Value Opportunity or Market Retreat to “Established” Peers?
By Dev Chandrasekhar
CapitalNumbers Infotech Ltd. (CNINFOTECH), a Kolkata-based digital engineering firm, debuted on the BSE SME platform on January 27, 2025. Being the first SME IPO to secure mutual fund anchors reflected strong initial confidence. Fuelled by revenues from fast-growing segments like AI and cloud engineering, and margins competitive with mid and large-cap IT peers, it seemed poised to outpace competitors. Yet, by March 28, 2025, its stock had dropped more than 40% from its listing price, lagging peers and trading well below its estimated fair value despite robust growth metrics.
A High-Profile Debut with Mutual Fund Backing
Capital Numbers’ ₹169.37 crore IPO on the BSE SME was at ₹263 per share–the share listed on January 27, 2025. It broke ground as the first BSE SME IPO to attract global investment firms and mutual funds as anchor investors, including Copthall Mauritius Investment Ltd. and Whiteoak Capital Mutual Fund . This institutional backing set it apart from typical SME IPOs, which genertally lean heavily on retail and HNI interest.
The IPO was oversubscribed nearly 135 times, driven by a ₹90 grey market premium. It opened at ₹274, a 4.2% premium over the offer price, valuing the company at ₹665 crore. This outperformed the BSE SME IPO index’s 3% average listing gain for 2025 , signalling strong investor faith in its growth potential.
Early Confidence in a Differentiated Business Model
Investors initially rallied behind Capital Numbers, convinced perhaps by its perceived unique model. Its end-to-end offerings—spanning AI/ML development, cloud and data engineering, custom software, UI/UX, and QA–are claimed to eliminate the need for multiple vendors, unlike mid-cap and large-cap peers that focus on engineering or segment phases across vast teams.
Its technological breadth—spanning AI, ML, cloud, IoT, and legacy stacks—targets both high-growth and traditional sectors, against the niche tech focus or slower, scale-driven delivery of peers. The blend of mid-cap agility and large-cap scope, plus a high repeat client rate, fueled early optimism, positioning Capital Numbers as a nimble disruptor,
Post-IPO Slump: Price Moves vs. Peers
Capital Numbers’ stock has plummeted since listing. From ₹274 on January 27, 2025, it fell to ₹160.3 by March 27, 2025, a 42% decline, reducing its market cap to ₹392 crore. This despite promoter buying of 1.8 lakh shares at ₹167 in March; daily volumes dropped from 2 lakh to 50,000 shares .
In contrast, peers showed mixed but generally stronger performance over the same period (January 27 to March 26, 2025)
Out of Steam or Undervalued Opportunity?
So what does this large correction signal for the Capital Numbers stock? Was the enthusiasm during the IPO mere hype or is the stock oversold? The key numbers suggest potential:
- Revenue and Growth: Estimated at between ₹120crore for FY25 potentially rising to ₹140 crore by FY26, driven by 20-50% growth.
- EBITDA: 30-35% margins yield ₹40-50 crore, competitive with peers.
- Valuation Metrics: Mid-caps like Persistent trade at 30x P/E or 5x revenue, large-caps like TCS at 32x and 5.5x. Capital Numbers might fetch 20-25x P/E or 2.5-4x revenue. At ₹140 crore revenue and 4x, fair value is ₹560 crore; at 25x ₹50 crore EBITDA, the potential valuationis ₹1250 crore.
- Fair Value Estimate: ₹750-1,000 crore, with upside to ₹5,000 crore if growth sustains.
At ₹392 crore, its 2.8x revenue multiple (assuming ₹140 crore annualized) and implied 15x P/E (₹26crore PAT) lag Persistent’s 5x and 30x, or Wipro’s 3x and 18x, suggesting an undervaluation despite outpacing peers’ growth.
Market Retreat to “Established” Peers?
Or does this reflect a market favoring “established” peers over Capital Numbers’ agility? Large-caps like TCS and Infosys offer stability with vast workforces, absorbing volatility better than a 600-person SME. Their steady growth(and high multiples align with the Nifty IT’s 15% YTD gain . Mid-caps like Persistent and Coforge blend growth with visibility. It’s SME volatility—42% drop vs. peers’ milder shifts—may drive investors to TCS’s predictability over a contender eyeing ₹250 crore revenue by 2027.
| Capital Numbers vs. Peers | ||||||
| Metric | Capital Numbers | TCS | Infosys | Persistent | Wipro | Tech Mahindra |
| Revenue (Est.) | ₹140 cr | ₹2,32,400 cr | ₹1,49,400 cr | ₹8,300 cr | ₹83,000 cr | ₹49,800 cr |
| Market Cap | ₹392 cr | ₹13,28,000 cr | ₹7,47,000 cr | ₹66,400 cr | ₹2,90,500 cr | ₹1,24,500 cr |
| Price (Jan 27) | ₹274 | ₹3,850* | ₹1,750* | ₹5,300* | ₹265* | ₹1,450* |
| Price (Mar 27) | ₹160.3 | ₹3,560* | ₹1,605* | ₹5,649* | ₹272* | ₹1,415* |
| % Change | -42% | -8% | -8% | 7% | 3% | -2% |
| Revenue Growth (YoY) | 20-50% | 8% | 5% | 20% | 1% | 4% |
| EBITDA Margin | 30-35% | 24% | 21% | 18% | 17% | 10% |
| Capital Numbers vs Peers | ||
| Capital Numbers | Peers | |
| Price change | -42.00% | -8% to +2% |
| Revenue Growth (YoY) | 20% to 50% | 1% to 8% |
| EBITDA Margin | 30%-35% | 10% to 24% |
|
Company, analyst estimates |
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| Peers included: TCS, Infosys, Persistent, Wipro, Tech Mahindra | ||
Conclusion: Opportunity or Oversight?
Capital Numbers’ 425% post-IPO drop from ₹274 to ₹160.3 contrasts with peers’ milder shifts—Persistent rose 6.6%, Wipro 2.5%, while TCS and Infosys fell 7.5% and 8.3%in the same period—despite its 20-50% growth outpacing them all. Trading at ₹390 crore against a ₹750-1,000 crore fair value, it could be an undervalued opportunity for investors betting on its tech versatility. Yet, the market’s lean toward “established” peers suggests a preference for scale, potentially overlooking a nimbler player that seeks to change the perception of India’s IT prowess. The answer hinges on whether sentiment will realign with fundamentals.
