Latent View Analytics Ltd.

Leading data analytics company within a growing industry

TABLE OF CONTENTS

1|P ag e ( 10 th N ov 21) For any further query, please email us on research@ventura1.com

 TABLE OF CONTENTS
Summary 3

Valuation and Peer Comparison 4

Financial Analysis & Projections 6

Key Growth Drivers 9

Huge growth potential in industry 9

Leadership position in data and analytics 11

Diverse services across industries 12

Strengthen position globally through select inorganic opportunities 17

Key Management Personnel 18

Risk & Concerns 18

Issue structure and offer details 19

Financial Statement Analysis & Projections 20

Disclaimer 21

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 Latent View Analytics Ltd.

SUBSCRIBE @ Upper Price Band of INR 197

Leading data analytics company within a growing industry

Latent View Analytics Ltd. (Latent) is among the leading pure-play data analytics
services companies in India serving several Fortune 500 companies in the recent Industry FinTech
years. The company serves clients across North America, Europe and Asia. Recently it
has entered into a strategic partnership with a recognized Canadian entity. Scrip Details
Listing BSE & NSE
The market for Data & Analytics (D&A) is expected to grow at 18% CAGR to ~ US$ 333 Open Date 10 Nov,2021
billion by 2024. The verticals of technology / BFSI, CPG & retail /industrial that Latent Close Date 12 Nov,2021
services are expected to grow to US$ 32 bn (19% CAGR) /US$ 117.9 bn (19% CAGR) / Price Band INR 190-197
UD$ 110.7 bn (20% CAGR) / US$ 16.8 bn (20% CAGR) over the same period Face Value INR 1
respectively. Key clients that include Adobe, Uber Technology and 7-Eleven. Market Lot 76
Minimum Lot 1 Lot
Over FY21-24, Latent is expected to grow its revenue at 21.7% CAGR at FY21-24E to
INR 551.2 cr driven by Issue Structure
- 21.1% CAGR in Technology to INR 344 cr, Offer for Sale 79%
- 54.8% CAGR in CPG & Retail to INR 109 cr, Fresh Issue 21%
- 5.0% CAGR in Industrial to INR 62 cr, and Issue Size INR 600.0 cr
- 7.1% CAGR in BFSI to INR 36 cr Total no of shares 3,04,56,853
QIB Share (%) ≥75%
EBIDTA margin expected to remain in range of 30.7% - 31.3% over FY21-24E which Non-Inst Share (%) ≥15%
will result into an EBIDTA growth of 17.7% CAGR to to INR 170.4 cr and Net profit Retail Share (%) ≥10%
growth of 17.8% CAGR to to INR 149.4 cr over the same period. Return ratio ROIC is Pre issue sh (nos) 17,37,20,925
expected to improve to 53.5% (+230 bps) respectively by FY24E. Post issue sh (nos) 19,77,81,839
Post issue M Cap INR 3896 cr
The company intend to utilize INR 147.9 cr from the IPO proceeds to fund inorganic
growth opportunities. At the offer price of INR 197 per share (26.1x FY24E earnings) Pre Post
Shareholding (%)
the issue is reasonably valued considering the large growth opportunity of the (%) (%)
analytics space, Latents strong balance sheet and expected future growth. We initiate Promoter 79.3% 66%
with a Subscribe for listing gains with a 24-month price target of INR 227 (30X FY24E Public 20.7% 34%
P/E) representing a potential upside of 15.2% from the IPO price of 197 (upper band). Total 100% 100%

Key Financial Data (INR Cr, unless specified)

Operating Net
Net EPS BVPS RoE RoA P/BV
Revenue EBITDA Profit Profit P/E (X)
Profit (INR) (INR) (%) (%) (X)
(%) (%)
FY20 310 80 73 25.9 23.5 3.7 17.6 20.9 21.1 53.5 11.2

