IPO Size: Rs. 2,834 cr

• Fresh Issue of Rs.1,024 cr for (i) Rs. 355 cr for AI R&D and sales (ii) Rs. 265 cr debt repayment (iii) Rs. 178 cr for new office and laptop
• Offer for Sale (OFS) of Rs. 1,810 cr, by the 4 investors (63% combined stake to drop to 48% post IPO)

Price band: Rs. 857-900 per share

M cap: Rs. 15,474 cr, implying 18% dilution

• Only 10% retail, as company reported loss in FY24

IPO Date: Mon 9^th Feb to Wed 11^th Feb 2026, Listing Mon 16^th Feb 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Mumbai headquartered B2B AI Company

Fractal Analytics is a 26 year old enterprise data, analytics and artificial intelligence (AI) company, investing in expanding its AI and generative AI software portfolio. It serves large corporates, different from B2C players like ChatGPT, Claude, Gemini, Perplexity etc. Fractal has invested close to Rs. 1,100 cr in building the business, which clocks Rs. 300 cr annual PAT, implying healthy capital efficiency.

Lackluster Financials

Annual topline is close to Rs. 3,000 cr, of which, 92% is from international geographies, such as US and Europe. Adjusted for nearly Rs. 100 cr annual ESOP charge, adjusted EBITDA margin is at 15-17% and adjusted PAT margin is at 9-12% for H1FY26 and FY25 respectively. 31% associate company Qure.ai reported Rs. 45 cr loss share in H1FY26, which is adjusted from profit margin.

H1FY26 revenue grew 20% YoY to Rs. 1,559 cr, but adjusted PAT growth lagged topline growth, being up by only 5% YoY, to Rs. 143 cr. Even this comprises pre-tax forex gain of Rs. 23 cr, a one-time income. Moreover, RoE has declined from 19.8% to about 14.5%.  

Benchmarking with Global AI Peer

World’s largest enterprise AI peer Palantir is growing at 20% QoQ besides clocking 40% net margin, which leads to super-premium valuation multiples too. But valuation aside, Fractal has not demonstrated a healthy growth track record neither high margins, despite the huge untapped opportunity in enterprise AI.

In the rapidly evolving AI world, Fractal’s 18-20% revenue growth and single digit PAT margin not exciting.

‘Nothing Left on the Table’

On FY26E estimated PAT of Rs. 300 cr, IPO is priced at a PE multiple of 52x, on current year basis, which is seen unattractive. Fractal’s financial performance is similar to IT services peers, so 25-30x PE multiple with some premium, looks more like it. While SaaS companies generally rule higher, recent SaaS IPO of Capillary Tech has delivered flat returns to investors.

Company’s single largest shareholder, TPG, first invested in Fractal in Mar 22, having average cost of Rs. 642 per share. It is part-exiting in the IPO at just 9% IRR in 4 years, which is quite poor, especially given the global AI buzz.