Capillary Technologies IPO Review, GMP, Valuation - Invest or Avoid?

Capillary Technologies India Limited is a Bengaluru-based software company that builds Artificial Intelligence (AI)-powered cloud tools to help big brands run smarter loyalty programs. The company is now coming out with its IPO worth ₹877.5 crore, opening on November 14, 2025, and closing on November 18, 2025. The price band is ₹549-₹577 per share. As of now, the GMP, an unofficial indicator of investor sentiment before listing, is ₹0, showing no extra buzz in informal trades.

In this blog, let’s dive into what Capillary really does, how it earns money, what the IPO funds will be used for, and whether its financials make sense at the current valuation. You’ll also find insights into its strengths, risks, industry outlook, and how it stacks up against global peers.

IPO Overview

• IPO Date: November 14 to November 18, 2025
• Total Issue Size: ₹877.5 crore
• Price Band: ₹549 to ₹577 per share
• Minimum Investment: ₹14,425
• Lot Size: 25 Shares
• Tentative Allotment Date: November 19, 2025
• Listing Date: November 21, 2025 (Tentative)
• GMP: The GMP for the Capillary Technologies IPO is ₹0, reflecting a 0% gain over the issue price, according to Chittorgarh.com.

Disclaimer: GMP is an unofficial indicator and is subject to market volatility.

How Capillary Technologies Makes Money

Capillary makes customer loyalty software for big companies. Think of it as the brain behind loyalty cards, reward points, and membership programs that keep you returning to a brand.

It sells AI-powered SaaS (Software-as-a-Service) products. SaaS means businesses pay a monthly or yearly fee to “rent” the software online instead of buying it outright. The software runs on the cloud, allowing companies to access it from anywhere.

Its product suite has four main modules:

• Loyalty+ - runs loyalty programs and calculates points and rewards.
• Engage+ - sends personalized messages, emails, or app notifications to each customer.
• Insights+ - studies customer data to find what works and what doesn’t.
• Rewards+ - manages the reward distribution process, like vouchers or cashback.

All these products are powered by an AI platform called aiRA, which helps brands understand customers better and act instantly.

Capillary makes money mainly from:

• Subscription fees - predictable monthly revenue from clients who use its software.
• Setup fees - one-time payments for installing or integrating their tools with clients’ systems.

It follows a common SaaS growth strategy called “Land and Expand”, which starts with one product, then expands usage within the same client group, such as other branches or countries. This leads to long-term, recurring income.

Objectives of the IPO

Capillary’s IPO consists of a fresh issue of ₹345 crore and an offer for sale (OFS) of ₹532.5 crore. Here’s how the company plans to use the new funds:

• Cloud Infrastructure Expansion (₹143 crore): This will maintain and grow the company’s online servers, ensuring it can process massive amounts of customer data without glitches. Think of it as investing in better “digital highways” so millions of users can access the platform smoothly.
• Research & Development (₹71.58 crore): This will strengthen its AI capabilities and help it build new loyalty features. Capillary already spent ₹128 crore in FY25 on R&D and plans to keep improving to stay ahead in AI and machine learning.
• Computer Systems Purchase (₹10.34 crore): Funds will be used to buy new systems that support daily operations.
• Acquisitions and Other Corporate Needs: The rest will go towards acquiring smaller companies and meeting general business requirements.

Strengths:

• Turned Profitable After Years of Loss: The company made a profit of ₹14.2 crore in FY25, reversing a loss of ₹88.6 crore in FY23. This turnaround shows tight cost control and successful integration of acquired firms.
• Strong Customer Stickiness: Its Net Revenue Retention (NRR) rate is 121.25%, meaning existing customers spent 21% more this year than last. This shows high satisfaction and deep relationships.
• Impressive Subscription Margins: Subscription Gross Margin stood at 66.36% in FY25. In plain terms, for every ₹100 earned from software subscriptions, ₹66 stays after covering delivery costs.
• Quick Cost Recovery: The company’s Payback Period is just 16 months, which means it recovers its cost to gain each customer in about one and a half years.
• Industry-Leading Clients: It serves 19 Fortune 500 companies across 47 countries, processing 1,567 crore customer transactions annually. This scale creates trust and a stable, recurring business.

Risks:

• High Dependence on Top Clients: The top 10 customers contribute nearly 56% of revenue. If even one leaves, the company could lose over ₹15 crore of yearly income.
• Geographical Concentration: Over half its revenue (56%) comes from North America. Any slowdown or regulation shift there can hurt earnings.
• Rising Customer Acquisition Cost (CAC): CAC rose 29.5% to ₹65 crore. This means getting new customers is becoming costlier, and if unchecked, margins may shrink.
• History of Negative Cash Flow: Although profitable now, it had past years with negative operational cash flows. If that recurs, it could affect liquidity.
• Aggressive Valuation: At a post-IPO P/E ratio of 327x (meaning investors are paying ₹327 for every ₹1 of profit), the stock looks very expensive. Peers like Salesforce trade at around 34x, showing a high pricing gap.

