The Bengaluru-based company is selling its shares in the range of Rs 75-80 apiece and the issue is entirely an offer for sale (OFS) of up to 38,672,208 equity shares by the promoters and existing shareholders of the company.
The promoters – Neha Singh and Abhishek Goyal – along with Flipkart founders Binny Bansal and Sachin Bansal are looking to offload shares in OFS along with
India IV, SCI Investments V, Kolluri Living Trust, Milliways Fund and others.
An investor can make a minimum bid of 185 shares and then its multiples thereof. The issue is open for subscription till Wednesday, October 12, 2022. The software-as-a-service (Saas) player has no listed peer.
The company will not receive any proceeds from the issue and the entire sum will go to the selling shareholders. The company said it intends to gain the benefits of listing the shares on the stock exchanges.
Founded in 2013, Tracxn Technologies has an asset-light business model. The company said it has raised Rs 139.22 crore from anchor investors.
As of June 30, 2022, the platform had 3,271 users across 1,139 customer accounts in over 58 countries and its customers include several Fortune 500 companies and/or their affiliates, the company said in its DRHP.
For the fiscal year 2021, the company clocked a total revenue of Rs 55.74 crore, which was Rs 63.13 crore a year ago. The company reported a net loss of Rs 5.35 crore, which was significantly lower than the net loss of Rs 54.03 crore last year.
is the sole book-running lead manager to the issue, whereas Link Intime India has been appointed as the registrar for the issue. Shares of the company will list on both BSE and NSE.
Brokerage firms are mixed over the issue. A few have suggested avoiding the issue citing poor financials, pricey valuations and the fact the IPO is an OFS. However, a few analysts have suggested bidding for the issue citing growth prospects for it.
Here is what a host of brokerage firms recommend for the initial public offering of Tracxn Technologies:
The company is bringing the issue at a P/S multiple of 14x on an FY22 basis. The company is a leading global provider of differentiated private market data and intelligence and has a diverse, longstanding and growing global customer base.
The company with its scalable and secure technology platform conceptualized and developed in-house has significant cost advantages from India-based operations along with experienced promoters, board of directors and senior management team, backed by marquee investors, it added with a subscribe rating on the issue.
Tracxn’s valuations seem to be stretched for a loss-making operation. Considering the high attrition rate in the IT-enabled sector and the already double-digit attrition level of Tracxn, the brokerage is cautiously optimistic about the company’s efforts in bringing down employee costs.
“Also full exit by PE investors raises the concerns on the long-term potential growth outlook,” the brokerage said while suggesting to avoid the issue.
Rating: Not Rated
It is backed by experienced promoters, a management team and marquee investors. The in-house developed, scalable and secure technology platform and diverse, longstanding and growing global customer base put the company in a good position.
On FY22 financials, the IPO is valued at 12.6x EV/Sales. Tracxn is one of the leading players in the market of providing intelligence data for private companies, it added. “However, the aggressively-priced IPO hardly leaves anything meaningful on the table for the investors over a medium-term.”
Tracxn Technologies has an asset-light business model and operate software as a Service-based platform. It is a combination of technology and human analysts and is able to process vast amounts of data. Along with a diversified customer base, Tracxn is an Indian SaaS company and their platform Tracxn serves customers globally.
“On the financials front, the company’s revenue has grown at a CAGR of 30.4 per cent. Although the revenues have increased, EBITDA and PAT have been negative for the past two years. An investor needs to keep a watch on the financials for FY23,” it said with a neutral rating.
Traxcn is one of the leading players providing private market data services with a growing user base scaling the operations of the company. At the upper price band, it is valued at 240x P/E and 10.9x MCap/sales of Q1FY23.
The brokerage, without rating the issue, has flagged elevated attrition levels, material defects or errors in the platform and usage of open-source software as the key concerns for the company.
The company is a leading global player, ranking amongst the top 5 in its segment. Cost arbitrage advantages, high operating leverage, a strong technology platform, and comprehensive data coverage strengthen Tracxn’s position.
“It has achieved break even and reported gains in Q1FY23. The stock is currently valued at P/S of 12.7x to its FY22 sales of Rs 63.43 crore, the issue is fairly priced,” it said with a subscribe for a long-term rating.
“The company faces significant competition from private players and free online or offline sources of information on companies & businesses, including government records, company websites, and open online databases,” it said. “We believe that the company will find it difficult to substantially grow its client base and top line in the coming years.”
Due to the rising interest rates globally & recessionary conditions in major markets like North America and Europe, the private equity markets, venture capital markets, investment banks, and family offices are witnessing a significant cutback in terms of activities and traction, it added with an avoid rating for the issue.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)