Latent View Analytics IPO GMP: The maiden initial public offering of data analytics services firm Latent View Analytics Limited has received a stellar response from investors. The Latent View Analytics IPO has made a record of being the most subscribed public issue that was ever floated in India. The offer has been oversubscribed by 326.49 times which is higher, amid an IPO gold rush. The stock will most likely be listed on November 22, Monday, at the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The grey market premium or GMP of Latent View Analytics is trading at Rs 320 on Monday, November 22, as per data available with IPO Watch — a good news for bidders to the issue.
The stellar response received from the Latent View Analytics IPO is backed by strong demand from qualified institutional buyers and non institutional buyers. The issue has been oversubscribed 338 times, according to reports. As per data, non institutional investors have bought shares 151 times and qualified institutional buyers have subscribed 882 times the portions reserved for them by the end of the third day of subscription.
Amid a sound response to the issue, the Latent View Analytics IPO GMP has been steady since the offer opened. On Monday, the issue was fetching a grey market premium of Rs 320, up from the issue price of Rs 197 at the higher end of the price band. This means that the grey market is expecting the shares to trade at Rs 517 (Rs 320 + Rs 197), which is around 162 per cent higher than that of the issue price at the upper end. The GMP has remained above Rs 300 since the offer opened earlier this month.
The company’s business model is supported by stable and recurring revenues, significant operating leverage and low capital requirements that contribute to a healthy free cash flow. Its high levels of client retention and shift toward multi-year engagement contracts result in a high degree of revenue visibility.
Latent View Analytics has aimed to raise Rs 600 crore through the IPO. Of this, Rs 474 crore is supposed to be raised though a fresh issue, while Rs 126 crore is set to be raised through an offer for sale (OFS) by selling shareholders. The company will not receive any proceeds from the OFS. Majority of the revenue is generated from long-term agreements. Additionally, it benefits from operating leverage given the high contribution margins associated with incremental revenue generated from its consulting services. Despite the investments being made to enhance technology, analytics and data capabilities, its capital requirements remain minimal with capital expenditures representing 1.30 per cent, 0.02 per cent, 0.60 per cent, 1.10 per cent and 0.56 per cent, of its revenues from operations in the three months ended June 30, 2021 and June 30, 2020 and in Fiscals 2021, 2020, and 2019, respectively. This contributes to strong free cash flow generation, allowing Latent View Analytics Limited the financial flexibility to invest in the business and remain margin accretive.
Axis Capital, ICICI Securities and Haitong Securities India Private Limited are the lead managers to the Latent View IPO. The company plans to utilise the proceeds from the fresh issue in funding inorganic growth initiatives (Rs 147.9 crore), working capital requirements of LatentView Analytics Corporation, its material subsidiary (Rs 82.4 crore). The proceeds will also be used for investment in subsidiaries to augment its capital base for future growth and for general corporate purposes.
Most analysts have given a ‘subscribe’ rating to the Latent View IPO. In a note, brokerage house Anand Rathi said, “The company is available at the upper end of the IPO price band at 42.6x its FY21 earnings attributable to post issue equity, demanding a market cap of Rs. 38,963 million. At the upper End of the IPO price band, the issue is priced at a P/BV of 7.29x based on its NAV of Rs. 27.02 as of June 30, 2021. The Company has a healthy Margin profile with three years average RoNW of 21.15 per cent. Considering the Company’s plan for inorganic growth, longstanding relationship with some of the fortune 500 companies, its leadership position in the Industry.”