FY21 306 105 91 34.2 29.9 4.6 22.1 20.9 20.0 42.6 8.9

FY22E 361 113 93 31.3 25.7 4.7 50.8 9.2 9.1 42.0 3.9

FY23E 451 139 127 30.7 28.1 6.4 56.2 11.4 11.3 30.8 3.5

FY24E 551 170 149 30.9 27.1 7.6 62.7 12.1 11.9 26.1 3.1

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 Valuation and Comparable Metric of Domestic and Global Data Analytics services Companies
PEG P/E Ratio RoE (%) RoIC (%) Sales EBITDA Margin (%) Net Margin (%)
Company Name Mkt Cap Price 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024
Domestic Peers (fig in INR cr, unless specified)
Latent 3,896 197.0 1.5 42.0 30.8 26.1 9.2 11.4 12.1 48.8 50.6 53.5 361 451 551 31.3 30.7 30.9 25.7 28.1 27.1
Happiest Minds 19,533 1330.0 4.2 96.6 85.6 74.1 25.6 24.2 24.0 45.2 46.3 47.2 1,065 1,233 1,409 23.2 23.3 23.3 19.0 18.5 18.7
TCS 12,95,630 3502.6 1.8 33.4 29.4 26.4 39.1 40.0 39.8 69.9 72.2 73.7 1,90,149 2,14,893 2,39,262 28.0 28.0 27.9 20.4 20.5 20.5
Infosys 7,30,771 1737.7 1.7 32.9 28.4 25.0 29.5 30.7 30.4 63.1 69.3 74.1 1,19,280 1,36,576 1,53,708 26.5 26.5 26.6 18.6 18.8 19.0
L & T Infotech 1,19,622 6828.0 2.1 52.3 42.9 37.5 26.1 26.8 25.8 39.4 43.1 46.0 15,358 18,398 21,513 20.0 20.3 20.2 14.9 15.2 14.8
L & T Technology 53,521 5076.1 1.5 56.6 46.0 39.6 22.9 23.7 22.2 43.8 48.9 44.0 6,547 7,792 9,016 21.1 21.2 21.1 14.4 14.9 15.0
Persistent System 31,373 4105.0 1.0 47.2 38.0 31.5 20.8 22.3 23.0 42.2 50.6 60.6 1,949 2,080 2,289 47.6 56.0 60.9 34.1 39.7 43.5
Coforge 31,840 5252.6 0.9 47.2 36.2 30.0 23.5 25.6 26.0 35.7 45.8 51.0 5,731 6,167 6,620 19.9 23.3 25.3 11.8 14.3 16.0

Global Peers (fig in USD mn, unless specified)

Capgemini 41,407 245.3 1.2 21.4 19.2 16.9 20.3 19.7 17.2 22.6 25.2 25.5 22,576 24,097 26,412 16.0 16.2 16.7 8.6 8.9 9.3
Accenture 2,42,336 368.5 3.2 37.2 34.0 31.0 29.5 28.0 26.8 61.2 57.9 58.5 57,306 61,671 66,202 18.6 18.6 19.0 11.4 11.6 11.8
Oracle 2,59,563 95.0 8.1 19.8 18.9 17.7 (6,149.5) (342.8) 10,732.8 41.5 40.9 44.6 42,352 44,063 46,100 49.8 50.4 50.6 31.0 31.2 31.8
Alteryx 5,367 79.6 NA (2,142.6) 323.4 198.8 (0.7) 5.5 NA (0.3) NA NA 620 739 930 3.4 5.4 NA (0.4) 2.2 2.9
New Relic 5,653 87.2 NA (165.3) (1,309.4) 110.7 (9.0) (0.7) 5.7 (107.0) (6.3) 7.9 734 817 942 3.1 7.6 13.0 (4.7) (0.5) 5.4

Source: Ventura Research & Bloomberg

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us on further query, please email us on reasech@ventura1.com
research@ventura1.com
 More than 20% ROIC and significant room for margin expansion are potential re-rating factors
85

75 TCS
Infosys
65
Persistent
Accenture
55
FY24 ROIC (%)

Latent
Coforge
45 Oracle Happiest Mind
L & T Infotech L & T Technology
35

25 Capgemini

15

New Relic
5
0 20 40 60 80 100 120 140 160 180
FY24 EPS CAGR (%)

28

Happiest Minds
23
Latent
FY24 Revenue CAGR (%)

