Latent View Analytics IPO opened for subscription today adding further to the tally of public offers this year. The offer, priced in the range of INR190 – 197 per share, aims to mobilize INR600 crore (INR6 billion) and commands strong premium in the informal grey market. Meanwhile, several brokerage houses have come up with Latent View IPO recommendations. Here is a brief snapshot of analyst views:
Angel One has outlined the company’s association and length of relationship with technology companies as a key strength. “Margins improved strongly in FY21 due to lower on-site employees and lower travel & promoted spends but may contract with resumption of spends. At INR197, the company is seeking ~43x FY21/TTM its earnings which seems reasonable compared to a high growth digital services company like Happiest Minds trading at ~115x (comparison owing to absence of like-to-like listed peer). The IPO provides an opportunity to invest in a pure-play analytics company which is has tailwinds from investments on Data & Analytics and is raising fresh funds to chase growth. We have SUBSCRIBE rating on the issue,” said its IPO note.
The company has presence in the United States, Europe, and Asia through subsidiaries while also operating sales offices in San Jose, London, and Singapore. In terms of domains, the company provides services to blue-chip companies in Technology, BFSI, CPG & Retail, Industrials, and other industry domains.
While Samco Securities is positive on the fundamental aspects of the company, it has listed a few risk factors as well. “Latent View has sound financial health and margins coupled with robust growth potential in the fast-growing Data and Analytics space. However, the company is small in size and possesses some business risks including high consumer and geographical concentration and high attrition rate. Having said this, due to the small issue size, the IPO is highly likely to get over subscribed. Thus, investors with a decent risk appetite are recommended to SUBSCRIBE to the IPO from a listing gains perspective,” said the brokerage house’s report.
Industry leadership and positive outlook are the factors behind bullishness by Asit C Mehta. “Latent View is among the leading pure-play data analytics services companies in India. At the upper price band of Rs.197/-, the stock trades at 43.68x its FY22E EPS of Rs.4.51/- (based on annualize latest earning and fully diluted equity post issue). Hence, we recommend to subscribe the issue from a long-term perspective,” said its research note.
Elite Wealth, too, has a positive view of the IPO. “The business model is supported by stable and recurring revenues, significant operating leverage and low capital requirements that contribute to a healthy free cash flow. At the higher price band of Rs 197, the offer is made at P/E multiple of 38.62x of FY21 EPS, considering the uniqueness of business and its niche position in data analytics service, we recommend SUBSCRIBE rating to the IPO,” said the firm adding to positive Latent View IPO recommendations.
Ventura Securities is another brokerage house with positive Latent View IPO recommendations. “The company intend to utilize INR 147.9 cr from the IPO proceeds to fund inorganic growth opportunities. At the offer price of INR 197 per share (26.1x FY24E earnings) the issue is reasonably valued considering the large growth opportunity of the analytics space, Latent’s strong balance sheet and expected future growth. We initiate with a Subscribe for listing gains with a 24-month price target of INR 227 (30X FY24E P/E) representing a potential upside of 15.2% from the IPO price of 197 (upper band),” said its research note.
Another positive word came from Nirmal Bang which feels that cross sell and up sell opportunities and inorganic growth will help the company to grow ahead while some of the expenses like travel are likely to come back. “ROCE of the company stands at 20.4% in FY21 and ROE stands at 20.9% in FY21. At the given upper price band of issue of Rs 197, Latent Analytics is offered at PE of 43.7x annualized Q1FY22E earning which we feel is attractive. We recommend subscribing to the issue,” said the firm in its note.
Latent View IPO recommendations: Not everyone is positive
As we can see, Latent View IPO recommendations are largely positive so far but some analysts have also highlighted risk factors.
SMC Global has a Neutral view on the IPO and it gave a rating of 2 stars out of maximum 5. The brokerage house noted Latent View’s leadership position in data and analytics with a wide range of capabilities, Deep and entrenched relationships with blue chip clients across industries, Scalable and attractive financial profile as the pillars of its strong strategy. At the same time, it has highlighted the excessive client concentration in the US and long-term partnerships with a selected few clients as risk factors.