1) Company & Its Business Operations

Capillary is a Bengaluru-headquartered software product company (incorporated in 2012) that offers AI-based, cloud-native SaaS for customer loyalty and engagement to large enterprises globally. Its Hybrid-SaaS stack spans Loyalty+, Engage+, Insights+, Rewards+ and CDP+, enabling rapid, API-first deployments across verticals such as retail, CPG, airlines, hospitality, BFSI and fuel retail. As of September 2025, the company serves hundreds of brands (including several Fortune 500s) across 47 countries through a network of 16 offices. Solutions deliver omni-channel personalisation, analytics and program management; subsidiaries include Brierley (loyalty strategy/design).

2) IPO at a Glance

Lead Managers: JM Financial, IIFL Capital Services, Nomura FA&S (India).

3) Objects of the Issue

Use of Fresh Issue proceeds (up to Rs 345.00 crore) includes:

• Cloud infrastructure & hosting costs to support platform scale-up.
• Product development and R&D (enhancing Loyalty/Engage/Insights/Rewards/CDP).
• Upgrade of computer systems/hardware.
• General corporate purposes.

(Offer for Sale: up to Rs 532.50 crore; Total Issue size up to Rs 877.50 crore.)

4) Industry Outlook

The global loyalty/cloud-CRM ecosystem is large and evolving. The customer experience management market was USD 10.48 billion in 2022, expected to reach USD 37.56 billion by 2029 (CAGR 19.9 per cent). The MarTech market is seen at USD 1.44 trillion by 2028 (CAGR 19.5 per cent), while the hybrid-SaaS TAM could be USD 420 billion by 2027 (CAGR 18.5 per cent). In India and Asia, a vast consumer base is adopting structured loyalty faster as enterprises digitise; Capillary’s global footprint positions it to monetise this shift.

5) SWOT Analysis

Strengths

• Full-stack, API-first Hybrid-SaaS platform (Loyalty, Engagement, Analytics, Rewards, CDP) with fast implementation and high stickiness.
• Global presence (47 countries, 16 offices) with marquee enterprise/Fortune-500 clients.
• Improving profitability; FY25 turned profitable at net level with positive EBITDA.

Weaknesses

• Cash-flow volatility (FY25 negative CFO).
• Dependence on large enterprises; long sales cycles.

Opportunities

• Rapidly growing TAM across CX/MarTech; accelerating adoption in India/Asia.
• Cross-sell/upsell across verticals; analytics-led expansion (AI/ML features).

Threats

• Intense competition from global SaaS majors (Salesforce, Adobe, HubSpot, Braze).
• Currency/geopolitical exposure given wide geographic footprint.

6) Financial Performance (Rs crore)

(a) Profit & Loss:

(b) Balance Sheet:

(c) Working Capital & Cash Flow:

7) Peer Comparison

Capillary’s RHP benchmarks competition primarily to global SaaS leaders (Salesforce, Adobe, HubSpot, Braze); direct Indian listed peers are not strictly comparable, and the RHP does not provide an India-peer valuation table. Hence, a like-for-like P/E/EV-metrics comparison with domestic names is not presented.

8) Outlook & Relative Valuation

Capillary operates in a structurally growing loyalty/CX market with rising digital adoption in India/Asia and strong enterprise demand globally. The platform breadth (Loyalty/Engage/Insights/Rewards/CDP) and API-first architecture support faster roll-outs and multi-year stickiness. Financially, FY25 saw a turn to profit and double-digit EBITDA margin, though cash flows remain volatile and working capital needs are meaningful. On valuation, at the upper band Rs 577, the stock implies ~319x FY25 EPS (Rs 1.81) on a pre-issue basis rich versus mature software names, but typical of growth SaaS listings that price on sales/EBITDA progression. Post-issue, proceeds earmarked for cloud costs and product R&D should aid scalability and margins. Near-term upside may depend on execution sustaining >12–14 per cent EBITDA margins, improving CFO, and enterprise wins outside core retail/BFSI. Medium term, a large TAM and cross-sell runway are positives; key risks are global competition, FX/geography exposures, and sales-cycle elongation.

9) Recommendation

Call: Avoid. Strong product breadth, global presence and a growing TAM support the long-term story, and FY25 profitability is encouraging. However, valuations are demanding and cash-flow variability persists. Suitable for investors with a higher risk appetite and multi-year horizon; monitor margin traction and operating cash conversion closely.