For detailed information, visit Capillary Technologies’ official IPO page.

Peer Comparison

Capillary Technologies does not have any listed peers within India, making it unique domestically. Globally, it competes with large, well-established SaaS companies like Salesforce, Adobe, HubSpot, and Braze.

• Revenue Size: Capillary’s FY25 revenue was ₹598 crore, while Salesforce earned over ₹3 lakh crore.
• Return on Net Worth: Capillary’s RoNW is 2.85%, meaning it earns ₹2.85 for every ₹100 invested by shareholders. Adobe earns ₹37 on the same ₹100.
• Customer Retention: With 121% NRR, Capillary beats HubSpot’s 102%, showing customers spend more once onboard.

Financial Performance

• Revenue grew from ₹266 crore in FY23 to ₹612 crore in FY25, a strong jump of over 50% annually. This came from acquiring companies like Brierley and Rewards+ and scaling up existing contracts.
• The EBITDA margin improved sharply from -22.8% in FY23 to 13.1% in FY25, proving efficiency gains after merging acquired firms. Profit also turned positive for the first time, driven by reduced expenses and better customer retention.
• While total borrowings rose 93% to ₹88.9 crore in H1 FY26, it remains manageable given the company’s asset growth and improving cash generation.

IPO Valuation

Capillary Technologies is priced at a high valuation with a Price-to-Earnings (P/E) ratio of around 327 times after the IPO. This means investors are paying ₹327 for every ₹1 of profit made by the company in the last year. Such a high number signals that the market expects strong future growth rather than valuing it just on past profits. For comparison, similar global software companies usually trade at a much lower P/E of about 34, showing a big premium for Capillary’s future potential. The company’s post-IPO market capitalization is estimated at roughly ₹4,600 crore, placing it in a high-growth SaaS category, but with aggressive pricing that cautious investors should carefully consider.

Disclaimer: The P/E ratio here is calculated using the company’s post-IPO equity and its most recent FY25 net profits at the upper end of the price band.

People Behind the Company

Capillary is led by Aneesh Reddy Boddu, an IIT Kharagpur graduate who co-founded the company and now serves as Managing Director & CEO. With over 15 years in tech entrepreneurship, he draws a salary of around ₹1.6 crore in FY25 and holds a 2.36% stake.

Anant Choubey, the Co-founder, CFO, and COO, is also from IIT Kharagpur. With similar experience, he earned ₹1.3 crore in FY25. Both founders represent the company’s deep roots in product innovation and technology management.

Neelam Dhawan, the Chairperson, brings decades of corporate leadership from major firms like ICICI Bank and HUL. Her presence boosts governance and trust, especially as the company transitions to being publicly listed.

The Money Makers from the IPO

Around ₹532.5 crore worth of shares will be sold by existing investors in the offer for sale:

• Capillary Technologies International Pte. Ltd. (CTIPL), the main promoter, is liquidating shares worth ₹492.8 crore. Its stake cost just ₹34.75 per share originally, translating to roughly a 16.6x return.
• Trudy Holdings, another investor, is selling ₹39.7 crore worth of shares, earning roughly 1.8x its cost of ₹319 per share.

The OFS money goes to these shareholders, not to the company.

Industry Outlook

The global loyalty market is valued at $16.6 billion in FY24 and may grow to $26.8 billion by FY29, at about 10% annual growth. India’s digital wave and high consumer engagement make it a fast-growing sub-market.

Three major factors are driving this:

• Companies are shifting from focusing on new customer acquisition to retaining loyal ones. It’s cheaper and gives better long-term profits.
• The rise of AI and data analytics is transforming how brands understand and reach people.
• The demand for omnichannel loyalty programs (same rewards offline and online) is rising, as customers switch between stores, apps, and websites.

Analyst View

Capillary Technologies presents a strong long-term growth story with proven global operations and improving profitability. Its technology backbone and loyal enterprise clients provide a solid foundation.

However, the IPO price looks aggressive. Paying a P/E of over 300x means investors are betting on many years of future growth. The company’s dependency on a few clients and high foreign exposure adds risk.

In short, this IPO suits investors comfortable with risk and long horizons rather than those seeking quick or safe returns.

For a seamless application process, visit the INDmoney IPO page.

Disclaimer

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