Fractal Analytics IPO GMP declines ahead of share sale next; should you subscribe?

The grey market premium (GMP) of Fractal Analytics has declined ahead of the opening of its initial public offering (IPO) next week. Shares of the AI solutions provider are currently commanding a premium of about 10 percent in the unregulated grey market. Investorgain has quoted a GMP of Rs 84 per share, suggesting a potential listing gain of around 9.33 percent over the upper end of the price band. IPO Watch has pegged the premium at about 10 percent. Earlier, the company’s shares were trading at a grey market premium of up to 21 percent. Fractal Analytics’ Rs 2,834-crore IPO will open for subscription on February 9 and close on February 11. The anchor investor portion of the issue is scheduled to open on February 6. The company has fixed a price band of Rs 857 to Rs 900 per share, valuing it at around Rs 15,500 crore at the upper end. The shares are scheduled to be listed on February 16. Check All IPO News Should you subscribe? SBI Securities has assigned a ‘Neutral’ rating to the issue. In its note, the brokerage said Fractal Analytics operates in a niche segment of data analytics, leveraging artificial intelligence developed through in-house research and development as well as external models. It added that the company has a presence across its four focus industries, with multinational corporations as clients and an average client tenure of more than eight years among its top 10 customers. At the upper price band of Rs 900, the issue is valued at a price-to-earnings multiple of 78.9 times based on post-issue capital, SBI Securities said. The valuation appears elevated, given the company’s revenue growth of 18 per cent compound annual growth rate between FY23 and FY25 and 20 percent year-on-year growth in the first half of FY26, it added. The brokerage also flagged the company’s attrition levels, which stood at 16.3 percent in FY25 and 15.7 percent in the first half of FY26. It noted that risks such as insourcing by clients, particularly with the advent of AI tools, could lead to loss of business and impact the company’s operating model. "Considering the elevated valuation, we assign a neutral rating to the issue and would like to track the performance of the company for a few quarters post listing," the report said. Proceeds from the fresh issue will be used to invest in its subsidiary Fractal USA for repayment or pre-payment of borrowings, purchase laptops, set up new offices in India, invest in research and development, support sales and marketing under Fractal Alpha, fund acquisitions and other strategic initiatives, and meet general corporate purposes.