L & T Infotech
18 L & T Technology

Infosys
New Relic TCS
13

Persistent System
Coforge
8
Accenture Capgemini

Oracle
3
10 20 30 40 50 60 70
FY24 EBIDTA Margin (%)

Source: Company Reports & Ventura Research

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 Financial Analysis and Projections
With all the key drivers in place, we expect Latent’s revenues to grow at a CAGR of 21.7% to
INR 551.2 cr over FY21-24E respectively. EBITDA is estimated to grow at a CAGR of 17.7% to
INR 170.4 cr, whereas EBIDTA Margin expected to remain at 30.9% in FY24E. The company
aims to pursue inorganic growth opportunities to complement its already robust growth. We
expect PAT to grow faster to INR 149.4 cr by FY24E (17.8% CAGR).

Latent’s Financial Summary

Fig in INR Cr (unless specified) FY19 FY20 FY21 FY22E FY23E FY24E FY25E FY26E FY27E FY28E FY29E FY30E FY31E
Revenue from operations 288.9 310.4 305.9 361.1 451.5 551.2 660.7 782.0 906.4 1,029.2 1,147.5 1,259.3 1,368.3
YoY Growth (%) 22.9 7.4 (1.4) 18.0 25.0 22.1 19.9 18.4 15.9 13.6 11.5 9.7 8.7
Employee Cost 172.1 198.0 177.2 207.6 259.4 315.5 377.7 447.9 516.5 588.7 656.3 718.9 781.2
Employee Cost to Sales (%) 59.6 63.8 57.9 57.5 57.4 57.2 57.2 57.3 57.0 57.2 57.2 57.1 57.1
Other Expenses 49.5 32.0 24.1 40.4 53.5 65.3 78.3 91.9 106.5 120.9 133.7 146.7 159.4
Other Expenses to Sales (%) 17.1 10.3 7.9 11.2 11.9 11.9 11.9 11.8 11.8 11.8 11.7 11.7 11.7
EBITDA 67.3 80.4 104.6 113.0 138.6 170.4 204.8 242.2 283.3 319.6 357.5 393.7 427.7
EBITDA Margin (%) 23.3 25.9 34.2 31.3 30.7 30.9 31.0 31.0 31.3 31.1 31.2 31.3 31.3
Net Profit 62.9 72.9 91.5 92.8 126.7 149.4 177.0 207.1 240.1 269.6 300.4 329.8 357.2
Net Margin (%) 21.8 23.5 29.9 25.7 28.1 27.1 26.8 26.5 26.5 26.2 26.2 26.2 26.1

Adjusted EPS 77.3 89.5 112.4 114.0 155.6 183.6 217.4 254.4 295.0 331.2 369.1 405.2 438.9
P/E (X) 2.5 2.2 1.8 1.7 1.3 1.1 0.9 0.8 0.7 0.6 0.5 0.5 0.4
Adjusted BVPS 329.0 427.4 537.8 1,234.1 1,366.3 1,522.4 1,702.8 1,914.0 2,152.9 2,421.2 2,712.8 3,032.9 3,366.4
P/BV (X) 0.6 0.5 0.4 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Enterprise Value 3,701.1 3,674.1 3,649.5 3,106.8 3,039.3 2,954.5 2,855.5 2,737.1 2,598.8 2,436.4 2,254.3 2,047.7 1,830.5
EV/EBITDA (X) 55.0 45.7 34.9 27.5 21.9 17.3 13.9 11.3 9.2 7.6 6.3 5.2 4.3

Net Worth 267.8 347.9 437.8 1,004.5 1,112.2 1,239.2 1,386.1 1,558.0 1,752.5 1,970.9 2,208.2 2,468.7 2,740.2
Return on Equity (%) 23.5 20.9 20.9 9.2 11.4 12.1 12.8 13.3 13.7 13.7 13.6 13.4 13.0
Capital Employed 267.8 347.9 460.4 1,012.2 1,112.2 1,239.2 1,386.1 1,558.0 1,752.5 1,970.9 2,208.2 2,468.7 2,740.2
Return on Capital Employed (%) 20.2 17.1 16.7 8.1 8.9 9.6 10.3 10.9 11.3 11.2 11.2 10.9 10.5
Invested Capital 72.6 125.7 191.0 215.0 255.3 297.4 345.4 398.8 454.9 511.0 566.2 620.1 674.5
Return on Invested Capital (%) 88.9 58.7 51.1 48.8 50.6 53.5 55.4 56.7 58.0 57.9 58.1 57.9 57.3

