Fractal Analytics IPO Faces Investor Apathy with 20% Subscription Rate
The initial public offering of Fractal Analytics, a prominent provider of artificial intelligence solutions, has encountered a notably tepid response from investors for the second consecutive day. As of Tuesday, February 11, the subscription rate stood at a mere 20%, indicating cautious market sentiment toward the AI firm's market debut.
IPO Timeline and Key Details
The Fractal Analytics IPO subscription window opened on Monday, February 9, and is scheduled to close on Wednesday, February 11. The company has established a price band ranging from ₹857 to ₹900 per equity share, with each share carrying a face value of Re 1. Investors must apply for a minimum lot size of 16 equity shares, with subsequent applications requiring multiples of 16 shares.
The public issue structure allocates 75% of the shares to qualified institutional buyers (QIB), up to 15% to non-institutional investors (NII), and a maximum of 10% to retail investors. Additionally, shares worth ₹600 million have been specifically reserved for company employees.
Allotment and Listing Schedule
The final allotment for the Fractal Analytics IPO is expected to be completed on Thursday, February 12. The company plans to initiate refund processes for unsuccessful applicants on Friday, February 13. On the same day, shares will be credited to the demat accounts of successful allottees. Fractal Analytics shares are anticipated to make their trading debut on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on Monday, February 16.
Company Background and Business Focus
Founded in March 2000, Fractal Analytics has established itself as an international enterprise specializing in AI and analytics solutions. The company assists major global organizations in enhancing their decision-making capabilities through advanced technological applications. With over two decades of industry experience, Fractal develops sophisticated AI solutions by combining extensive technical expertise with specialized insights across various domains and business functions.
Grey Market Premium Analysis
The current grey market premium (GMP) for Fractal Analytics IPO shares stands at ₹7. Based on the upper end of the IPO price band at ₹900 and this premium, the estimated listing price is approximately ₹907 per share, representing a modest 0.78% increase over the IPO price.
Market observers note that grey market activities over the past nine sessions indicate a downward trend in the IPO GMP, with expectations of further decline. The minimum recorded GMP is ₹7.00, while the maximum reached ₹180 during this period, according to expert analysis.
Detailed Subscription Status
The Fractal Analytics IPO subscription status reveals significant variation across investor categories. While the overall subscription rate reached 20% on the second day, the retail portion demonstrated stronger interest with 60% subscription. The non-institutional investor (NII) portion was booked at 27%, while qualified institutional buyers (QIBs) showed minimal participation with only 2% bids received.
As of 17:00 IST, the company had received bids for 36,41,104 shares against the total offering of 1,85,79,360 shares available.
Brokerage Recommendations and Analysis
GEPL Capital Analysis: Based on earnings forecasts for FY25, the issue pricing reflects a price-to-earnings (P/E) ratio of 79x relative to the company's paid-up capital. The brokerage identifies Fractal Analytics as India's premier pure-play AI firm, highlighting its notable client portfolio, improving financial performance, and robust technical capabilities. Consequently, GEPL Capital recommends a "Subscribe" rating for the offering.
BP Equities Assessment: At the upper price band of ₹900 per share, the company valuation represents a P/E ratio of 110.0x based on projected FY26 annual earnings. Considering Fractal's strategic positioning in the rapidly expanding AI market and its improving profitability metrics, the brokerage has assigned a "SUBSCRIBE" rating with a medium to long-term investment perspective.
IPO Structure and Utilization of Proceeds
The total offering size amounts to ₹2,834 crore, comprising a fresh issue of shares worth ₹1,023.5 crore and an Offer For Sale (OFS) component valued at ₹1,810.4 crore. The company intends to allocate a portion of the IPO proceeds to assist its subsidiary in repaying existing debts. Additional funds will be directed toward purchasing laptops, acquiring new office space, and investing in research and development, sales and marketing initiatives, along with several undisclosed acquisition opportunities.
Financial Institutions Involved
The Book Running Lead Managers for the Fractal Analytics IPO include Kotak Capital, Morgan Stanley India, Axis Capital, and Goldman Sachs. MUFG Intime India Pvt. Ltd. will serve as the registrar for the offering, managing the administrative and procedural aspects of the public issue.
Disclaimer: The views and recommendations presented above represent the opinions of individual analysts, experts, and broking companies. Investors are advised to consult with certified financial experts before making any investment decisions.
