The Indian capital markets are poised to witness a landmark event as Fractal Analytics, a prominent player in the artificial intelligence and data analytics domain, prepares to launch its initial public offering (IPO) next week. Scheduled to open for subscription on Monday, February 9, this offering marks a significant milestone, potentially establishing Fractal as the first AI-centric firm to list on the Indian stock exchanges.
IPO Details and Valuation
The company has set the Fractal Analytics IPO price band at ₹857 to ₹900 per equity share. At the upper end of this band, the firm is targeting a valuation of approximately ₹14,450 crore. However, in a strategic adjustment, Fractal has revised its IPO size downward to ₹2,834 crore from the initially planned ₹4,900 crore. This recalibration reflects a cautious approach, with the company's latest valuation standing lower than its previous financing round.
Fractal CEO Srikanth Velamakanni, in discussions with Reuters, acknowledged that artificial intelligence represents a novel category for many investors. Consequently, the company was advised to adopt a conservative stance, effectively "leaving money on the table" to ensure a successful market debut and foster long-term investor confidence.
Grey Market Premium and Listing Prospects
Ahead of the official launch, Fractal Analytics is already generating considerable buzz in the unofficial grey market. The current grey market premium (GMP) for the IPO stands at ₹105. This premium indicates that shares are trading ₹105 above the upper offer price of ₹900 in the grey market.
If this GMP holds, Fractal Analytics shares could potentially list at a premium of around 11.67% over the upper price band. While this signals strong initial investor interest, market experts caution that grey market premiums are notoriously volatile and can experience sharp fluctuations. Therefore, investors are advised not to rely solely on GMP trends when making investment decisions.
Essential Information from the Red Herring Prospectus
As investors prepare for the subscription window, here are ten critical aspects from the Red Herring Prospectus (RHP) that merit attention:
- IPO Timeline: The public offering will open on February 9 and close on February 11. Anchor investor bidding is scheduled for February 6, with the expected listing date set for February 16.
- Offer Structure: The Fractal Analytics IPO comprises a fresh issue of ₹1,023.5 crore and an offer for sale (OFS) of ₹1,810.4 crore, aggregating to ₹2,833.9 crore.
- Selling Shareholders: The OFS involves entities such as Quinag Bidco, TPG Fett Holdings, Satya Kumari Remala and Rao Venkateswara Remala, and the GLM Family Trust.
- Utilization of Proceeds: The net fresh proceeds are earmarked for multiple purposes: ₹265 crore for subsidiary investments and debt repayment, ₹57 crore for laptop procurement, ₹121 crore for establishing new Indian office premises, and ₹355 crore for research & development alongside sales and marketing initiatives. The balance will serve general corporate needs.
- Client Portfolio: Fractal boasts an impressive clientele, including major corporations like Citibank, Costco, Franklin Templeton, Mars, Mondelez, Nationwide, Nestle, and Philips. Notably, the company has served several of the "Magnificent Seven" tech giants—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.
- Financial Performance: As India's leading pure-play enterprise in data, analytics, and AI (DAAI), Fractal has demonstrated steady revenue growth, rising from ₹1,985 crore in Fiscal 2023 to ₹2,765 crore in Fiscal 2025. The company achieved profitability in the last fiscal, posting a net profit of ₹196 crore, a significant turnaround from losses of ₹320 crore in FY23 and ₹42 crore in FY24.
- Revenue Geography: The firm derives the majority of its revenue from international markets. In the six months ending September 30, 2025, 92.4% of revenue came from clients outside India, with a similar 91.6% in Fiscal 2025.
- Client Concentration: A potential risk factor is the company's reliance on its top clients. In 1HFY26 and FY25, the top 10 clients contributed 54.2% and 53.8% of revenue from the Fractal.ai segment, respectively, indicating vulnerability to client relationship dynamics.
- Business Segments: Fractal operates through two primary segments: Fractal.ai and Fractal Alpha. Fractal.ai focuses on AI services and products, primarily hosted on its flagship agentic AI platform, Cogentiq. Fractal Alpha comprises independent AI businesses targeting broader markets and new geographies.
- Industry Outlook: The global DAAI market, valued at an estimated $143 billion (₹12 trillion) in Fiscal 2025, is projected to grow at a compound annual growth rate (CAGR) of 16.7%, reaching $310 billion (₹23 trillion) by Fiscal 2030. Key sectors like BFSI, healthcare, retail, and technology, where Fractal is active, accounted for about 80% of the global DAAI services market in FY25.
Brokerage Review and Investment Considerations
SBI Securities, in its analysis of the Fractal Analytics IPO, highlighted the company's niche positioning in data analytics powered by AI, developed through both in-house and external resources. The brokerage noted that at the upper price band of ₹900, the issue is valued at a FY25 price-to-earnings (P/E) multiple of 78.9x based on post-issue capital.
This valuation appears elevated, especially considering the company's revenue growth trajectory—an 18% CAGR between FY23-25 and 20% year-on-year growth in the first half of FY26. Additionally, the attrition rate remains a concern, recorded at 16.3% in FY25 and 15.7% in 1HFY26.
SBI Securities also pointed out potential risks, such as the trend of clients insourcing analytics functions, particularly with the proliferation of accessible AI tools, which could impact Fractal's business model. Given these factors, the brokerage has assigned a "NEUTRAL" rating to the IPO, advising investors to weigh the elevated valuation against the growth prospects and inherent risks.
Disclaimer: This content is for informational and educational purposes only. The views and recommendations expressed herein are those of individual analysts or brokerage firms and do not necessarily reflect the stance of any financial publication. Investors are strongly encouraged to consult with certified financial advisors and conduct their own due diligence before making any investment decisions.
