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Latent View IPO: Latent View Analytics IPO Date, Price Band, Details & News

Latent View IPO: Latent View Analytics IPO Date, Price Band, Details & News

Last updated: 09 Nov, 2021 | 01:20 pm

Latent View IPO: Latent View Analytics IPO Date, Price Band, Details & News

Latent View Analytics Limited (LVAL) IPO opens for subscription on 10th November. The company is looking to raise up to Rs 600 crore through the public issue. Here are the details:

About the IPO

Latent View Analytics Limited IPO Date: 10 November - 12 November 2021

Latent View Analytics Limited IPO Price band: Rs 190 - Rs 197

Issue Size: Rs 600 crore (fresh equity issue worth Rs 474 crore and an offer for sale (OFS) of Rs 126 crore)

Post Issue Market Cap: Rs 3896.3 crore.

Reservation: QIB 75%, Retail - 10%, NII 15%

Employee Discount:  Rs 19

Bid lot: 76 shares, and in multiples of 76 shares

Objectives of the issue

The net proceeds from the IPO will be utilized for the following purposes :

  • To fund inorganic growth initiatives - Rs 147.90 crore.
  • Fund working capital requirement of Latent View Analytics Corporation, company's material subsidiary - Rs 82.40 crore.
  • Investment in subsidiaries to augment their capital base for future growth - Rs 130 crore.
  • General corporate purposes.

About Latent View Analytics 

  • The company was incorporated in 2006 and provides services like data and analytics consulting, business analytics & insights, advanced predictive analytics, data engineering, and digital solutions. 
  • It provides services to blue-chip companies in Technology, BFSI, CPG & Retail, Industrials, and other industry domains. 
  • The company has a presence across countries in the United States, Europe, and Asia through their subsidiaries in the United States, United Kingdom, Netherlands, Germany, 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.
  • Latent View designs and engineers result-oriented analytics solutions for clients across industries. It enables them to operate more efficiently by predicting outcomes that fuel digital transformation and sustainability. 
  • Latent View expertise in business analytics includes analytics with respect to customer profiling, targeted marketing, supply chain management, finance and risk management, and HR functions. 

Latent View Analytics Services

The company provides services in below:

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

Industry Peers

Latent's closest listed peer is Happiest Minds Technologies. However, they are not truly comparable on an apple to apple basis. 

  • Happiest Minds Technologies is trading at a PE ratio of 122 almost 3x to 42.64 of Latent View Analytics.
  • Total Income for Happiest in FY 21 stood at Rs 797.7 crore more than double to Latent’s Rs 326.7 crore. The EPS (basic) of Happiest mind is 11.75, while that of Latent View Analytics is 5.35.
  • RoNW for Happiest Minds and Latent View Analytics is 29.76% and 20.89%, respectively.

Financials

  • Revenue from operations from the top five clients in FY21 amounted to Rs 165.18 crore and represented 54.00% of their revenue from operations. Also around 90% of the revenue comes from the US.
  • EBITDA margin has seen a gradual increase from 27.11% in FY19 to 36.90% in FY21. The net profit has also increased at an excellent rate on year. The PAT increased from Rs 59.66 crore in FY19 to Rs 91.46 crore in FY21
  • Its operating margin expanded on account of lower travel expenses and cost efficiencies.
  • For the last three fiscal years, the company has posted an average EPS of Rs 4.42 and average RoNW of 21.15%.
  • The company has not declared any dividend in the last three fiscals. However, it will adopt a prudent dividend policy post listing based on its financial performance and prospects.

USPs

Strong position in data and analytics - LVAL is among the leading pure-play data analytics companies in India. It has emerged as one of the most trusted partners to several Fortune 500 companies in recent years. They bring deep skills, a wide range of capabilities, and relevant experience in helping global leading organizations utilize the power of data and analytics across the spectrum of the business value chain.

