Xtranet Technologies Limited

Incorporated in 2002 by Sukhbir Singh Kukreja, Xtranet Technologies is a Bhopal-based IT services and infrastructure company serving government departments, PSUs and enterprises. FY26 revenue splits into managed services (41%), enterprise applications (33%, incl. data centres), digital services (16%) and proprietary platforms (10%). Hardware resale is 38% of revenue; Government/PSU clients 47%; exports 0.13%.

DRHP filed: September 25, 2025

IPO open & close: July 23, 2026 to July 27, 2026 (anchor book July 22, 2026)

Listing date: July 30, 2026 (tentative), on BSE and NSE

BRLM: Share India Capital Services Private Limited

Auditor: Nagendra Pawaiya and Company, Chartered Accountants (FRN 009541C)

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Delta's View:

May Subscribe for Listing Gains | Skip

Indian IT services are entering a structural AI-led deflation cycle, with HCL, TCS and Infosys all highlighting pricing pressure and slower growth. Xtranet operates in the most vulnerable segment, with ~40% of revenue from IT services companies, ~26% generated through subcontracting and ~41% from manpower-intensive managed services, while AI-led revenue opportunities are not separately disclosed. The business is also highly concentrated, and working capital requirements being funded by borrowings & IPO proceeds. At the IPO ask valuation of ~11.9x EV/EBITDA and ~16.4x P/E, the risk-reward does not appear compelling at this stage. We would skip the issue.

One can expect only flat to moderate listing gains as per current GMP ~6% (27th July 2026), provided the GMP sustains.

•    Indian IT is being guided down by its own largest players. HCL grew FY26 revenue 4% (constant currency) and guides down 1-4% in the coming year (constant currency), calling “AI deflation”; TCS revenue slipped -2.4%, which CEO K Krithivasan called degrowth; Infosys FY26 constant currency revenue growth was just 3.1%, where Salil Parekh expects deflation to become a factor. ICICI Direct models 2-3% annual deflation in traditional IT services, peaking across FY26-FY28.

•    The pressure is already visible in employment and in the tape. The five largest Indian IT firms cut a combined 6,981 jobs in FY26, reversing a net addition of 12,718 the year before; Cognizant has signalled 12,000-15,000 role removals in an AI-led restructuring falling hardest on India. Jefferies notes application services are 40-70% of revenues and consensus does not fully reflect the risk; FIIs sold a record $8.5 bn of Indian IT stock in 2025.

•    Xtranet sits in the most automatable layer. 39.8% of FY26 revenue came from clients classified as IT & Services/Software Consulting — other IT firms, not end users — and 25.6% was explicitly subcontracted. Managed services, 40.5% of revenue, is monitoring, NOC/SOC, helpdesk and resident engineers. Capacity is 504 permanent and 370 contract staff; there is no plant. When primes absorb 3-5% deflation, the subcontractor's rate is the first lever. AI revenue is not separately disclosed.

•    Demand is domestic, government-weighted and concentrated. Government and PSU clients are 47% of revenue on 150-210 day credit terms. Revenue is almost entirely domestic, drawn from roughly 52 customers. The top ten customers are 87% of FY26 revenue, and the largest single client is 23.1%. The order book is more concentrated still: the top four counterparties are 74%, with Dynacons alone at 38%.

•    Leverage doubled in a single year and cash conversion is poor. Borrowings were flat at ₹41 cr (FY24) and ₹39 cr (FY25) before doubling to ₹85 cr in FY26. D/E of 0.6x is the weakest in the peer set — Silver Touch 0.2x, Dynacons 0.3x, Coforge 0.04x. Operating cash flow was 0.68x PAT in the best year and negative in FY24. Free cash flow was negative every year, cumulatively -48 cr against 82 cr of profit.

•    61% of the raise funds working capital rather than growth. ₹102 cr of the ₹167 cr issue goes to working capital. The FY26 cash conversion cycle lengthened from 10 days to 96: debtor days fell from 215 to 114 only because payables were cut ₹76 cr, with payable days collapsing from 395 to 147. The plan assumes receivables triple to ₹340 cr in FY27 while days improve, implying revenue near ₹855 cr against a ₹357 cr order book.

