Tracxn Technologies IPO opens, GMP nil; should you subscribe to Flipkart founders-backed issue?

Tracxn Technologies Ltd (TTL) IPO opened for subscription on Monday (10 October). The offer will open for subscription till 12 October (Wednesday). The price band for the offer has been fixed at Rs 75–80 per equity share of face value Re 1 each. The market intelligence data provider backed by the co-founders of Flipkart intends to garner around Rs 310 crore through an offer for sale (OFS) of 38,672,208 equity shares by the shareholders and promoters. Of the total offer size, 75% of the net offer will be reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 10% for retail investors.

Investors can bid for a minimum lot size of 185 shares and in multiples thereof. The minimum investment for a retail investor works out to Rs 14,800 at the upper end of the price band for 185 shares. A retail investor can apply for up to 13 lots or 2,405 shares for an amount of Rs 1,92,400. Ahead of the IPO, the company garnered Rs 139.22 crore from anchor investors. It allocated 17,402,494 shares at Rs 80 per share to anchor investors. Foreign Portfolio Investors who participated in the anchor were India Acorn, BNP Paribas Arbitrage- ODI, Ashoka India Equity Investment PLC, Tara Emerging Asia Liquid Fund, Kotak Offshore (India Midcap Fund).

In addition, shares have been allocated to domestic funds Nippon Life, ICICI Prudential, Whiteoak Capital Flexi Cap Fund, Kotak Pioneer Fund, Reliance General Insurance, Motilal Oswal are among the investors that participated in the anchor book. Out of the total allocation of 17,402,494 equity shares to the anchor investors, 7,526,910 equity shares were allocated to four mutual funds through six schemes amounting to Rs 60.22 crore, 43.25% of the total anchor book size. There was no fancy for unlisted Tracxn Technologies IPO shares as the grey market premium (GMP) was nil.

Should you subscribe to Tracxn Technologies IPO?

Choice Broking: Avoid

“There is no peer company in the listed space having operations similar to the company. At the higher price band, Tracxn is demanding an EV/Sales multiple of 12.3x, which seems to be stretched for loss-making operations. Considering the high attrition rate in the IT-enabled sector and already double-digit attrition level (49% in FY22 and 13.8% in Q1FY23) of Tracxn, we are cautiously optimistic on the company’s efforts in bringing down the employee costs. Also, partial/full exit by PE investors raises concerns on the long-term potential growth outlook. Thus considering the above observations, we assign an “AVOID” rating for the issue,” the brokerage said in its note.

ICICI Securities: Unrated

“Traxcn is one of the leading players providing private market data services with a growing user base scaling the operations of the company. At the upper price band, it is valued at 240x P/E & 10.9x MCap/sales on Q1FY23 (annualised basis). We assign UNRATED rating to the IPO,” the brokerage said in its report.

Hem Securities: Subscribe for long-term

“Company is bringing the issue at a price band of Rs 75-80 per share at p/s multiple of 14x on FY22 basis. Company being a leading global provider of differentiated private market data and intelligence has a diverse, longstanding and growing global customer base. Company with its scalable and secure technology platform conceptualized and developed in-house has significant cost advantages from India-based operations along with experienced promoters, board of directors and a senior management team, backed by marquee investors. Hence, we recommend “Subscribe” on issue for long term,” the brokerage firm said.

Marwadi Financial Services: Avoid

“Considering the FY23(Annualized) EPS of Rs 0.28 on a post issue basis, the company is going to list at a P/E of 286x with a market cap of Rs 8025 million. There are no listed companies in India whose business portfolio is comparable with that of the company’s business. We assign “Avoid” rating to this IPO as the company has incurred losses for the Financial Year 2020, 2021, 2022. Also, the valuations are not in favor of the investors,” the brokerage said.

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With the IPO, the company aims to achieve the benefits of listing the equity shares on the stock exchanges and the sale of shares by the selling shareholders (Neha Singh, Abhishek Goyal, Elevation Capital, Accel India IV (Mauritius) Ltd, SCI Investments V, Prashant Chandra, Binny Bansal, Sachin Bansal, WGG International Limited, Sahil Barua, Deepak Singh, Trustees, NRJN Family Trust, Milliways Fund LLC, Rathnagirish Mathrubootham, Trustees, Kolluri Living Trust, Apoletto Asia Ltd and Manoj Kumar Gandhi) in the offer. The company will not get any proceeds from this public offer and the proceeds will entirely go to the promoters.

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)