Is Fractal Analytics NVIDIA’ of AI Services? Decoding the Business Model

When Srikanth Velamakanni and Pranay Agrawal founded Fractal Analytics in 2000, the world was still reeling from the dot-com burst. At a time when “AI” was a niche academic concept, Fractal was already betting on the power of data. As the company prepares for its IPO (9–11 February 2026), it stands not just as a business listing, but as a validation of India’s deep-tech maturity on the global stage.

Fractal Analytics Business Model Analysis

To understand Fractal, you must stop viewing it as a traditional software firm. It is a ‘Decision-Intelligence’ firm. While most companies drown in oceans of data, Fractal provides the navigation system to determine the “Next Best Action.”

Fractal Analytics business model operates on a sophisticated Dual-Engine Strategy:

• Fractal.ai (The Growth Engine): Contributing over 97% of the total revenue, this is the company’s bread and butter. It combines high-end AI Services (bespoke problem-solving for enterprises) with AI Products like Cogentiq.
• Fractal Alpha (The Venture Engine): This is the “Incubation Lab” where Fractal creates new ideas and spins them off into independent businesses. A prime example is Qure.ai (Healthcare AI), which recently earned a spot on the TIME100 Most Influential Companies list.

Market Landscape: A ₹12.9L Cr Ocean

Fractal operates in the Data, Analytics, and AI (DAAI) services market, which is currently at a massive inflection point. According to the Everest Report, the Total Addressable Market (TAM) for DAAI was valued at USD 143 billion (~INR 12.94 lakh crore) in FY2025. This market is projected to grow at a 16.7% CAGR, reaching USD 310 billion (~INR 28.06 lakh crore) by 2030.

What makes Fractal’s trajectory impressive is its pace; while the global third-party DAAI market grew at 11%, Fractal recorded a revenue growth of 18% CAGR between FY23 and FY25, consistently outperforming the industry and capturing market share.

The Moat: “Decision Intelligence” and Marquee Clients

Fractal is not only an IT services firm; it is a “Decision Intelligence” powerhouse. Their goal isn’t just to provide data, but to power the actual decisions within an enterprise. This philosophy has led to deep-rooted relationships with 122 “Must Win Clients” (MWCs)—global giants with over USD 10 billion in annual revenue, including names like Citi, Nestlé, Mars, and Philips.

The data highlights incredible stickiness:

• Net Revenue Retention (NRR): In FY2025, Fractal’s NRR stood at 121.3%. This means that even without adding a single new customer, their existing clients spent 21.3% more than the previous year.
• Longevity: Their top 10 clients have been with them for an average of over 8 years. One US-based CPG giant has partnered with Fractal for 19 years.
• Satisfaction: A Net Promoter Score (NPS) of 77 places them in the elite bracket of global service providers.

Fractal Analytics IPO: Financial Forensics

Looking at the restated consolidated financials, Fractal has moved from “growth at all costs” to a model characterised by high operational discipline.

While FY24 showed a loss due to ESOP-related non-cash expenses, FY25 marked a definitive turnaround. The company generated INR 397 crore in operating cash flow, proving that the business is now a self-sustaining cash generator.

Innovation Moat: From Services to “Agentic AI”

The future Fractal Analytics valuation depends on its ability to move from labor-intensive services to high-margin products. This shift is already underway through Cogentiq, their flagship Agentic AI platform.

• IP Power: With 28 registered patents and 38 pending, Fractal owns its tech stack.
• Sovereign AI: Fractal was selected by the Government of India under the IndiaAI Mission to build the country’s first Large Reasoning Model (LRM)—a sophisticated system spanning up to 70 billion parameters.
• Project Ramanujan: Their research into mathematical reasoning models won the inaugural Meta HackerCup (NeurIPS 2024), proving their technical edge over standard AI “wrappers.”

Fractal Alpha: The Incubation Engine

Beyond its core services, Fractal acts as a venture studio through Fractal Alpha. This segment incubates independent AI businesses that could unlock significant “sum-of-the-parts” value in the future:

• Asper.ai: An AI-first SaaS for revenue growth management in the CPG sector.
• Qure.ai: A global leader in healthcare AI, recently recognised in TIME100 Most Influential Companies 2025.

5-Year Outlook for Fractal Analytics: Growth Drivers & Hurdles

As we look toward 2031, Fractal’s growth will likely be driven by:

• Product Scaling: As platforms like Cogentiq mature, revenue growth will become “non-linear”—meaning they can grow income without a proportional increase in headcount.
• Sector Diversification: While CPGR (Consumer Goods) is their stronghold at 39%, the Healthcare (HLS) and BFSI segments are expanding rapidly, with HLS reaching 17% of revenue in H1 FY2026.

The primary challenge remains Client Concentration, with the top 10 clients contributing 54.2% of revenue. However, their 121% retention rate and the addition of 15 clients in the USD 5M+ bracket (up from 10 in FY23) suggest they are successfully widening the funnel.

Fractal Analytics IPO Snapshot

Fractal Analytics IPO Details

Final Words

Fractal Analytics is a high-conviction growth play. While the 107x P/E ratio reflects a “scarcity premium” for being India’s first pure-play AI listing, it is backed by real cash flows, 25 years of domain expertise, and a 121% NRR. For investors, Fractal isn’t just an AI company; it is an investment in the very foundation of how global enterprises will make decisions in the coming decade.

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