS, SOC2 compliant
• R&D: Continuous AI/ML innovation, AskAira AI assistant, predictive analytics

Company Strengths

1. Global Leadership in End-to-End Loyalty Solutions – Forrester/Gartner Recognized:
   • One of few global players offering complete loyalty stack (Loyalty+, Engage+, Insights+, Rewards+, CDP)
   • Competitors (Salesforce, Adobe, HubSpot) offer loyalty as module within broader CRM – Capillary’s sole focus differentiates
   • Recognized by Forrester, Gartner, Zinnov as leader in loyalty management (Sept 2025)
   • Manages 1.82 billion consumer profiles, 0.16M transactions/hour – massive scale validation
2. Strong Enterprise Customer Base – 19 Fortune 500 Clients:
   • 410+ brands across 47 countries including Tata, PUMA, Shell, Domino’s, Aditya Birla, Asics, Indigo, Abbott
   • 98.23% revenue from Enterprise Customers (>₹8M/client) in H1 FY26 – high ticket sizes
   • Fortune 500 clients provide brand validation, stickiness, and expansion opportunities
   • Goal: Onboard one Fortune 500 every quarter (CFO statement)
3. Impressive Profitability Turnaround – Loss to Profit in FY25:
   • FY25: ₹14.15 cr profit vs ₹68.35 cr loss (FY24) vs ₹87.71 cr loss (FY23) – critical inflection point
   • Revenue CAGR: 53.06% (FY23-FY25) from ₹255.37 cr to ₹598.25 cr
   • ROE recovered from -135.93% (FY23) to +2.85% (FY25) – capital efficiency improving
   • H1 FY26: ₹359.22 cr revenue (+25% YoY), ₹1.03 cr PAT – sustained profitability
4. Proven M&A Playbook for Strategic Growth:
   • Successful acquisitions: Persuade (2021, US), Brierley+Partners (2023, Texas), Kognitiv (2024)
   • CAC substitution strategy: Acquire enterprise clients via M&A, migrate to scalable Capillary platform
   • Enhances margins and operational synergies
   • IPO proceeds earmarked for further inorganic growth
5. AI-First, Cloud-Native Platform – Scalable Infrastructure:
   • Built on modern API-first, cloud-based architecture (AWS, GCP, Azure)
   • AskAira – Proprietary AI research assistant launched 2023
   • AI-driven personalization, predictive analytics, real-time engagement
   • ISO 27001, PCI DSS, SOC2 compliant – enterprise-grade security
   • Scalable infrastructure supporting 1.82B consumers
6. Geographic Diversification – 56% Revenue from North America:
   • North America contributes 56.01% revenue (H1 FY26) – reduces India dependency
   • Operations in 47 countries across 6 continents
   • MEA (12.44%), Rest of Asia (11.95%), India (19.60%) providing balanced mix
   • International expansion reducing emerging market volatility exposure
7. Marquee Investor Backing – $329M Raised from Top VCs:
   • Warburg Pincus, Sequoia (Peak XV), Norwest, Avataar, American Express, Qualcomm
   • Strong institutional backing providing credibility and strategic guidance
   • Successful fundraising history demonstrating investor confidence

Key Risks & Challenges

1. Extreme Valuation – P/E 298.93x vs Salesforce 40x, Adobe 29x:
   • P/E of 298.93x (FY25 basis) – investors paying ₹299 for every ₹1 of profit
   • 7-10x higher than global CRM/SaaS giants: Salesforce (~40x), Adobe (~29x), HubSpot
   • Valuation based on just ₹14.15 cr profit (FY25) after years of losses – sustainability untested
   • Post-issue P/E over 2200x (some analyst reports) using H1 FY26 annualized – astronomical
   • Little room for error – any growth disappointment triggers sharp correction
   • Aggressive pricing assumes flawless execution and multi-year hypergrowth
2. Modest Profitability & Short Track Record – First Profit in FY25:
   • Just turned profitable in FY25 with ₹14.15 cr PAT after losses of ₹68.35 cr (FY24), ₹87.71 cr (FY23)
   • H1 FY26 PAT only ₹1.03 cr – profitability still fragile
   • ROE of just 2.85% (FY25) – very low capital efficiency
   • ROCE 2.76% – barely positive returns on capital
   • No multi-year profitability track record to justify rich valuation
   • Operating leverage and margin sustainability unproven
3. High OFS (60.7%) – Investor Exit Signal, Limited Fresh Capital:
   • ₹532.50 cr (60.7%) OFS goes to promoter/investor exit vs ₹345 cr (39.3%) fresh
   • Promoter Capillary International and investor Trudy Holdings cashing out majority
   • Signals peak valuation or confidence concerns from insiders
   • Limited fresh capital (₹345 cr) relative to ₹7,000+ cr market cap
   • Only ₹143 cr for critical cloud infrastructure – may need more funding soon
4. Intense Competition from Global Giants – Salesforce, Adobe, HubSpot:
   • Competing with CRM/marketing tech behemoths: Salesforce (market cap $300B+), Adobe ($200B+), HubSpot, Oracle, SAP
   • Giants offer loyalty as integrated module within comprehensive CRM suites – bundling advantage
   • Salesforce, Adobe have 10-100x Capillary’s resources for R&D, sales, marketing
   • Low switching costs for enterprise clients
   • Niche focus on loyalty limits TAM vs full-stack CRM platforms
5. Client Concentration Risk – Revenue Dependency on Top Clients:
   • While 410+ brands served, concentration among top 10-20 clients likely high (enterprise SaaS pattern)
   • Loss of single Fortune 500 client materially impacts revenue
   • Multi-year contracts provide visibility but renewal risk exists
   • Client churn in competitive SaaS market pressures growth
6. Data Privacy & Regulatory Compliance Burden:
   • Manages 1.82 billion consumer profiles – massive data liability
   • Subject to GDPR (Europe), CCPA (California), India’s DPDP Act – stringent regulations
   • Data breaches catastrophic for reputation and client trust
   • Increasing compliance costs and legal risks
   • 47-country operations multiply regulatory complexity
7. Low Retail Allocation (10%) & Flat GMP (₹0) – Muted Market Sentiment:
   • Only 10% IPO for retail vs typical 35% – limited public participation
   • GMP flat at ₹0 (trading at upper band ₹577) – no grey market premium
   • Indicates subdued investor enthusiasm despite strong business
   • High valuation likely deterring retail demand
   • Heavily dependent on institutional appetite (75% QIB) – if institutions balk, issue underperforms

Disclaimer: This information is based on publicly available sources including SEBI RHP filings and company disclosures. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance is not indicative of future results. The company has extreme valuation (P/E 298.93x vs Salesforce 40x, Adobe 29x), just turned profitable in FY25 after years of losses (₹14.15 cr PAT), high OFS (60.7%), and faces intense competition from global CRM giants. Grey Market Premium is ₹0 (flat) indicating muted market sentiment.