Cash Flow from Operations 59.1 63.0 89.9 95.5 123.8 149.0 176.3 207.6 243.3 277.3 313.5 349.5 384.5
Cash Flow from Investing (47.0) (33.6) (45.4) (48.7) (76.5) (85.5) (95.3) (107.2) (113.9) (117.7) (120.2) (122.8) (129.5)
Cash Flow from Financing (0.8) (5.4) 17.3 456.7 (27.2) (22.4) (30.1) (35.2) (45.6) (51.2) (63.1) (69.3) (85.7)
Net Cash Flow 11.3 23.9 61.8 503.5 20.1 41.1 50.8 65.2 83.8 108.4 130.2 157.5 169.3
Free Cash Flow 59.6 57.5 74.4 71.2 80.2 100.9 121.4 144.7 171.3 194.9 219.4 241.9 260.8
FCF to Revenue (%) 20.6 18.5 24.3 19.7 17.8 18.3 18.4 18.5 18.9 18.9 19.1 19.2 19.1
FCF to EBITDA (%) 88.6 71.5 71.1 63.0 57.9 59.2 59.3 59.7 60.5 61.0 61.4 61.4 61.0
FCF to Net Profit (%) 94.8 79.0 81.3 76.7 63.3 67.5 68.6 69.9 71.3 72.3 73.0 73.3 73.0
FCF to Net Worth (%) 22.3 16.5 17.0 7.1 7.2 8.1 8.8 9.3 9.8 9.9 9.9 9.8 9.5

Total Debt 0.0 0.0 22.6 7.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Debt (195.2) (222.2) (246.8) (789.5) (857.0) (941.8) (1,040.8) (1,159.2) (1,297.6) (1,459.9) (1,642.0) (1,848.6) (2,065.8)
Net Debt to Equity (X) (0.7) (0.6) (0.6) (0.8) (0.8) (0.8) (0.8) (0.7) (0.7) (0.7) (0.7) (0.7) (0.8)
Net Debt to EBITDA (X) (2.9) (2.8) (2.4) (7.0) (6.2) (5.5) (5.1) (4.8) (4.6) (4.6) (4.6) (4.7) (4.8)
Interest Coverage Ratio (X) 430.3 25.5 37.4 46.3 226.0 NA NA NA NA NA NA NA NA

Source: Company Reports & Ventura Research

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 Our Bull and Bear Case Scenarios

We have prepared a Bull and Bear case scenario based on Latent’s FY24 sales, EBIDTA margin,
and P/E.

• Bull Case: We have assumed Rs.551.2 cr of sales in FY24E (CAGR of 21.7%), EBIDTA
Margin of 30.9%, along with the re-rating to 33X FY24E P/E, which will result in a Bull
Case price target of INR 250 per share (upside of 26.9% from CMP).

• Bear Case: We have assumed Rs.429.7 cr of sales in FY24 (CAGR of 12.0%), EBIDTA
Margin of 24.8% along with 31X FY24E P/E, which will result in a Bear Case price target
of INR 141 per share (downside of 28.4% from CMP).

Bull & Bear Case Scenario

Bull Case Price
Sales of Rs.551.2 cr in FY24 (CAGR of
21.7%) and 33x FY24E P/E. INR 250 per share

Target Price
INR 227 per share

IPO Price
INR 197 per share

Sales of Rs.429.7 cr in FY24 (CAGR of Bear Case Price

12.0%) and 31x FY24E P/E. INR 141 per share

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 Latent’s Story in Charts
Growing segment wise revenue Revenue contribution (%)
Technology CPG & Retail Industrials Technology CPG & Retail Industrials BFSI
BFSI YoY Growth (%) 120
%
INR Cr
600 30
100
500 25
80
20
400
15 60
300
10
40
200
5
100 20
0
0 (5) 0
FY19 FY20 FY21 FY22E FY23E FY24E FY19 FY20 FY21 FY22E FY23E FY24E

