Capillary Technology, the Bengaluru-based SaaS powerhouse specializing in customer engagement and loyalty solutions, is set for its long-awaited public debut after receiving SEBI’s nod for its IPO. This marks a remarkable turnaround story for a company that weathered post-pandemic shocks, overhauled its business model, and now stands tall as a profitable leader in India’s booming SaaS sector.
IPO Details and Use of Funds
Capillary Technology aims to raise ₹430 crore, with the listing comprising a fresh issue to fund expansion, R&D, and cloud upgrades, plus an offer-for-sale (OFS) by major investors including Capillary Technologies International Pte Ltd, Ronal Holdings LLC, Trudy Holdings, and Filter Capital India Fund I. The fresh capital will be used for:
- Cloud infrastructure enhancement (₹120 crore)
- Platform and product R&D (₹151.5 crore)
- Computer systems procurement (₹10.3 crore)
- Strategic acquisitions and general corporate purposes.
JM Financial, IIFL Capital, and Nomura are lead managers for the issue.
Resilience and Rebound After Covid
Capillary Technology’s journey has not been linear. At the height of Covid-19, the company lost nearly 80% of its revenue overnight due to its dependence on the battered retail sector. Forced to recalibrate, Capillary pivoted aggressively: it expanded internationally, diversified into verticals like oil & gas, consumer goods, healthcare, BFSI, and hospitality, and made the North American and EMEA markets its top revenue generators (now over 75% of total sales).
The financial bounce-back is striking:
- FY23: Loss of ₹87.7 crore
- FY24: Narrowed to a loss of ₹59.4 crore
- FY25: Turned profitable with a PAT of ₹13.3 crore (from a net loss), and a profit from continued operations of ₹14.2 crore.
Operating revenue soared from ₹266.3 crore in FY23 to ₹598.3 crore in FY25—a 230% jump. Cash flow also improved, with a closing cash balance of ₹214.1 crore in FY25.
A major shift included discontinuing its “Anywhere Commerce+” e-commerce product and winding down its digital business, letting Capillary refocus on its core loyalty solutions.
Product Suite and Key Offerings
Capillary Technology is best known for its cloud-based, AI-driven loyalty and customer engagement solutions, offering:
- End-to-end loyalty programs and CRM
- Customer analytics and omnichannel engagement (personalized, real-time campaigns)
- O2O (online-to-offline) commerce capabilities
- Engagement for major retail, fuel, CPG, BFSI, healthcare, hospitality, and luxury brands.
It counts 400+ global enterprise clients, including Shell, Puma, Levi’s, Domino’s, HP, Bata, and Asics, powering the back-end loyalty programs for two Fortune 10 and 16 Fortune 500 companies. North America led with 57% of FY25 operating revenue, followed by Asia-Pacific.
Industry Landscape and Competitors
Capillary Technology stands out as a rare homegrown player in the enterprise loyalty and engagement SaaS space, with no direct listed Indian rivals yet. However, the broader SaaS IPO pipeline is heating up, with major names such as Freshworks (NASDAQ-listed), Unicommerce (public since 2024), and upcoming IPOs from Groww, Lenskart, and Zepto—all riding the SaaS boom.
India’s overall SaaS sector crossed $15 billion in annual revenue in FY24, with over 36 companies now earning over $100 million in annual recurring revenue (ARR). The market is expected to hit $26.4 billion by 2026, underpinned by digitalization across BFSI, retail, healthcare, and government.
Sector News and Outlook
The SaaS sector is attracting strong global interest:
- Recent mega-IPOs include HDB Financial Services and Tata Capital.
- Investors have poured billions into Indian SaaS startups; Capillary alone has raised $239 million to date from institutional backers like Warburg Pincus, Sequoia, Avataar Ventures, and Filter Capital.
- Digital adoption post-pandemic is fueling massive demand for customer engagement platforms, with Capillary’s focus on AI and personalization placing it at the forefront of industry trends
Capillary’s Comeback Kid Status
Capillary’s management—led by co-founder and CEO Aneesh Reddy—has been widely acknowledged for guiding the company through crisis to renewed growth, and for capturing lucrative multi-year international contracts. Today, Capillary’s low client churn (<2% per quarter), expanded verticals, and robust profitability provide a playbook for resilience in the fast-evolving SaaS world.
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Capillary Technologies’ IPO stands as a testament to the strength of strategic pivots, operational discipline, and India’s potential as a global SaaS hub. Its journey from pandemic struggles to a profitable, globally diversified public contender serves as inspiration for the country’s next wave of enterprise software innovators.
