data analytics company Latent View Analytics Ltd. What has become the highest subscribed Initial Public Offering (IPO) ever, has witnessed 338x subscription frenzy in share sales, generating price bids. 1.13 trillion on the last day.
The issue overtook Paras Defense and Space Technologies Ltd, which was subscribed nearly 304 times just a few weeks back. Prior to Paras Defence, Salsar Techno Engineering Ltd was the most subscribed issue with 273 times.
The frenzied demand for the LatentView IPO comes days after investors gave the cold shoulder to the biggest-ever opening share sale of India’s Paytm, which is managing just 1.89x subscriptions. Paytm raised Rs 18,300 crore in the IPO that closed on Wednesday.
In the unofficial gray market there was frenzied application for LatentView’s shares to a 150% premium. The price band prescribed for the issue was the following 190-197 a share and is quoted at a current gray market premium 290 per share, said a dealer.
The Rs 600 crore IPO by a data analytics firm received strong interest from all investor categories. The stock exchange data showed that at 5.30 pm, the total issue, excluding anchor allotment, attracted bids for 5.72 billion shares against the issue size of 16.90 million shares.
The data shows that the institutional investor category received bids for 1.36 billion shares and the book was subscribed 150.82 times.
The non-institutional category with high net worth was subscribed 882 times. Demand from retail individual investors whose exposure cannot be high 2 lakh in an IPO, was 123.84 times.
Prior to the launch of the share sale, analysts had noted that the deal seemed to be reasonably priced at 42.6x FY21 earnings and 43.7x FY22 annualized earnings. Latent View Analytics rivals Happiest Minds Tech, which trades at a valuation of 115 times FY11 earnings.
Despite modest revenue growth, Latent View has demonstrated decent earnings growth over the past two years, primarily due to a significant improvement in margins during the period. While the company recorded only 3% revenue CAGR during FY19-FY21, EBITDA and PAT registered 20% and 24% CAGR respectively during this period. Notably, the EBITDA margin has increased from 25.3% in FY19 to 34.2% in FY21.
Moreover, Latent View’s cumulative operating cash flow and free cash flow stood at Rs 220 crore and Rs 210 crore respectively in FY19-FY2011, which analysts said is healthy. However, higher attrition rates (26.7% in FY2011 and 21.5% in 1QFY22), which led to higher wages and higher other expenses, resulted in EBITDA margin of 30.8% in Q1 FY2012.
IPO involves a new issue 474 crore and offer for sale 126 crore by its existing shareholders and promoters.
OFS includes 60.15 cr, by Adugudi Viswanathan Venkataraman 23.52 crore by Gopinath Koteswaran, up to 35 crores, by Ramesh Hariharan 3.87 crores by Subramaniam Ramachandran, up to 1.19 cr, by Divya Balakrishnan 1.15 cr, by Rajkumar Kaliyaperumal 73.50 lakhs by Priya Balakrishnan.
Proceeds from issue worth 147.90 crore will be used to finance inorganic development initiatives; 82.40 crore will be used to finance the working capital requirements of its content arm LatentView Analytics Corp and 130 crores for investment in its branch to increase its capital base for future growth.
The firm is a pure-play data analytics company working with several Fortune 500 companies. It primarily provides services to companies in the Technology, CPG and Retail, Industry and BFSI industries. It has a diverse customer base of 45 active customers worldwide that it served in fiscal 2021, including 21 in the Fortune 500, three in the Fortune 1000.
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