Sustainable profitability Improving return ratio

EBITDA Net Profit Net Worth Invested Capital
EBITDA Margin (%) Net Margin (%) RoE (%) RoIC (%)
200 40 1,400 (%) 100
% INR Cr
INR Cr 35 1,200
80
150 30 1,000
25 60
800
100 20
600 40
15
50 10 400
20
5 200
0 0 0 0
FY19 FY20 FY21 FY22E FY23E FY24E FY19 FY20 FY21 FY22E FY23E FY24E

Strong balance sheet Strong cash flow generation

Total Debt Net Debt CFO FCF
Net Debt to Equity (X) Net Debt to EBITDA (X) CFO to EBITDA (%) FCF to Net Profit (%)
200 0 160 100
INR Cr (x) INR Cr %
(1) 140
0 80
FY19 FY20 FY21 FY22E FY23E FY24E (2) 120
(200) 100 60
(3)
80
(400) (4)
60 40
(5)
(600) 40
(6) 20
20
(800)
(7) 0 0
(1,000) (8) FY19 FY20 FY21 FY22E FY23E FY24E

Source: RHP, Company Reports & Ventura Research

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 Key Growth Drivers

Huge growth potential in industry

The global IT spend is expected to reach approximately $4 trillion by 2024. Across industries,
Data & Analytics (D&A) are being leveraged by enterprises to guide business strategy and
optimize spending decisions during growing financial uncertainties. The market for Data &
Analytics was approximately $174 billion in 2020 and is expected to grow at a CAGR of 18% to
approximately $333 billion by 2024. Digital native businesses have been at the forefront of
adopting advanced analytics to stay ahead of the competition.

The Analytics market in North America has been growing at a CAGR of approximately 16% over
the last few years. Similar to most other developed markets, Canada is facing a significant
shortage of Analytics talent. Canada's traditional sectors, such as Retail, Banking, and
Insurance have significantly accelerated their investment in digital transformation.

This is especially true in BFSI, and CPG and Retail industries where investment in Data &
Analytics is expected to grow at a CAGR of almost 20% over the next 5 years to exceed US$110
billion by 2024. Both industries offer a multitude of products across a variety of channels. It is
leveraged to analyze consumption patterns and customer behaviour to facilitate informed
decisions as well as in fraud detection and prevention. Global D&A spending by the BFSI vertical
was estimated to be $58.6 billion in 2020. A growth of approximately 19% is expected year-on-
year, estimated to reach $117.9 billion by 2024.

Global D&A spending by CPG & Retail sector is estimated to grow from $53.6 billion in 2020 to
reach $110.7 billion by 2024, at a CAGR of 20%. With e-Commerce platforms and online
marketplaces serving as major sales channels, it is crucial for businesses to remain updated
with actionable insights.

Technology vertical, comprising of companies primarily in the software or internet business, is

the third largest contributor to D&A spending. As more independent software vendors are
adopting subscription-based business models, they gain access to large amounts of customer
usage data. Global D&A spending by the Technology vertical is estimated to grow from $15.9
billion in 2020 to $32.0 billion by 2024, at a CAGR of approximately 19%.

Global D&A spending by the Industrial vertical is estimated to grow from $8.0 billion in 2020
to $16.8 billion by 2024. Supply Chain Analytics is increasingly being used by enterprises across
variety of uses - from forecasting demand, to planning supply chain operations and performing
predictive maintenance of machines and equipment. Approximately 35% of the US
manufacturers have implemented some form of Advanced Analytics in their organization in
the last 3 years. With the pandemic being the accelerator of digital transformation,
manufacturers are expected to increase their investments in D&A.

