All Things to Know About the Upcoming Latent View Analytics IPO

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  • Nov 8, 2021 - All Things to Know About the Upcoming Latent View Analytics IPO

All Things to Know About the Upcoming Latent View Analytics IPO

Nov 8, 2021

After a small pause, the IPO season seems to continue with as many as three companies scheduled to hit the capital markets with their initial public offerings (IPO) in the second week of November.

Apart from Fintech firm Paytm and KFC operator Sapphire Foods, the IPO of Chennai based Latent View Analytics, a data and analytics company, opens for subscription on 10 November 2021.

Latent View Analytics has set the price band for its public issue at Rs 190-197 per share. The company aims to raise Rs 6 bn fresh capital through the IPO.

Axis Capital, ICICI Securities, and Haitong Securities India are the book running lead managers to the issue.

Latent View Analytics IPO Details
Issue Type Book Built Issue IPO
Face Value Rs 1 per equity share
IPO Price Rs 190 to Rs 197 per equity share
Market Lot 1 lot - 76 shares
Issue Size Rs 6 bn
Fresh Issue Rs 4.7 bn
Offer for Sale Rs 1.3 bn
Basis of Allotment Date Tuesday, 16 November 2021
IPO Listing Date Monday, 22 November 2021
Data Source: Company's Red Herring Prospectus (RHP)

As a part of the offer for sale (OFS), promoter Adugudi Viswanathan Venkatraman will offload shares worth Rs 601.4 m, shareholder Ramesh Hariharan will sell shares worth Rs 350 m, and Gopinath Koteeswaran will offload shares worth Rs 235.2 m, among others.

Currently, Venkatraman owns 69.63% stake in the company, Koteeswaran holds 7.74% stake and Hariharan has 9.67% holding in the firm.

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Category-wise reserved portion

The company said that up to 75% of the issue has been reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors and the remaining 10% for retail investors.

Retail investors can invest a minimum of Rs 14,972 per lot and the maximum investment by them would be Rs 194,636 lakh in 13 lots.

Use of IPO funds

Proceeds from the fresh issue will be used for funding inorganic growth initiatives (Rs 1.5 bn), working capital requirements of the subsidiary Latent View Analytics Corporation (Rs 824 m), investment in subsidiaries to augment their capital base for future growth (Rs 1.3 bn) and general corporate purposes.

About Latent View Analytics

Incorporated in 2006, Latent View provides analytics services such as data and analytics consulting, business analytics & insights, advanced predictive analytics, data engineering, and digital solutions.

The company provides services to blue-chip companies in Technology, BFSI, CPG & Retail, Industrials, and other industry domains.

The company classifies its business into four segments.

  • Consulting services which involves understanding relevant business trends, challenges, and opportunities and preparing a roadmap of data and analytics initiatives that addresses them.
  • Data engineering to design, architect, and implement the data foundation required to undertake analytics.
  • Business analytics which delivers analysis and insights for clients to make more accurate, timely and impactful decisions.
  • Digital solutions which the company develops to automate business processes, predict trends and generate actionable insights.
    • Company's global presence

      The company has a presence across countries in the United States, Europe, and Asia through their subsidiaries in the United States, Netherlands, Germany, United Kingdom, and Singapore, and their sales offices in San Jose, London, and Singapore.

      Latent View has worked with over 30 Fortune 500 companies in the last three fiscals and some of the key clients include Adobe, Uber Technology, and 7-Eleven.

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      Financial snapshot of the company

      Latent View Analytics earned maximum business from the US that accounted for 92.88% of revenue, and the UK contributed 1.85% of revenue in the financial year 2021.

      The company reported 25.6% growth in consolidated profit at Rs 914.6 m for the fiscal 2021, compared to previous year, but revenue in the same period declined 1.4% to Rs 3.1 bn.

      Key Financial Parameters
      (Rs bn) FY19 FY20 FY21
      Revenues 2.9 3.1 3
      Revenue Growth (%)   6.90% -3.20%
      Expenses 2.3 2.4 2.1
      Net Profit 0.6 0.7 0.9
      Data Source: Company's RHP

      According to the prospectus, the analytics services market is expected to grow at a compound annual growth rate (CAGR) of 19% and poised to touch approximately US$68 bn in 2024.

      India is the top outsourcing destination for analytics, and Indian companies including Multi Service Providers and Pure Play Analytics firms have a share of approximately 40% of the addressed market.

      For more details, check out Latent View Analytics' Red Herring Prospectus.

      Comparison with listed peers

      As per the offer document, Latent View Analytics has shown Happiest Minds Technologies as its listed peer.

      Company (Rs bn) Total Income Net Profit Return on Net Worth (%)
      Happiest Minds 7.8 1.6 29.60%
      Latent View Analytics 3.3 0.9 20.90%
      Data Source: RHP, Equitymaster

      Key risk factors

      • Historically, company has entered into long-term partnership with few of its key clients. This resulted in limited number of clients which accounts for substantial portion of its revenue.
      • If such clients do not renew their contracts with them or expand the scope of services, it can result in loss of business and impacts the financials of the company.
      • The ongoing impact of Covid-19 pandemic on its business and operations are uncertain and it may impact in future too.
      • The company derives 90% of its revenue from clients located in USA. Any adverse development in this market could adversely affect its business.
      • It proposes to utilise the net proceeds to undertake acquisitions for which targets have not been identified.

      What is Latent View Analytics IPO grey market premium?

      In the grey market, Latent View Analytics is quoting at a premium or grey markets premium GMP of Rs 210, suggesting the possibility of strong demand for the issue, according to market observers.

      GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about IPO price as it is unorganised market.

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      IPO market is booming in India. Will the trend continue?

      Following the recent correction, the Indian stock market is still currently trading high and IPOs are attracting some wild valuations.

      Given the abundant liquidity, the market regulator easing listing procedures and overall bullish sentiments, the IPO craze is understandable.

      Data suggests that companies raised funds to the tune of US$4.6 bn from IPOs last year. The market believes this amount will be easily surpassed in 2021.

      As companies line up to raise funds from the market amid high valuations, investors need to consider many factors before investing their money in an IPO.

      If you are investing in an IPO, weigh in all the positive and negative factors affecting the company.

      Take a close look at the company's financials and valuations. It would give you a clear picture of what's brewing.

      Happy Investing!

      Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more here...

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