MUMBAI: Fractal Analytics, the first domestic artificial intelligence (AI) firm to get listed, has nearly halved its IPO size to just Rs 2,834 crore, down 42% from Rs 4,900 crore it sought to raise initially.
The company Wednesday pegged the post-issue at a valuation of Rs 14,450 crore and also trimmed the top band of its share price by 18% with the price band being fixed at Rs 857-900.
It has reduced its public issue size by 42% to Rs 2,834 crore in the RHP, compared to the Rs 4,900 crore outlined in its draft red herring prospectus (DRHP) last year.
According to Srikanth Velamakanni, co-founder and chief executive of Fractal, the move to lower the IPO size came from bankers and fund managers who advised the promoters to leave “a lot of money on the table for making the IPO attractive for people to invest and see results.”
The share price on the top end of the band was previously pegged at Rs 1,110 per share.
“At that price band, our investors said they would want to hold on, and stay on with us for much longer. As they didn’t want to sell much, we had to reduce the overall IPO size,” Velamakanni told reporters here Wednesday while announcing the price band.
“We have been trying to strike that balance between how low we can price versus the investors simply not willing to sell. So, finally we found this equilibrium,” Velamakanni said further.
Meanwhile, its GMP rose to 21% after the price bank announcement.
At present, Apax Partners-managed Quinag Bidco, TPG Fett Holdings, GLM Family Trust, and Satya Kumari Remala and Rao Venkateswara Remala will be the selling shareholders in the offer-for-sale.
Velamakanni and co-founder Pranay Agrawal will continue to hold on to their stakes post listing.
“While our gross margin has stayed at 45-46%, we are always focused on growth and our operating leverage takes care of the rest. Our drivers for future profitability will continue to be how we keep that gross margin high and improving,” said Ashwath Bhat, chief financial officer of Fractal.
The company is also steadily growing its research and development (R&D) spend as a part of the overall revenue. It grew from 5.2 percent of the revenue in the last fiscal year to 6.1 percent in the first half of this year, Bhat said.
“We would like to keep taking it in line with the revenue growth and also keeping the margins growing,” he added.
For its global competitors such as Palantir Technologies, R&D spend has been as high as 12-16% of the revenue.
Even as competition between AI companies continues to intensify in the US -- Fractal’s core market contributing around 64-65% of its overall revenue -- Velamakanni remained bullish that focusing on enterprise AI use cases will help the company stay differentiated.
Founded in 2000, the global enterprise AI company works with large multinational corporations helping them with decision-making through data-driven insights and end-to-end AI solutions.
Fractal’s offerings are organised into two segments. Fractal.ai houses its AI services and products. Products are largely hosted on Cogentiq, its flagship agentic AI platform, enabling enterprises with pre-built agents, tools, connectors along with low-code features.
The second segment, Fractal Alpha, comprises independent AI businesses that target Fractal.ai’s core multinational clients as well as newer markets and geographies, each run by separate management teams.
In FY25, it reported a revenue of Rs 2,816 crore, up from Rs 2,241 crore in the previous year.
It serves 113 large multinational clients, including global names across banking, consumer goods, retail, technology, healthcare and insurance.