Latent View Analytics IPO: All You Need To Know

Latent View Analytics Ltd., a data analytics company, will launch its three-day initial public offering on Wednesday, joining a myriad of companies in their race to list on the bourses in a boom year for maiden offers.

The Rs 600-crore IPO comprises a fresh issue and an offer-for-sale by promoter and other investors, according to its red herring prospectus.

The company will sell shares at Rs 190-197 apiece, pegging the value at Rs 3,896.3 crore at the upper end of the price band. The IPO constitutes 21% of the post-issue equity. The promoters will continue to hold 68.1% after the sale.

Issue Details

• Face value: Re 1 apiece.

• IPO duration: Nov. 10-12.

• Fresh issue: Rs 474 crore.

• Offer for sale: Rs 126 crore.

• Minimum lot: 76 shares and multiples.

• Listing: National Stock Exchange and BSE.

• Book running lead managers: Axis Capital, ICICI Securities, Haitong Securities.

Objective

• To fund inorganic growth initiatives: Rs 147.9 crore.

• To fund working capital requirements: Rs 82.4 crore.

• Investment in subsidiaries to augment capital base: Rs 130 crore.

Business

Latent View Analytics operates in data and analytics consulting to business analytics and insights, advanced predictive analytics, data engineering and digital solutions.

It has emerged as one of the most trusted partners to several Fortune 500 companies in recent years, and has worked with more than 30 such firms in the last three financial years. Some of its key clients include Adobe, Uber Technology and 7-Eleven.

The top five clients contribute 54% of revenue — Adobe alone accounted for over 20% in the quarter ended June. It gets 90% of revenue from the U.S., and plans to invest the proceeds from the IPO to expand in the U.K., Germany and the Netherlands.

Financials

Latent View Analytics’ revenue from operations rose over the year earlier in the quarter ended June. Its operating margin expanded on account of lower travel expenses and cost efficiencies.

For the full fiscal ended March 2021, while revenue declined, margin improved.

But as Covid-led restrictions ease, and onsite and travel activities gather pace, margins may contract and remain range-bound at 25-30%.

Peers

Latent View Analytics competes with Mu Sigma, Fractal Analytics, Tiger, Palantir, Accenture, Tata Consultancy Services Ltd. and Capgemini.

Risks

• If clients do not renew contracts or expand the scope of services, or if its long-term relationships with its largest clients are impaired or terminated, its revenue could decline. Revenue from operations from top five clients stood at 59.3% in the quarter ended June.

• The ongoing impact of the Covid-19 pandemic on its business and operations is uncertain and it may be significant and continue to have an adverse effect on its business, operations and future financial performance.

• Derives more than 90% of revenue from clients located in the U.S. and any adverse developments in this market could affect business.

• Inability to derive benefits from investment in few of its subsidiaries to augment their capital base for future growth.

• Revenues are highly dependent on a limited number of industry verticals, and any decrease in demand for outsourced services in these industry verticals could adversely affect business.

• Dependent on key managerial personnel and delivery and sales personnel, and the loss of, or inability to hire, retain, train, and motivate such qualified and skilled personnel could adversely affect business. It had a attrition rate of more than 20% in the quarter ended June.