LatentView Analytics is one among the leading
pure play data analytics companies in India and has emerged as one of the most
trusted partners to several fortune 500 companies in recent years.
The company designs and engineers
result-oriented analytics solutions for its clients that enable them to operate
more efficiently by predicting outcomes that fuel digital transformation and
sustainability. Its expertise in business analytics includes analytics with
respect to customer profiling, targeted marketing, supply chain management, finance
and risk management, and HR functions.
The company provides services primarily to
companies in Technology, CPG and Retail, Industrials and BFSI industries. In
FY2021, 63.25% of revenues was contributed by Technology, 17.54% by Industrials,
9.62% by CPG & Retail and the balance 9.59% by BFSI segment. For 3 months
ended June 30,2021, 66.81% was contributed by Technology, 13.64% by CPG &
Retail, 13.64% by industrials and the balance 5.91% by BFSI segment.
The business of the company can be broadly classified
into: Consulting services that involves understanding relevant business trends,
challenges, and opportunities and preparing a roadmap of data and analytics
initiatives that addresses them; Data engineering that is undertaken to design,
architect and implement the data foundation required to undertake
analytics; Business analytics that delivers analysis and insights for clients
to take more accurate, timely and impactful decisions; and Digital solutions
that it develop to automate business processes, predict trends, and generate
actionable insights.
The company has emerged as the most trusted
partners to several Fortune 500 companies in recent years and has worked with
over 30 fortune 500 companies in the last 3 fiscals. Some of the key clients
with whom company works include Adobe, Uber Technology and 7-Eleven.
The
company begins its engagements with most clients by providing business
intelligence and visualization services, which evolve into deeper engagements
for advanced analytics and predictive modelling, and mature into providing
strategic insights, thought leadership, and business recommendations. The
company has also expanded its range of offerings from basic services such as
web analytics, activity-tracking reports, survey analytics to social media
analytics, big data, cloud architecture and migration, and are currently
engaged as a strategic partner to several clients delivering a wide range of
end-to-end solutions. Currently the key areas of engagement include search
engine analysis, competitor analysis, survey analytics, web and campaign
analytics, forecasting, marketing and media mix modelling, purchase brand
funnel analysis and social media.
In a world of increasing data availability, the value proposition
is shifting from the provision of core data to the generation of analytical
insights to inform decision making processes and optimize workflows, across
interrelated business activities (Source: Zinnov Report). The company’s
end-to-end solutions cover a comprehensive spectrum of use cases across the
value chain of its clients’ businesses. These use cases continue to evolve as
the company find additional ways to derive insights from data. The company’s
customized solutions are a key competitive advantage and allow the company to
effectively compete across the entire commercial data and analytics landscape.
The company use a consultative approach wherein developers, analysts, and
nontechnical users collaborate to make data-driven decisions. These data-driven
decisions are often written back into decision systems to be analysed and
modelled for improved future understanding and decisions, creating an
operational feedback loop. The company prioritises innovation and R&D
through multiple initiatives, through a combination of solutions the company
design as responses to client requests, as well as proactive efforts to
identify marketable solutions. The company carries out client driven innovation
through its Service Delivery Excellence (SDE) framework that supports a cycle
of continuous improvement through context-based improvement studies, and has
set-up ‘IdeaLabs’, a team of dedicated R&D resources, for its ongoing
innovation efforts.
The company serves clients across countries in
the United States, Europe, and Asia through its subsidiaries in the United
States, Netherlands, Germany, United Kingdom and Singapore, and its sales
offices in San Jose, London, and Singapore. In the 3 months ended June 30,2021,
94.79% of the revenue was contributed from United States and in FYs 2021, 2020
and 2019, revenue from operations from clients in the United States represented
92.88%, 92.33% and 90.91% of its revenue from operations in such periods,
respectively, and revenue from operations from clients in United Kingdom
represented 1.85%, 1.78% and 3.75% of its revenue from operations in such
periods, respectively. The company plans to increase its presence in Europe.
The company is promoted by AdugudiVishwanathan Venkatraman and PramadwathiJandhyala.
