Why Latent View Analytics Share Price is Falling

2021 was a year when the Indian primary markets saw a flurry of initial public offering (IPOs). Blockbuster listings were common back in those days where IPOs were oversubscribed to a large extent.

Basically, the Indian primary market was flourishing. 63 companies collectively raised Rs 1.2 trillion (tn) through IPOs in 2021. This was the highest amount raised through IPOs in a calendar year.

In 2021, investors eagerly looked forward to upcoming IPOs. Companies like Paras Defence, Sigachi Industries, among others were listed with bumper gains. One more company that makes this list is Latent View Analytics.

The IPO of Latent View Analytics received an overwhelming response from all categories as it subscribed by 326.5 times in November 2021. The Rs 6 billion (bn) IPO had a price range of Rs 190-197 per share.

The stock made a strong market debut on 23 November 2021 with a premium of 169%. Within three days of listing the company's share price gained 44%. However, after the initial gains, the rally came a halt.

As things stand now, shares of the company have slipped over 10% in just five days. Investors went on a selling spree earlier this week on 10 May 2023 and it closed at Rs 372.8.

Read on to know why Latent View Analytics share price is falling.

#1 Poor quarterly results

On 10 May 2023, Latent View Analytics announced disappointing quarterly results. The company's profit after tax came in at Rs 342 million (m) in Q4 of the financial year 2023. This is 4% lower compared to Rs 355 m reported in the corresponding period of the last year.

For the quarter under review, total revenue came in at Rs 1,411 m, up 20.1% YoY.

Reducing profit despite increasing revenue indicates margin pressure. For Q4 its net profit margin fell to 21.9%, down 6.5% compared on a YoY basis.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was down 15.9% YoY at Rs 301 m. While EBITDA margin stood at 21.4%, 9.1% lower on a yearly basis.

Latent View Analytics Quarterly Performance

Particulars	Q4 FY22	Q4 FY23	Growth
Total Revenues (Rs in m)	1,175.0	1,411.0	20.1
EBITDA (Rs in m)	358.0	301.0	-15.9
Profit margin (%)	28.4	21.9	-6.5
EBITDA margin (%)	30.5	21.4	-9.1

Data Source: Investor Presentation

For the financial year 2023, the company's total revenue grew by 38.6% to Rs 5,945 m.

While its net profit grew by 19.9% to Rs 1,554 m.

The midcap company's net profit margin for the financial year 2023 came in at 26.1%. This is again 4.1% lower on a YoY basis.

Latent View Analytics Annual Performance (2022 - 2023)

Particulars	Mar-22	Mar-23	Growth
Total Revenues (Rs in m)	4,078.0	5,388.0	32.1
EBITDA (Rs in m)	1,219.0	1,451.0	19.0
Profit margin (%)	30.2	26.1	-4.1
EBITDA margin (%)	29.9	26.9	-3.0

Data Source: Investor Presentation

What next?

Latent View Analytics is the first data analytics company to go public. Being the first public company, it has a competitive edge in a growing industry.

Internet penetration has doubled from 20% in 2018 to 41% in 2019, according to the World Bank, and is expected to add over 900 m users by 2025. No wonder all the digital India stocks were in focus.

This growth has supported the data analytics industry with a significant increase in the collection of data that can potentially be used to tap into various markets.

In recent times, India has witnessed an explosive surge in the adoption of technology in diverse business practices. The Covid-19 pandemic was instrumental in accelerating the pace of digitisation. India witnessed the trend of businesses moving to online models from an offline structure.

Amid all this, data analytics has, consequently, emerged as the most critical component of the digital transformation processes.

Latent View Analytics is well-positioned to take advantage of these growing trends because of its internal strength.

The company has deep domain expertise in sectors like technology, industrials, consumer and retail, and financial services. The expertise is maintained by consistent client-driven innovations and consulting-led solutions.

It is deeply entrenched with big brands and businesses from respective industries. It collaborates with over 30 Fortune 500 clients.

The company can tap growth opportunities because of its wide presence. It has global delivery capabilities with a presence in high-potential markets.

However, emerging competition and client concentration may put a dent in the company's growth. It earns around 71% of its revenue from its top 10 clients. Hence, any turbulence in relations with these clients may harm the company's cash flow.

Also, the company earns a major chunk of its revenue from the USA. During Q4 of the financial year 2023, it earned 95.1% of revenue from the USA. Growing concerns over the US banking system and recessionary fears signal near-term uncertainty in the company's future.

How Latent View Analytics share price has performed recently

On a YTD basis, Latent View Analytics share price has fallen by 8.7%.

In the past one year, its share price is down by 12.9%.

Latent View Analytics shares touched a 52-week high of Rs 429.9 on 18 May 2022 and a 52-week low of Rs 305.3 touched on 20 June 2022.

About Latent View Analytics

Latent View Analytics operates as a digital analytics firm. The company provides business analytics, data engineering, marketing analytics, risk and compliance analytics, and supply chain analytic services. It serves customers worldwide.

Latent View Analytics enables leading global brands to predict new revenue streams, anticipate product trends and popularity, improve customer retention rates, optimize investment decisions and turn unstructured data into a valuable business asset.

To know more about company, check out the Latent View Analytics fact sheet and quarterly results on our website.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...