IPO update: LatentView Analytics

LatentView Analytics came out with its IPO about four months ago. You can find our detailed analysis of the IPO here. In this update, we will look at the company's market performance and business performance post issue.

Our analysis of the IPO
We gave a score of 18 out of 27 to this data analytics company. LatentView Analytics is a pure-play data analytics provider. It helps its clients (businesses) to operate more effectively by predicting outcomes through data and analytics. Its expertise includes digital solution accelerators, big data capabilities, social media predictive analytics and analytics tools. It provides its services to blue-chip companies in technology, industrials, consumer packaged goods & retail and BFSI industries.

Our rating for LatentView Analytics was based on the following:

• Out of the 10 business metrics, the company did well on five.
• It scored five out of six on management quality-related metrics.
• The company cleared six out of eight financial metrics.
• It cleared two out of three valuation-related metrics.

Stock performance since listing
LatentView Analytics saw a phenomenal response to its IPO, which was oversubscribed by about 327 times, making it the highest subscribed IPO in the past year. The qualified institutional buyers (QIB) portion was oversubscribed by 146 times, while the non-institutional investors' portion was oversubscribed by 851 times and the retail portion by about 119 times.

The company had a great debut on the stock exchanges, with the shares listing nearly at 2.7 times its issue price, opening at Rs 530 and ending the day at Rs 489. Post listing, the stock has gyrated up and down and reached a high of Rs 755 after a few days. It achieved a low of Rs 369 per share on February 24, 2022. As of March 21, 2022, the stock closed at Rs 432, which is about 125 per cent above its issue price of Rs 192.

Business performance
In Q3 FY22, the revenue earned by LatentView Analytics was Rs 107.8 crore, a growth of 37.7 per cent YoY. Profit after tax grew by 122.4 per cent YoY to Rs 49.9 crore. For the nine months ended December 2021, the company's revenue and profit after tax grew by 28.2 per cent and 38.8 per cent, respectively. This growth was driven by existing clients and new client additions.

During the quarter, the company added six new clients. For the nine months ended December 2021, the company has added 15 new clients. The company's cash and investments (excluding IPO proceeds) stood at Rs 450.2 crore as of December 31, 2021.

What to do now?
The global data and analytics market is expected to grow at 18 per cent annually over the next three years. Being a pure-play analytics provider, LatentView Analytics will leverage its product offerings & solutions to create growth. To this end, the company has laid out a six-point growth strategy. Its wide range of capabilities and long-standing relationships with its clients have put the company on a strong footing.

However, the run-up in the share price cannot be ignored. Since its listing in November, the company has traded at a P/E between 81-152 times, and currently trades at a P/E of about 95 times. To invest at the current levels, one needs to figure out whether the future growth rates are indeed high and sustainable for a long period. As there is a higher probability of lower returns at the current valuation, one can keep this company on their watch list.

Disclaimer: This analysis is not meant to serve as a recommendation. Do your research before investing in the company. If you are interested in our stock recommendations, please visit www.valueresearchstocks.com.

Also read:

LatentView Analytics IPO: Information analysis

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