AdugudiVishwanathanholds a B.Tech from IIT Madras and a PGDM from IIM Calcutta.
He has several years of experience across IT services, credit analysis and
business consulting. PramadwathiJandhyala has a B Tech from BITS Pilani and
PGDM fro IIM Calcutta. She has several years’ experience across corporate
finance and credit ratings.
Objects of
the offer
The offer comprises a fresh issue of 2,40,60,914 equity shares at
upper price band of Rs 197 and 2,49,47,368 equity shares at lower price band of
Rs 190 aggregating up to Rs 474 crore by the company and an offer for sale by
selling shareholders AdugudiVishwanathan Venkataraman of up to 30,53,046 equity
sharesat the upper price band and of Rs 197 and 31,65,526 equity shares at the
lower price band of Rs 190 aggregating Rs 60.15 cr, Gopinath Koteeswaranof up
to 11,93,909 equity shares at upper price band of Rs 197 and 12,37,895 equity
shares at lower price band of Rs 190 aggregating Rs 23.52 cr , Ramesh Hariharan
of up to 17,76,650 equity shares at upper price band of Rs 197 and 18,42,105
equity shares at lower price band of Rs 190aggregating Rs 35.00 cr, Subramanian
Ramachandran of up to 1,96,345 equity shares at upper price band of 197 and 2,03,579
equity shares at lower price band of Rs 190 aggregating Rs 3.87 cr, DivyaBalakrishnanof
up to 60,406 equity shares at upper price band of Rs 197 and 62,632 equity
shares at lower price band of Rs 190 aggregating Rs 1.19cr, Rajkumar
Kaliyaperumal of up to 58,274 equity shares at upper price band of Rs 197 and
60,421 equity shares at lower price band of Rs 190 aggregating Rs 1.15 cr, Priya
Balakrishnan of up to 37,310 equity shares at upper price band of Rs 197 and 38,684
equity shares at lower price band of Rs 190 aggregating Rs 0.74 cr and Navin
Loganathan of up to 20,000 equity shares at upper price band of Rs 197 and 20,737
equity shares at lower price band of Rs 190 aggregating Rs 0.39 cr.
AdugudiVishwanathan Venkatraman pre-issue shareholding was 69.63%,
which shall decrease to 59.61% at the upper price band of Rs 197.
Thecompany proposes to utilize the net proceeds of the fresh issue
towards funding inorganic growth amounting to Rs 147.90 cr, funding working
capital requirements of its material arm LatentViewAnalytics Corp amounting to
Rs 82.40 cr and investment in its arm to augment its capital base for future
growth amounting to Rs 130.0 cr.
Capital base is being augmented to fund its inorganic growth. The
company has started evaluating young start-ups for mergers and acquisition
which will drive inorganic growth.
Strengths
India is the top outsourcing destination for
analytics, and Indian companies including Multi Service Providers and Pure Play
Analytics firms have a share of approximately 40% of the addressed market. The
Indian delivery market is estimated to grow at approximately 20% CAGR
(2020-2024). Western Europe and USA have a larger concentration of Pure Play
Analytics players, who create differentiation through their expertise in niche
solutions and products. USA delivery market is expected to grow at
approximately 24% CAGR (2020-2024).
LatentViewAnalytics is among the leading
pure-play data analytics services companies in India and has emerged as one of
the most trusted partners to several Fortune 500 companies in the recent years.
It has presence in the top 5 analytics markets in the world with subsidiaries
around the world. The pure play analytics companies have grown by 25% to 30%,
driven by a focus on large accounts and their ability to provide an in-depth understanding
of customer problems.
The
company’s portfolio offers a distinctive breadth and depth of capabilities,
including descriptive analytics and prescriptive analytics with intuitive and
personalized dashboards that can drive monetization by improving sales and
marketing efficiency, improving customer experience and operational efficiency.
Functional expertise is the foundation of the company’s operations, and
combining its functional expertise with business knowledge, expertise in
quantitative methods, and data management helps the company provide end-to-end
business solutions.