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 IT Industry and Data & Analytics Growth

IT Spending (%) Global data & analytics market (USD Bn)

350 333
Other Data & Analytics
18% CAGR
300
14
$0.2Tn
250

200 174

FY20 $1.3Tn 150

Digital spend
100

$1.1Tn 50

0
86
2020 2024

BFSI, CPG & retail, technology & industrials North America to remain the largest market for
represent 70% of the market (USD bn) data & analytics (USD bn)
BFSI CPG & Retail Technology Industrial Other NA APAC Europe Other

350 350 3

300 55 300
79
250 17 250
32
200 111 200 2
150 150 40 120
38
16 8
100 118 100 59
54
50 50
59 72 131
0 0
2020 2024 2020 2024

Analytics Services addressed Market (USD bn) India is the top outsourcing destination for data & analytics

Multi service IT service providers Pure play analytics providers

80
70
10
60
50
40
4
30
20
10
30 58
0
2020 2024

Source: RHP, Company Reports & Ventura Research

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 D&A Spend (USD bn)
BFSI CPG & Retail
EDM Descriptive & Diagnostic Predictive Prescriptive EDM Descriptive & Diagnostic Predictive Prescriptive

140 120
4
3
120 100
100 33
32 80
80
1 60 1
60 12 13
46 40
40 48
22 22
20 20
24 37 17 26
0 0
2020 2024 2020 2024

Technology Industrial
EDM Descriptive & Diagnostic Predictive Prescriptive EDM Descriptive & Diagnostic Predictive Prescriptive

35 18
2 1
30 16
14
25
12
20 10
1 0 8
15 17 8

7 6 3
10 6 4
3 4 2
5 2
5 7 3 4
0 0
2020 2024 2020 2024

Source: RHP, Company Reports & Ventura Research

Leadership position in data and analytics with a wide range of capabilities

The company is among the leading pure-play data analytics companies in India and has
emerged as one of the most trusted partners to several Fortune 500 companies. Latent provide
predictive and prescriptive analytics services by leveraging AI/ ML and advanced analytics
techniques to help clients better understand their commercial relationships and make better
informed decisions with a more holistic view of the business. Through Latent’s business-
focused approach to analytical problem solving, the company guide enterprises in the adoption
of updated scalable architectures to provide insights in real-time to aid decision making.

The company partner with many of the largest enterprises in the world, and has worked with
over 30 Fortune 500 companies in the last three fiscals. Latent’s client base is diversified across
size, industry, and geography. Its client base includes several marquee enterprises engaged in
diverse industries, including Adobe, 7-Eleven, Uber Technology.
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 Diverse services across industries

Diverse services of the company include:

Consulting services – Consulting services are aimed at helping organizations identify the most
relevant trends that are impacting their business, understand the challenges and opportunities
presented by those trends and prepare an analytics roadmap for harnessing the power of data
and analytics to capitalize on the opportunities. The company has gained relevant industry
experience in solving vertical-specific problems as well as functional expertise in addressing
the needs of different departments within an organization.

Business Analytics and Insights Services – Business analytics plays a crucial role in formulating
ways to improve business strategies, operations and make smart data-driven decisions that
lead to a competitive advantage. The defining characteristic of services is the breadth and
depth of actionable analytics that help drive informed decisions for clients. This service
includes finance and risk analytics, customer analytics, marketing analytics, supply chain
analytics, and HR analytics.

Data Engineering – Enterprise Data Management (EDM) refers to a set of processes, practices,
and activities focused on consolidating data from disparate sources – both internal and
external, maintaining accuracy and quality of data, and providing security and governance
across the enterprise according to regulatory mandates. Data engineering team of the
company helps organizations monetize and maximize the value of their data by taking a
curated approach to integrate data from different sources, address structural inconsistencies
and cleanse data for use by downstream analytics applications. The company build a strong
foundation of data and generate insights from data mining.

Digital Solutions – The company’s solutions have been implemented in several Fortune 500
businesses and have proven successful in automating business processes, predicting trends,
and generating actionable insights. Latent help clients to accelerate their product development
and reduce time-to-market by integrating digital solutions with their processes.
The company provide services primarily to companies in Technology, CPG and Retail,
Industrials, and BFSI industries. With respect to:

Technology – Businesses in the technology industry continuously need to reinvent and protect
themselves from global disruptions. The company primarily work with tech-giants and
technology conglomerates with various business units such as Adobe, Uber Technology and 7-
Eleven, and engage with multiple touch points within these organizations over time. The
company provide them with sustainable solutions by integrating analytics services and
technological expertise to move towards a user-centric goal while accelerating their digital
transformation journey.

