The month of January 2022 did not turn out to be the same as the previous two years for stock market investors. With the US Fed’s hawkish stance, the Union Budget, and the Omicron variant, the stock market took investors for a bumpy ride. No easy money was made! However, despite the ongoing volatility in the stock market, many companies have gone to file the draft prospectus with the Securities and Exchange Board of India (SEBI) for their IPO. One such company is Tracxn Technologies Limited. So let us discuss in detail the company’s business fundamentals.
About the company
Tracxn Technologies Limited is among the leading global market intelligence providers for private company data and stands among the top five players globally in terms of number of companies across sectors and geographies. The company has an asset-light business model and operates Software as a Service-based platform. Tracxn scanned over 550 million web domains, and profiled over 1.4 million entities across 1805 feeds categorized across industries, sectors, sub-sectors, and geographies as of May 2021. The company’s platform has 2358 users across 855 customer accounts in over 50 countries, as of March 2021. The company’s customers include a number of Fortune 500 companies.
Tracxn Technologies Limited IPO Details
The following are the details of the company’s IPO:
- The IPO is a book built issue IPO and is an entire offer for sale issue. The company will not receive any amount from the IPO proceeds.
- The company’s shares will list on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
- The price issue range for the IPO is yet to be announced, so the valuations can be adjudged only after that.
- The IPO subscription dates are yet to be announced.
- The pre-issue promoter shareholding stands at 50.93%.
- The company will issue 38,672,208 equity shares of ₹1 each.
- Link Intime India Private Limited is the registrar for the IPO.
Objectives of the IPO
The following are the objectives of the company’s IPO:
- To achieve the benefit of listing equity shares on the exchanges and enhance its corporate and brand image.
- The IPO issue is entirely an offer for sale; hence all the proceeds from the IPO will go to the selling shareholders. The company will not get any amount.
- The IPO proceeds will also be used for certain issue related expenses.
Following are the key strengths of the company:
- The company is a leading global provider of differentiated private market data and intelligence.
- The company has a diverse, longstanding and growing global customer base of 855 customer accounts in over 50 countries. The company’s customer accounts have grown at a CAGR of 34.73% over the last three fiscal years.
- The company has a scalable and secure technology platform conceptualized and developed in-house.
- The company’s ability to develop and deploy their platform in India provides us with significant cost advantages.
- The company’s promoters have significant experience in software and technology sectors.
The following are the key risks that the company may face in its business:
- The company derives majority of its revenues from subscription by customers. If the customers do not renew or expand their subscriptions, it could hurt the company’s revenues.
- Being in the technology sector, the company will have to rapidly keep pace with emerging threats and competition.
- A major chunk of the company’s revenues comes from international markets and as a result the company is prone to wild fluctuations in foreign exchange rates.
- The company has restated losses for FY20 and FY21.
- Salary and wage pressure in India could diminish the company’s competitive advantage and may reduce the revenues.
- There are several outstanding litigations against the company. Any adverse outcome in this regards could lead to disruptions in the company’s business.
Fundamentals of the company
The following are the fundamentals of the company:
- The company’s revenue from operations decreased from ₹668.30 million in 2019 to ₹557.41 million in 2021.
- The company posted a profit after tax of ₹123.99 million in FY19. From then, it swung to a loss of ₹53.47 million in FY21.
- The company’s total assets increased from ₹441.13 million in FY19 to ₹484.58 million in FY21.
- The company’s earnings per share stood at ₹-0.55 for FY21.
- The company’s total borrowings were zero as of March 2021.
- The company has a net asset value per share of ₹2.28 as of March 2021.
As per the company prospectus, there is no listed company in India which is engaged in the same business activities as the company. Hence, a per-to-peer comparison will not be possible in this regards.
Discussed above are the detailed business fundamentals of the company. However, the IPO price range and subscription dates are not yet out, and investors should take a decision regarding investing in the company’s IPO only after taking into account these details.