The
company brings deep skills, a wide range of capabilities, and relevant
experience in helping global leading organisations (including Fortune 500
companies) utilise the power of data and analytics across the spectrum of the
business value chain including customer analytics, marketing analytics, supply
chain solutions and finance and risk analytics and People/HR analytics.
The
company partners with many of the largest enterprises in the world, and has
worked with over 30 Fortune 500 companies in the last three Fiscals. The
company’s client base is diversified across size, industry, and geography. The
company’s client base includes several marquee enterprises engaged in diverse
industries, including Adobe, 7-Eleven, Uber Technology. The company provides services
primarily to companies in Technology, CPG and Retail, Industrials, and BFSI
industries.
The
company has held relationships with its top five clients by revenue for FY
2021, for an average of over six years as of 30 June 2021and has evolved from
being an analytics provider to a strategic thought leadership partner. Revenue
from operations from clients that the company has engaged with for over five
years as of June 30, 2021, represented 44.51%, 42.42%, 55.27%, 67.51% and
79.76% of its revenue from operations in the three months ended June 30, 2021,
and June 30, 2020, and in FYs 2021, 2020, and 2019, respectively.
Majority of the company’s revenue is generated from long-term
agreements. Additionally, the company 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 its
technology, analytics and data capabilities, the company’s capital requirements
remain minimal with capital expenditures representing 0.60%, 1.10% and 0.56%,
of its revenues from operations in FYs 2021, 2020, and 2019, respectively.
Revenue from operations outside India represented 96.17%, 97.48% and 99.59% of
its revenue from operations in Fiscals 2021, 2020 and 2019 respectively. All
these factors contribute to strong free cash flow generation, allowing the
company financial flexibility to invest in the business and remain margin
accretive.
Weaknesses
The company is very small and small companies tend to be
affected more by changes in the environment and client dynamics.
Revenue from operations from its top five clients in FY
2021 and in the three months ended June 30, 2021, amounted to Rs165.20 cr and
Rs 52.1 cr, respectively, and represented 54.00% and 59.31% of its revenue from
operations in such periods, respectively.
The company derives significant portion of its revenues
from clients located in the United States and any adverse developments in this
market could adversely affect its business. Further, exchange rate fluctuations
may adversely affect the company’s profitability as the company earns and
expends significant portion in foreign exchange.
The ability of the company to continue to engage with
its clients is dependent on the quality of its services and offerings and real
or perceived errors, failures or glitches in its offerings could adversely
affect the growth prospects.
The business depends on the company’s ability to remain
updated with new technologies and continue to develop new digital solutions to
address the needs of the clients.
The company faces intense competition in its markets.
The markets for data and analytics are very competitive, and the company expect
such competition to continue or increase in the future.
Despite being a small company engaged in high growth
segment, the company’s sales have remained flat around Rs 300 crore in the last
three years.
Valuation
For 3 months ended June 2021, consolidated
sales were up by 20.3% to Rs 87.8 crore. OPM rose 109 bps to 30.8% which led to
24.7% increase in operating profit to Rs 27.1 crore.Other income declined by
58.1% to 3.9 crore while interest cost decreased 6.4% to Rs 0.6 crore and
depreciation increased 4.5% to Rs 1.8 crore. PBT declined by 0.4% to Rs 28.6
crore. Tax expenses increased by 6.3% to Rs 6.3 crore. Net income stood at 22.3
crore as against net profit of Rs 22.8 crore during the same period last year.
For FY 2021, consolidated sales were down by
1.4% to Rs 305.9 croredue to non-renewal of certain client engagements for a
client engaged in the travel and hospitality industry due to Covid related
disruptions. OPM
rose 828 bps to 34.19% which led to 30% increase in operating profit to Rs 104.6
crore. The company was able to achieve a significant business shift to its
offshore centers of excellence in Chennai and Bangalore, thereby achieving a
significant margin expansion in FY2021. Other income increased7.8% to 20.8
crore while interest cost decreased 9.9% to Rs 2.6 crore and depreciation
increased 3.2% to Rs 6.9 crore. PBT increased by 28.5% to Rs 115.9 crore. Tax
expenses declined by41% to Rs 24.5 crore. Net income stood at 91.5 crore as
against net profit of Rs 72.8crore.
