Tracxn Technologies IPO: Analyst cautious due to losses and investor exits
- Bengaluru-based data provider Tracxn Technologies’ IPO opens next week from Monday October 10-12.
- The IPO will be entirely an offer for sale (OFS) of 3.86 crore equity shares by promoters and investors.
- Flipkart founders Binny Bansal and Sachin Bansal will be offloading up to 12.63 lakh shares each.
- While the company reported good business growth in the last three fiscal years, it’s still posting losses.
AdvertisementBengaluru-based data provider Tracxn Technologies is all set to launch its initial public offering (IPO) worth ₹309 crore next week from Monday October 10-12.
Launched in 2015, Tracxn Technologies is a software as a service (SaaS) platform that has scanned over 66 crore web domains to profile 18.4 lakh companies. The company’s extensive global database provides a platform for customers to source and track companies across sectors and geographies as per their requirements.
As of June this year, the company had 3,271 users across 1,139 customer accounts in over 58 countries.
Its subscription-based platform, Tracxn offers customers private company data for deal sourcing, identifying merger and acquisition targets, deal diligence and analysis. It also tracks emerging themes across industries and markets.
Analysts remain cautious of the losses and negative cash flow
While the company has reported good business growth in the last three fiscal years, the operations are still loss making.
Tracxn also reported a negative operating cash flow during FY19-21 period, except for FY22 (₹0.6 crore). More importantly, it’s one a kind and that means there is no peer company based on which it can be valued, as per analysts at Choice Broking.
“At the higher price band, Tracxn is demanding an enterprise valuation/sales multiple of 12.3x, which seems to be stretched for a loss-making operation. Considering the high attrition rate in the IT-enabled sector and already double digit attrition level (49% in FY22 and 13.8% in Q1 FY23) of Tracxn, we are cautiously optimistic on the company’s efforts in bringing down employee costs,” said analysts at Choice Broking.
Also, a partial/full exit by private equity investors raises concerns on the long term outlook, say analysts at Choice Broking which assigned an ‘avoid’ rating for the issue.
The IPO will be entirely an offer for sale (OFS) of 3.86 crore equity shares by promoters and investors. Flipkart founders Binny Bansal and Sachin Bansal will be offloading up to 12.63 lakh shares each.
Delhivery founder Sahil Barua will sell 2.07 lakh shares, Freshworks’ Girish Mathrubootham will offload 2.96 lakh shares and Sequoia Capital India will sell up to 21.81 lakh equity shares as a part of the IPO.
AdvertisementFormer chairman of Tata Sons, Ratan Tata is among the angel investors backing the company.
“Although the revenues have increased, EBITDA and PAT have been in negative for the past two years. So, an investor needs to keep a watch on the financials for FY23,” says a report by Religare Broking which gave a ‘neutral’ rating to the issue.
|Fiscal year||Revenue||Net Profit||EBITDA margin|
|FY22||₹63.45 crore||-₹4.84 crore||-3.25%|
|FY21||₹43.77 crore||-₹5.34 crore||-39.54%|
|FY20||₹37.33 crore||-₹54.03 crore||-61.64%|
Here are some of the important details of the IPO:
|IPO open date||October 10|
|IPO close date||October 12|
|Allotment date||October 17|
|Initiation of refunds||October 18|
|Credit of shares to demat account||October 19|
|IPO listing date||October 20|
SEE ALSO: Banks to reap rewards of interest rate hikes in Q2 earnings
Looking to invest in IPOs? Here’s how to pick winners and spot the duds
Nifty50 valuations remain expensive, but experts are divided on India's growth prospects
Popular on BI
- Flair Writing IPO allotment – How to check allotment, GMP, listing date and more
- Mini Ratna IREDA stock zooms on debut with over 60% listing gains
- COP28 set to kick off from Nov 30 — UAE hopeful for deal on renewable energy tripling, doubling energy efficiency
- Family Man Manoj Bajpayee bats for movie heroes who like ‘the common man’
- Gandhar Oil IPO allotment – How to check allotment, GMP, listing date and more