Driven by strong retail demand, Tracxn Technologies on Monday attracted 11 per cent bids for its initial public offer (IPO) within the first three hours of the Day 1 bidding process.
The Flipkart founders-backed IPO received bids for 22,50,525 shares, which was 10 per cent of the total issue size of 2,12,69,714 shares. The quota reserved for retail individual investors (RIIs) was subscribed 57 per cent. The quota for non-institutional investors was subscribed a mere 2 per cent.
The Rs 309 crore offer for sale (OFS), which is being sold in 75-80 price band, will conclude on Wednesday, October 12. Last heard, the IPO was commanding a grey market premium of Rs 6 per share.
Ahead of its IPO, the firm garnered Rs 139.22 crore by allocating 17,402,494 shares to anchor investors at Rs 80 a piece. The OFS consists of 38,672,208 equity shares. Among selling shareholders are founders Neha Singh and Abhishek Goyal. Flipkart founders Binny Bansal and Sachin Bansal and a few other investors are also among selling shareholders.
The Bengaluru-based private market intelligence platform posted losses in FY22 and FY21 but has reported profits in June quarter of FY23.
“The company reported a profit in Q1FY23 (minor). With operating leverage kicking in, profitability is likely to improve, going forward,” said ICICIdirect. The brokerage said scale benefits in the future could be one of growth levers in the medium to long term. The brokerage did not rate the IPO.
Choice Broking said it is cautiously optimistic on the company’s efforts in bringing down the employee costs. It said partial or full exit by PE investors has raised concerns on the long-term potential growth outlook.
“There is no peer company in the listed space having operations similar to the company. At higher price band, Tracxn is demanding an EV/Sales multiple of 12.3 times, which seems to be stretched for a loss-making operation,” Choice Broking said.
The brokerage also looked concerned over high attrition rate in the IT-enabled sector and recommended ‘avoid’ rating on the issue.
That said, Arihant Capital Markets finds the issue fairly priced at FY22 price-to-sales of 12.7 times.
“The company is a leading global player, ranking amongst the top 5 in its segment. With cost arbitrage advantages, high operating leverage, a strong technology platform, and comprehensive data coverage strengthening Tracxn’s position. It has achieved breakeven and reported gains in Q1FY23,” Arihant Capital Markets said. Brokerage Religare Securities, meanwhile, is ‘neutral’ on the IPO.
