As an investor, it can be very challenging to decide whether the Fractal Analytics IPO is a good or bad investment. Not anymore, as in this blog, we will provide you with all the necessary details related to the Fractal Analytics IPO to help you decide whether you should Apply or Not. Read on to know the IPO risks, strengths, valuation, financial details, and expert opinion to make your investment decision better.
Strengths:
- Fractal Analytics is the first AI unicorn start-up company to be listed that solely focuses on offering end-to-end Artificial Intelligence (AI) and analytics solutions.
- The strong and growing relationships with global clients help generate strong revenue.
- A strong employee base of 5,722 is supported by trust, transparency, and consistent training to help the business grow.
- For the past 3 years, the revenue has increased by a CAGR of 18%.
Weaknesses:
- Incidents like security breaches, cyber-attacks, computer viruses, and hacking activities can expose them to risks like data loss, financial losses, and damage to reputation.
- The firm derives a 64% of its revenue from the United States of America.
- About 54% of revenue is derived from its top 10 customers. Losing any of these customers can majorly impact the business.
- In FY25, the company generated a negative cash flow of -224 crore.
- Fractal IPO retail quota is at 10%, meaning the retailers will gonna have less chance of getting allotment.
Fractal Analytics IPO Review
| Reviewer | Recommendation |
| IPO Watch | May Apply |
| Canara Bank | |
| SBICAP Securities | Neutral |
Promoters & Track Records, if any
- Srikanth Velamakanni, born on February 16, 1974, aged 51 years, is a Wholetime Director and group chief executive and executive vice-chairman of the Company. He holds 7,395,590 Equity shares, representing 4.61% of the company’s pre-offer Equity capital.
- Pranay Agrawal, born on February 12, 1975, aged 50 years, is a Non- executive Director of the Company and chief executive officer of Fractal. He holds 8,121,360 Equity shares, representing 5.06% of the company’s paid-up Equity capital.
- Chetana Kumar, born on July 16, 1979, aged 46 years, is the chief sustainability officer of the Company. She holds 6,377,155 Equity shares, representing 3.97% of the company’s paid-up Equity capital.
- Narendra Kumar Agrawal, born on July 8, 1949, is aged 76 years. He holds 5,962,180 Equity shares, representing 3.71% of the company’s paid-up Equity capital.
- Rupa Krishnan Agrawal, born on March 10, 1974, is aged 51 years. She holds 828,910 Equity shares, representing 0.52% of the company’s paid-up Equity capital.
Expansion
- Proceeds raised from the fresh issue will be used towards the investment in one of their subsidiaries, Fractal USA.
- A portion of the funds will be used towards repayment and prepayment of the existing borrowings.
- Some funds will be used towards the purchase of Laptops.
- A portion of it for setting up new office premises in India.
- Some proceeds will be utilized for investment in R&D, sales, and marketing under Fractal Alpha.
- Lastly, the remaining funds will be used for inorganic growth through unidentified acquisitions and general corporate purposes.
Fractal Analytics IPO—Should You Apply or Not?
Fractal Analytics, a leading global AI analytics company, is going public on February 9. A solid global client base and operating in a high-growth AI sector have grabbed investor interest. As of Feb 5, the Fractal Analytics IPO GMP is 90, reflecting a listing gain of around 9% to 11%.
Overall, Fractal Analytics seems to be a promising IPO to invest in. Although AI has been seen as a high-growth segment, it is still an evolving area. We have to wait to see how well investors understand the business model and valuations, which will influence the IPO performance.
Financially, in FY24, the company incurred a loss of ₹54.70 crore, but in FY25, the company made a comeback, generating a Profit of ₹220 crore. When it comes to valuation, the P/E ratio of the Fractal is 109.12x. When compared to existing AI-focused companies, the P/E ratio of Fractal’s IPO seems to be overvalued.
Short-term investors may consider applying for the listing gains due to its strong presence in the AI and analytics space, and if the GMP remains supportive. Cautious investors must carefully analyse the risks, like the high offer-for-sale portion, high valuation, and sector-related volatility, before subscribing.
Please note:
Investors are advised to make their own decisions and apply entirely at their own risk. This article is written using information from the company’s RHP (Red Herring Prospectus) data and online sources. If you have any queries, kindly contact the IPO Watch Team.
