The brokerage initiated coverage on India’s first pure-play AI company, recommending a target of Rs 1,260.
Fractal AI shares briefly breached the issue price today, but could not sustain the levels. It ended the day at Rs 881.40, gaining Rs 45.60 or 5.4% over the previous closing price of Rs 847.15. The stock was listed at Rs 876.
“Fractal operates in the analytics space that powers decision making process for large enterprises by leveraging AI tools and services. Fractal has demonstrated consistent and steady revenue performance over the past decade (27% CAGR USD growth) along with robust client retention (98%), a strong sales engine and R&D-led innovations,” a PL note by Amnish Aggarwal said.
The stock finally ended at Rs 883.45, up by Rs 36.30 or 4.28%.
What works for Fractal Analytics?
Aggarwal lists five reasons behind the optimism around Fractal:
1) Robust mining and new logo hunting activities
Fractal derives 80% of its revenue from existing accounts, with 98% annuity-led revenue and a strong NPS of 77, underscoring deep client engagement and recurring mandates. Backed by a robust sales engine (150 members), the company continues to scale wallet share, evidenced by multiple clients moving into higher revenue buckets and the doubling of the $5–10mn cohort over the past 2 years
2) Steady growth in accounts
Aggarwal highlighted the company’s systematic graduation of accounts across tiers amid the broadening of the base. This implies structured account mining.”Execution strength comes from the leadership pedigree; founders and senior executives have deep AI, analytics, and enterprise transformation expertise, enabling perpetual engagement, rather than project-level selling,” the note said.
3) Standing in AI, RGM & high-growth verticals
Fractal’s engagements are centred on upstream AI architecture combining data engineering, enterprise-grade customised reasoning models, and agentic AI. With 40% revenue coming from RGM and optimisation practices and over 50% exposure to HLS and CPG, the company’s vertical and functional mix is well aligned to high-growth industry segments and AI functions, the note said.
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4) Fractal.ai to sustain growth momentum
Ex-Neal Analytics, Fractal reported revenue growth of 20% YoY in INR terms in FY24. Despite the drag, Fractal.ai reported USD revenue CAGR of 16% over FY23-25, where HLS and TMT contributed notably and delivered above-consolidation-level growth.
5) Fractal Alpha turnaround to enhance consolidated business
The PL analyst said Fractal Alpha will likely break even in FY27E. It has historically been a drag on the company’s consolidated profitability.
With continued monetisation and scaling of its higher margin SaaS businesses, though a relatively small contributor to overall margins, it is expected to provide incremental support to consolidated margins and enhance overall profitability over time.
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