Fractal Analytics share price jumps nearly 6% after PL Capital's 'Buy' rating, 40% upside forecast

Fractal Analytics share price rose nearly 6% on Tuesday, February 17, following brokerage Prabhudas Lilladhar's initiation of coverage on the AI company with a ‘Buy’ recommendation and a target price of ₹1,260, which is based on a valuation of 22x EV/EBITDA for FY28E, indicating a possible upside of 40%.

Fractal Analytics share price today opened at an intraday low of ₹826.25 apiece on the BSE, the stock touched an intraday high of ₹897.10 apiece.

Fractal Analytics shares opened nearly 6% lower on their debut day (Monday, February 16), trading at ₹847.15 per share on the NSE, reflecting a decline of 5.87%. The company’s shares debuted weakly, listing at approximately a 3% discount from their initial public offer (IPO) price of ₹900. The IPO was subscribed 2.66 times during the primary market period from February 9-11.

On the NSE, Fractal Analytics shares were listed at ₹876 each, with discount of 2.67%. On the BSE, the company's shares were listed without any significant change. Following the share listing, the company’s market capitalization reached ₹15,476.86 crore.

The brokerage's report indicated that Fractal functions within the analytics sector, enhancing decision-making processes for major enterprises through the use of AI tools and services.

As noted by the brokerage, this AI firm has showcased a steady and reliable revenue trajectory over the last ten years, achieving approximately 27% CAGR in USD growth, along with impressive client retention rates of around 98%, a strong sales framework, and innovations driven by research and development.

The effectiveness of cross-selling and upselling strategies is evident in the net revenue retention (NRR) exceeding 120%, with clients moving into the USD20 million-plus category, and projected revenue growth exceeding 20% CAGR (FY23-H1FY26) for top accounts. Fractal is currently aiming to enhance EBITDAM from approximately 13% in FY25 to over 20%, believes Prabhudas Lilladhar.

“We believe the decoupling of revenue and headcount growth, narrowing of ESOP costs, and improvement in high-margin SaaS-based revenue (Fractal Alpha) would help increase EBITDAM going forward. However, as more products get commercialized (under Alpha), R&D and S&M activities could weigh on margins beyond certain threshold. We estimate USD revenue/INR EBITDA/INR PAT CAGR at 19.3%/30.9%/44.5% over FY26E-28E. Valuation remains inexpensive (~15.1x EV/EBITDA FY28E),” said Prabhudas Lilladhar.

Fractal Analytics IPO details

Last week, Fractal Analytics IPO witnessed a subscription rate of 2.66 times by the conclusion of the bidding period. The company established a price range between ₹857 and ₹900 per share.

The IPO, valued at ₹2,834 crore, consists of a fresh issue of equity shares amounting to ₹1,023.5 crore and an offer for sale totaling ₹1,810.4 crore.

The funds raised from the fresh issue will be directed towards investments in its subsidiary, Fractal USA, debt repayment, acquisition of laptops, establishing new offices in India, investing in research and development, enhancing sales and marketing under the Fractal Alpha initiative, funding acquisitions, other strategic activities, and general corporate uses.

Established in 2000 by Srikanth Velamakanni and Pranay Agrawal, Fractal Analytics specializes in data and artificial intelligence (AI) and has extensive knowledge across sectors such as consumer packaged goods and retail, technology, media and telecom, healthcare and life sciences, as well as banking, financial services, and insurance.

The company provides support to large international enterprises across various industry sectors and business functions by offering data-driven insights and facilitating decision-making through comprehensive AI solutions.

As of March 31, 2025, the organization catered to global clients, including Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla.

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