At
the higher price band of Rs 197, the offer is made at a P/E of 42.8 times TTM
(till June 21) EPS (of Rs 4.6). There is no directly comparable listed player,
though the company compares itself with Happiest Minds Technologies, which is
trading at P/E of 121.8 times TTM (till June 21) EPS (of Rs 10.53). However,
between FY19-21, Happiest Mind has grown its sales and net profit at a CAGR of
13.6% and 536.4% while Latent View's sales and profit has grown at a CAGR of 3.1%
and 23.8%. Happiest Mind has FY21 RONW of 39.9% compared to Latent View's
23.3%. Happiest Mind's revenue is 2.5 times latent View's.
Latent
View Analytics: Issue Highlights
|
Fresh issue (in Rs crore)
|
474
|
Offer for sale (in Rs crore)
|
126
|
Offer for sale (in number of shares)
|
|
- in Upper price band
|
63,95,939
|
- in Lower price band
|
66,31,579
|
|
|
Price Band (Rs)
|
190-197
|
For Fresh Issue Offer size (in no of shares)
|
|
- in Upper price band
|
2,40,60,914
|
- in Lower price band
|
2,49,47,368
|
Pre issued capital (Rs crore)
|
17.37
|
Post issue capital (Rs crore)
|
|
- in Upper price band
|
19.78
|
- in Lower price band
|
19.87
|
Pre issue promoter and Promoter Group shareholding
(%)
|
79.3%
|
Post issue Promoter and Promoter Group shareholding
|
|
-On higher price band (%)
|
68.11%
|
-On lower price band (%)
|
67.75%
|
Bid Size (in No. of shares)
|
76
|
Issue open date
|
10/11/2021
|
Issue closed date
|
12/11/2021
|
Listing
|
BSE, NSE
|
Rating
|
43/100
|
Latent View
Analytics : Consolidated Financials
|
|
1903 (12)
|
2003 (12)
|
2103 (12)
|
2006 (3)
|
2106 (03)
|
Sales
|
287.9
|
310.4
|
305.9
|
73.0
|
87.8
|
OPM (%)
|
25.2
|
25.91
|
34.19
|
29.71
|
30.80
|
OP
|
72.7
|
80.4
|
104.6
|
21.7
|
27.1
|
Other inc.
|
8.0
|
19.3
|
20.8
|
9.4
|
3.9
|
PBIDT
|
80.6
|
99.7
|
125.4
|
31.1
|
31.0
|
Interest
|
3.1
|
2.9
|
2.6
|
0.7
|
0.6
|
PBDT
|
77.6
|
96.8
|
122.8
|
30.4
|
30.3
|
Dep.
|
7.1
|
6.7
|
6.9
|
1.7
|
1.8
|
PBT
|
70.5
|
90.2
|
115.9
|
28.7
|
28.6
|
Share of profit/loss from JV
|
-
|
-
|
-
|
-
|
-
|
PBT Before EO
|
70.5
|
90.2
|
115.9
|
28.7
|
28.6
|
Exceptional items
|
-
|
-
|
-
|
-
|
-
|
PBT After EO
|
70.5
|
90.2
|
115.9
|
28.7
|
28.6
|
Total Tax
|
10.8
|
17.3
|
24.5
|
5.9
|
6.3
|
PAT
|
59.7
|
72.8
|
91.5
|
22.8
|
22.3
|
Minority Interest
|
-
|
-
|
-
|
-
|
-
|
Net Profit
|
59.7
|
72.8
|
91.5
|
22.8
|
22.3
|
EPS (Rs)*
|
3.0
|
3.7
|
4.6
|
4.6
|
4.5
|
*EPS is calculated based on post issue share
capital of Rs 19.78 cr at upper price band, Face Value Rs 1.
|
Figures in Rs crore
|
Source: Capitaline Corporate Database
|
|