Firm Overview:
Tracxn is among the many main world market intelligence suppliers for personal firm information and ranks among the many prime 5 gamers globally by way of the variety of corporations profiled providing information of personal market corporations throughout sectors and geographies. They’ve an asset-light enterprise mannequin and function a Software program as a Service (“SaaS”)-based platform, Tracxn, with over 1.84 million non-public corporations’ profile and works with prospects throughout 58 nations and its prospects embrace non-public market buyers – enterprise capital, non-public fairness funds, and enormous corporates. Their platform makes use of an in-house developed algorithm based mostly on a mixture of know-how and human analysts, to course of huge quantities of knowledge, create profiles and supply market intelligence on non-public market corporations. Greater than 70% of the corporate’s income comes from exterior India, primarily from Europe, the Center East, and Africa. The corporate, which competes with Crunchbase, CB Insights, PrivCo, and Pitchbook, ranks among the many prime 5 gamers within the non-public market information area globally.
Funding Rationale:
Robust Base: Tracxn has a geographically diversified buyer base, which includes non-public market buyers & funding banks, corporates throughout industries, and others (together with authorities businesses, universities, accelerators, and incubators). Its buyer base has elevated at 32.4% (Three-year CAGR development) from 471 in FY19 to 1,092 in FY22. As of Jun. 2022, its platform had 3,271 customers throughout 1,139 prospects, which incorporates a variety of Fortune 500 corporations. The corporate has maintained long-standing relationships with its prospects which might be demonstrated by its retention fee, which stood at round 72-73%. Additional as of thirtieth Jun. 2022, eight of its top-10 prospects have been related to it for over three years, whereas round 23% of its energetic buyer base has been related to it for over three years.
Monetary Monitor Document: Over FY19-22, the corporate has reported sturdy development within the enterprise, however the operations have been loss-making. On the again of a rising within the buyer base, the corporate reported a Three-12 months CAGR development of 24% in Income to Rs.63.5 crs in FY22 from Rs.33.19 crs in FY19. Whole working bills elevated primarily because of excessive worker advantages bills through the years, which as a share of income stood at 92% in FY22 as in comparison with 137% in FY20. This led to an EBITDA lack of (Rs.1.9 crs) and an distinctive lack of (Rs.4.49crs) resulting in a Internet lack of (Rs.4.85 crs) in FY22. The corporate has been making losses traditionally and posted a revenue of Rs.0.84 crs for the primary time in June 2022 quarter.
Asset gentle Mannequin: Launching its platform in FY15, Tracxn has grown to be one of many main gamers within the non-public market information service supplier area. It has an asset-light enterprise mannequin and operates a software-as-a-service-based platform “Tracxn”. The corporate provides non-public firm information for deal sourcing, figuring out M&A targets, deal diligence, evaluation, and monitoring rising themes throughout industries and markets, via its subscription-based platform to its prospects. As of FY22, Tracxn derived all of the income from the B2B subscription-based enterprise mannequin. Tracxn has one of many largest coverages of personal corporations in rising know-how sectors together with IoT, synthetic intelligence, digital actuality, robotics, blockchain, and electrical autos.
Key Dangers:
PE/VC Exit – By means of this IPO, the promoters Neha Singh and Abhishek Goyal are offloading a cumulative stake of 15.28%. Enterprise capital investor, Elevation Capital is offloading 50% of its complete stake, whereas SCI investments and Accel India IV (Mauritius) Ltd. are totally exiting from the corporate which is a key concern.
Attrition Danger – The corporate’s attrition fee (each because of voluntary attrition and because of underperformance) in Fiscals 2020, 2021, and 2022 was 66.08%, 39.91%, and 49.02% and within the three months ended June 30, 2022, was 13.79%, respectively. The corporate’s lack of ability to retain expert workers and the excessive working prices are key considerations for the corporate.
Outlook:
The IPO being fully a suggestion on the market (OFS) will present nothing besides the itemizing advantages to the corporate. There isn’t a peer firm within the listed area having operations just like the corporate. At the next value band, the itemizing market cap might be round ~Rs.800 crs and Tracxn is demanding an EV/Gross sales a number of of 12.3x, which appears to be stretched for a loss-making operation. Alternatively, the corporate is backed by investments from angel buyers reminiscent of Ratan Tata, the NRJN Household Belief (founder Nandan Nilekani), Flipkart founders Binny Bansal and Sachin Bansal, and many others. Its listed monopoly standing and a distinct segment asset-light enterprise additionally again the corporate on a constructive notice. Therefore, we offer a ‘Impartial’ ranking for this IPO.
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