Deep relationship with blue-chip clients - They partner with many of the largest enterprises in the world. LVAL has worked with over 30 Fortune 500 companies in the last three Fiscals. Their growth has been supported by retaining top clients through quality services, which enable them to gain strong referrals to new clients. 

Consistent client-driven innovation - Their end-to-end solutions cover a comprehensive spectrum of use cases across the value chain of their clients’ businesses. The use cases continue to evolve as they find additional ways to derive insights from data. LVAL customized solutions are a key competitive advantage. It allows them to effectively compete across the entire commercial data and analytics landscape.

Strong leadership - The company's growth and culture of innovation have been fostered by the entrepreneurial spirit of its promoters and experienced senior management. They recruit from the top business schools, technical institutions, and those with prior experience in the data and analytics industry. 

Growth Potential

Capitalize on growing industry opportunities - The market for data and analytics was $174 billion in 2020 and is expected to grow at a CAGR of 18% to $333 billion by 2024. COVID has accelerated remote working environments that are expected to increase the demand for digitization services enabling more clients to accommodate its global delivery model. The company plans to identify and expand its network of partners and build and capitalize on these partnerships to further drive the growth of operations.

Continue evolution to analytics - The company helps its clients transform their businesses based on its deep understanding of harnessing data and analytics. They recognize the importance of data-driven decisions and seek to continue to operate an entire range of data and analytics solutions. They plan to strengthen their horizontal service lines and have dedicated teams who specialize in data analytics capabilities, functional knowledge, and specific service offerings.

Expand client base and geographic presence - The company has a presence in the top five analytics markets in the world with subsidiaries in the United States, United Kingdom, Germany,

Netherlands, and Singapore. They intend to grow their client base in different regions by focusing on industry leaders and leveraging existing client relationships to reach target accounts. They will continue to invest in client acquisition measures to drive efficient acquisition of new clients.

Risks

Limited number of clients - LVAL has long-term partnerships with a few of its key clients, which has resulted in a limited number of clients accounting for a substantial portion of its revenue. If existing clients do not renew their contracts, or expand the scope of services the companies provide to them, or if its long-term relationships with its largest clients are impaired or terminated, the company's revenue could decline and impact the net profit.

Dependency on US clients - Revenue from operations from the United States of America represented 92.88%, 92.33%, and 90.91% of its revenue from operations in FY21, FY20, and FY19, respectively. The different risks include complying with changes in foreign laws, regulations, and policies, including restrictions on trade, import, and export license requirements, and tariffs and taxes, etc. Any adverse developments in this market because of any above reasons could adversely affect its business.

The market develops slowly - The market for its analytics services is rapidly evolving. The future success will depend in large part on the growth and expansion of this market, which is difficult to predict and relies on a number of factors. If the market for their services develops more slowly than expected, it may hamper its ability to grow as anticipated.

Latent View Analytics IPO: INDmoney review

Latent View Analytics has reported a steady rise in its topline from Rs 288 crore in FY18 to Rs 306 crore in FY21, even as it was able to improve its margins and bottomline. The company’s profits rose from Rs 60 crore in FY19 to Rs 91.4 crore in FY21, implying a CAGR increase of 24%. During the period, the adjusted EBITDA margin has improved to 34% from 25% in FY19. 

Latent View Analytics is into a fast growing data analytics industry, and provides a unique opportunity to take exposure to this niche space. The company provides Descriptive and Diagnostic solutions. 

At the higher end of the price band, Latent View Analytics is priced at a PE ratio of ~42.64 times FY21 earnings (fully diluted post-issue basis). This is much lower than the company’s listed peer Happiest Minds which is trading at a PE ratio of 122 times. However, given a superior financial profile for Happiest Minds, it is expected to command a premium valuation.  

Given a strong growth in bottomline, healthy margins, reasonable valuations, good return ratios, and niche positioning, we remain ‘Positive’ on the long-term prospects of the issue.