•    ₹33.6 cr of trade receivables — 29% of the gross book and 83% of FY26 PAT — were over three years past due at 31 March 2026, yet carried as "considered good" against a loss allowance of just ₹0.4 cr, or 0.32%.

Business

•    Incorporated in 2002, Xtranet builds and runs IT systems for government departments, PSUs and enterprises — procuring hardware and software from OEM distributors, integrating and commissioning it, then earning recurring revenue under multi-year maintenance contracts.

•    FY26 revenue splits into managed services 40.5% (running and monitoring client IT, plus on-site engineers), enterprise applications 33.2% (ERP, system integration, data centres, custom software), digital services 15.9% (cloud, analytics, AI/IoT) and proprietary platforms 10.3%. Data centres alone are 18.3% of revenue;

•    Two owned products. Synergy is a low-code platform for workflow automation and app development. XtraTrust, a 95% subsidiary, is a MeitY-licensed Certifying Authority and eSign provider, legally able to issue digital signature certificates in India — a licensed activity with few authorised players. It did ₹25 cr revenue and ₹1.4 cr PAT in FY26, deployed with state utilities, FCI and several High Courts.

•    The customer base is roughly 52 domestic clients, with the top ten at 86.7% of revenue and the largest at 23.1%. Government and PSU clients are 47.1% of FY26 revenue; Maharashtra and MP are 79% of revenue. Clients include BSNL, EPFO, Indian Oil, Delhi Police, Mumbai Metro, RailTel, HDFC and Honeywell.

•    The chain runs: track and bid tenders on GeM and state portals, win the work order, procure hardware from OEM distributors, install and commission, hand over, then earn annuity revenue via managed services and AMCs. Government contracts carry 150-210 day credit terms. Bid-to-win averaged 41% over three years (43% in FY26 on 214 bids); order book is ₹357 cr across 76 projects as at Apr-26.

•    Headcount was 504 permanent and 370 contractual as at Apr-26, with 14.1% attrition. The group has three Indian subsidiaries — Xtranet BPO (90.24%), XtraTrust Digisign (95%) and XtraSynergy Solutions (51%) — and a 50% associate in Dubai that constitutes the entire international presence.

Promoters and Leadership

•    Founder-run, first generation. Sukhbir Singh Kukreja (MD, 50) founded the company in Bhopal in Jan 2002 at age 26, straight from a two-year analyst role at a local IT support centre. Jogendrapal Singh Alagh (Whole time director) joined months later. Kukreja runs technology and delivery; Alagh runs sales.

•    Control is family-held. The three promoters — Kukreja, Alagh and Shiney Sukhbir (Kukreja's wife, a Non-Executive Director) — hold 77.45% pre-issue; with Alagh's wife Supneet Kaur Alagh the family holds 83.63%.

Shareholding Pattern

•    Pre-issue capital is 3,91,51,700 shares of ₹10 held by 229 shareholders. Promoters hold 77.45% (Kukreja 42.16%, Alagh 26.38%, Shiney Sukhbir 8.91%) plus 6.18% promoter group, taking family control to 83.63%. The only outside holder above 1% is Strategic Sixth Sense Capital Fund at 2.11%.

•    Fully diluted equals basic — no warrants, options, convertibles or preference shares are outstanding, and there is no ESOP scheme. No independent director, KMP or senior manager holds a single share.

•    The company raised only ₹40 cr of equity in 24 years, 97% of it in two rounds: ₹9 cr from Hira Infratek at ₹50/share (Mar-23) and ₹30 cr from 60 investors at ₹325/share (Sept-24).

•    As the issue is 100% fresh, no shareholder sells. Share counts are unchanged and percentages fall purely through dilution — promoter and promoter group go from 83.63% to 62.63%. 20% of post-issue capital held by promoters locks in for 18 months; the balance for six months.

Issue Details

Fresh issue size - Amount → 166.80 cr; To be utilized in -

•    To meet working capital requirements → 102 cr

•    Repayment or pre-payment of certain outstanding borrowings → 20 cr

•    Capital expenditure for purchase and installation of systems and hardware → 8.5 cr

•    General Corporate Purposes & Others

Offer For Sale size - Amount → Nil;

Financials