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Latent View Analytics' shares made a strong market debut on Tuesday, with the stock listing at a premium of up to 169 percent compared with its issue price. Most analysts say investors can hold Latent View Analytics shares for the long term.
Latent View Analytics' shares made a strong market debut on Tuesday, with the stock listing at a premium of up to 169 percent compared with its issue price. Chennai-based data analytics firm Latent View's stock was off opening gains at Rs 489.1 on BSE, still at a premium of 148.3 percent after debuting at Rs 530.
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Latent View Analytics' market debut is the first mainboard listing after that of Paytm parent One97 Communications, and KFC and Pizza Hut outlet operator Sapphire Foods.
Most analysts say investors can hold Latent View Analytics shares for the long term.
Santosh Meena, Head of Research at Swastika Investmart, said investors who played for a listing gain should keep a stop loss at Rs 490. "It is another stellar listing after the disappointment from Paytm which indicates the market is ready and has an appetite to reward quality IPOs," he said.
"It is a one-of-its-kind listed company with experienced management and quality corporate governance practices. It has a strong client base from Fortune 500 but there is concentration risk because 55 percent of its revenue comes from the top five clients. Revenue growth has been muted for this company however it has a strong margin with more than 20 percent RoE. The overall outlook is bullish but the valuations look expensive after a strong listing," said Meena, who suggests long-term investors hold the Latent View Analytics stock.
Milan Desai, Lead Equity Analyst at Angel One, said the Latent View listing was along the expected lines. "The IPO provides exposure to pure-play data analytics firms in India. The data being generated across points has increased multi-folds due to continuously improving and evolving technology, and data and analytics have become vital in terms of decision making and strategy for enterprises," he said.
Desai believes Latent View Analytics' strong fundamentals and growth from inorganic initiatives can help the company post strong growth that justifies the valuation of 43 times (TTM) sought by it.
"With rising spends on customer analytics by segments like CPG and retail, as well as technology, companies like Latent View that offer niche analytic solutions with focused domain expertise and consulting capabilities are likely beneficiaries. However, the current volatility and uncertainty in the market may curb the enthusiasm, but it should be a rewarding listing for those who got the allotment," he said.
Parth Nyati, Founder of Tradingo, suggests those who have won the allotment in the IPO to put a stop loss at Rs 450 and hold the stock with a long-term view.
"New investors should look for a dip to buy the stock. It has a first-mover advantage and is backed by strong management and fundamentals with increasing margins... However, the industry is expected to grow at a CAGR of 15-20 percent in the next three years which will aid the company's revenue," he said.
Latent View Analytics' IPO, asking a valuation of 42.6 times its FY21 earnings, was reasonably priced compared with its close peer Happiest Minds Tech, which trades at a valuation of 115 times, said Neha Khanna, Director at ValPro.
"Growth in IT spend is expected to be largely driven by investments in digital technologies as enterprises scale up digital transformation efforts across business units. The investment in digital technologies is expected to double to around $2.4 trillion in 2024 (a CAGR of around 16.5 percent). This presents an immense opportunity for the company, which may help it to continue double-digit growth in the coming years," she said.