CPG & Retail – The CPG & Retail industries are evolving rapidly to keep up with shifting
consumer demand. With eCommerce platforms and direct-to-consumer online market places
serving as major sales channels, it is crucial for businesses to remain updated with actionable
insights to gain commercial success. Through Latent’s analytics solutions, Latent help

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 companies understand consumer purchasing behaviour to gain a competitive advantage and
emerge stronger in their industries.

BFSI – For companies in the BFSI sector, the company apply analytics and technology expertise
to core business capabilities to help make strategic decisions that streamline operations and
provide their customers with the best possible experience in a highly competitive market. As a
data-heavy industry with exposure to risks, the company is typically engaged by these entities
for finance and risk analytics to identify and help mitigate vulnerability to fraudulent
transactions and cyber-attacks.

Industrial – In the Industrial sector, helping them understand the factors that improve large
scale operations performance by combining digital solutions and advanced analytics
capabilities. The company a Service Delivery Excellence (SDE) framework that supports a cycle
of continuous improvement driven by measurable business impact. The SDE team is
responsible for maintaining a ‘Project Health Scorecard’ which measures team utilization, team
composition, delivery issues, and actionable insights. The team also conducts a quarterly Voice
of Customer Survey to understand customer satisfaction across various parameters. This is
used to provide feedback to the project teams and formulate a plan of action to drive
improvement. Insights are documented and validated with the client to quantify the impact of
each project to maximize the value driven for the client.

Revenue Mix

Technology CPG & Retail Industrials BFSI YoY Growth (%)

600 30

500 25

20
400
15
300
10
200
5

100 0

0 (5)
FY19 FY20 FY21 FY22E FY23E FY24E

Source: RHP, Company Reports & Ventura Research

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 Clients Mix
2019 2020 2021
Number of Revenue from Number of Revenue from Number of Revenue from
Clients operations Clients operations Clients operations
Less than Rs. 5 cr 45 54.9 31 46.0 29 54.3
Between Rs. 5 cr – Rs. 10 cr 6 44.1 7 51.1 10 76.4
Between Rs. 10 cr – Rs. 50 cr 7 188.9 9 213.3 5 123.9
Above Rs. 50 cr - - - - 1 51.3
Total 58 287.9 47 310.4 45 305.9
Source: RHP, Company Reports & Ventura Research

Latent’s solutions are generally licensed through a master agreement or online terms and
conditions with corresponding product specific terms that are either in separate order forms
or are incorporated into the online terms and conditions.

The company offer multiple engagement models and service clients based on the client
requirements:

Managed Services CoE – This model involves deploying dedicated teams for the client, who
serve as the extended analytics division of the client business. The team works closely with the
multiple business stakeholders across functional areas in projects involving advanced analytics,
machine learning, business intelligence, visualization, and data engineering. There is
operational flexibility to scale-up or scale-back the team based on the client’s requirements.

Project Based – Project goal, objectives and milestones are identified, defined and finalized for
a fixed fee and duration. The company is responsible for project management, work schedule
and task prioritization based on the project milestones and deliverables. Projects are typically
for durations of a few months.
Consulting – Value-driven client engagement to enable clients to discover key business
problems and create an approach to address them. Pricing is based on the complexity of the
problem and potential value to be derived.

Solutions – Customization of pre-built accelerators and assets that would address customer
pain points in a specific area. Pricing is dependent on the level of customization, transaction
based, and value delivered. Examples include the data volume, number and frequency of
insights, number of markets covered, and number of end users of the solution.

Go-To-Market Approach

The company’s marketing and sales efforts are focused on both generating new clients as well
as cross-selling and upselling our end-to-end solutions to existing clients. Latent’s salesforce is
primarily segregated into field sales and inside sales.

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 Sales and Marketing strategy

Source: RHP, Company Reports & Ventura Research

The focus of sales efforts is to build long-term and deep relationships with select strategic
clients as compared to a scattered approach. These strategic clients are typically the top clients
in a particular industry and are independently managed by Latent’s directors who own the
client relationship and are equipped to sell all solutions. Key account management is facilitated
by an onsite client partner in collaboration with an offshore delivery lead. Field sales team is
geographically distributed and leverages existing customer relationships to gain referrals and
reach target accounts.

