Tracxn Technologies Limited IPO

About the Company

Tracxn Technologies Ltd. (TTL) is one of the global market intelligence data suppliers for private company data, ranking among the top five in terms of the number of companies profiled, giving data on private market enterprises across sectors and geographies.

The company has an asset light business model and operate a Software as a Service ("SaaS")-based platform, Tracxn, that scanned over 662 million web domains, and profiled over 1.84 million entities across 2,003 Feeds categorized across industries, sectors, sub-sectors, geographies, affiliations and networks globally, as of May 31, 2021.

Services provided by the company:
Through its Tracxn platform, the business makes private corporate data available to its clients for a variety of purposes, including deal sourcing, target identification for M&A transactions, deal due diligence, analysis, and tracking new market and industry trends.

It launched the platform in Fiscal year 2015 with a particular focus on the global emerging technology sector, providing users with detailed profiles of companies including detailed information on funding rounds and acquisition-related information, sector-specific reports and news events

The company has 3,271 users across 1,139 Customer Accounts in over 58 countries, as of June 30, 2022, and its customers include several Fortune 500 companies and/or their affiliates.

Industry Outlook
The growth prospects of the B2B information services companies are likely to continue to grow as businesses are looking to consolidate and will be keener to explore new start-ups, private companies and geographies to invest in which suits their business strategies.

The global B2B information services market which was close to around USD 140 billion in 2020 is estimated to be a USD 190 billion market in 2025 growing at compound annual growth rate of around 6.16% (compared to 5.6% CAGR for past decade 2010-2019) according to Frost and Sullivan estimates.

In the recent past, the market has been experiencing some downturn due to the ongoing economic turmoil, pessimistic investment sentiments and the geo-political volatility. The current pandemic is further expected to slow down the market.

The Objective of the Issue
1. To receive the benefits of listing the equity shares on the stock exchanges.
2. To provide liquidity to the existing shareholders of the company and enhance the company’s brand name.
3. To provide a public market for the company’s equity shares in India

Financials

a) Top line: The Revenue growth for FY 22 (Y-o-Y) is 16.90% & Revenue growth for June 23 (Y-o-Y) is 23.57%.
b) Bottom Line: The company was loss-making till FY 22 and has posted positive results for 3 months ended on June 2022.
c) Net worth: Net worth (Reserves & Surplus) is positive, solely on account of securities premium, as company has huge accumulated losses (116.68 crores).

Average price at what the shares were issued in preceding 18 months

The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 11.31 per share. Thus promoters/selling stakeholders have received shares at much cheaper valuations than what is being offered through IPO.

Peer comparison and valuation
According to RHP, the company has no listed competitors, making a comparative valuation difficult.
At an upper price cap the P/E for the company comes to approx. Rs. 217, which is making the company exorbitantly priced

Risk

1. The company faces stiff competition from, Free online and offline sources of information on companies and businesses, including government records, company websites, and open online databases, which offer database for free as well as for subscription.

2. For Fiscals 2020, 2021 and 2022, Company’s revenue from customers outside India was 71.39%, 70.48%, 70.45%, respectively. Thus, given the global recession fears these can act as risk to company.

IPO details and subscription
The IPO starts on 10th October 2022 and will end on 12th October 2022 with an issue size of Rs. 309.38 Cr- full OFS (In Offer for Sale the funds raised through the IPO will not go into the books of the company, rather will be received by selling shareholders.) The lot size will be 185 shares and a retail investor can apply for a maximum of 13 lots. The price band offered by the company is Rs. 75-80 per share.