Incentives for client servicing teams are pegged to revenue growth at existing and new
accounts with additional rewards for winning deals in focus areas. Sales leads are incentivized
to drive growth through acquisition of large deals at new clients and new groups through a
deal incentive program. Sales teams are also entitled to receive additional incentives for
meeting and exceeding revenue goals.

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 Key Account Management

Source: RHP, Company Reports & Ventura Research

Expand client base and geographic presence

Operation of the company is present in the top five analytics markets in the world with
subsidiaries in the United States, United Kingdom, Germany, Netherlands, and Singapore.
North America accounts for the largest share of the global data and analytics spend at almost
40%. Substantial increase in fraudulent transactions across retail and banking industries in
North America has led to increased spending on risk analytics applications – leading to North
America contributing to approximately 38.5% of global spend on risk analytics.

As per Zinnov Report, While the pandemic severely disrupted the European manufacturing
industry, spend on supply chain analytics is expected to increase at a CAGR of 19.8% from 2019
to 2024.

The company has typically gained access to new geographies through pilot projects that the
company has carried out for existing and potential clients that transform into longer term
engagements. Latent’s continued presence in these geographies through subsidiaries has been
driven by market opportunities in these countries and client referrals.

The company has identified Canada as an important and margin accretive market going
forward, and have recently entered into a strategic partnership with a recognized Canadian
entity. The company has recently made strategic hires to strengthen sales and delivery
channels in Canada to acquire potential clients engaged in the retail industry.

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 The company intend to follow a ‘hub-and-spoke’ model where global delivery centres will be
in India and operation centres with dedicated teams will be in different geographies where
clients are located, to address their requirements on a real-time basis.

Strengthen position globally through select inorganic opportunities

Overall the analytics application market, excluding enterprise data management spend, is
estimated to grow to US$240 billion in 2024. This will be primarily driven by five key enterprise
functions - finance and risk, customer, supply chain, marketing and HR or workforce that
together comprise almost 50% of the spend on analytics applications.

The company propose to leverage these opportunities and continue to pursue strategic
expansion plans through inorganic opportunities. The company is exploring strategic
acquisition opportunities that will enable to gain access to new geographies, industries, and
client base. The company continue to identify and evaluate prospects that will provide access
to new technologies/IP, clientele, and those we believe to be synergetic with existing
operations. In particular, the company intend to pursue opportunities that will complement
data engineering capabilities and help to build deeper capabilities in terms of our AI/ ML
functions.

The company intend to utilize INR 147.9 cr from Net Proceeds to fund inorganic growth
opportunities over a period of three calendar years from the date of listing of Equity Shares.

Consistent client driven innovation supported by functional expertise

The company prioritize innovation and R&D through multiple initiatives, through a
combination of solutions we design as responses to client requests, as well as proactive efforts
to identify marketable solutions. We carry out client driven innovation through our Service
Delivery Excellence (SDE) framework that supports a cycle of continuous improvement through
context-based improvement studies, and have set-up ‘IdeaLabs’, a team of dedicated R&D
resources, for our ongoing innovation efforts.

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Key Person
Adugudi Viswanathan Venkatraman Chairman
Pramadwathi Jandhyala
Dipali Hemant Sheth
Mukesh Hari Butani
Raghavendra Raghuttama Rao
Reed Allen Cundiff
Source: RHP, Company Reports
18 | P a g e ( 1 0 t h N o v 2 0 2 1 )
Management Team
Designation Details
He holds a postgraduate diploma in management from IIM Calcutta, and a Bachelor of Technology in
Civil Engineering from IIT Madras. He has several years of experience across IT services, credit analysis
and business consulting.
She graduated with a B.E. in Computer Science from BITS Pilani and a postgraduate diploma in
Executive Director management from IIM, Calcutta. She has several years of experience in corporate finance, and credit
ratings.
She holds a B.A. (Honours) degree in Economics from University of Delhi. Prior to joining the company
as an Non-Executive, Independent Director, she was associated with RBS Services India Private
Independent Director
Limited as a Country Head of Human Resource’s Standard Chartered Bank, Procter & Gamble
Distribution Company Limited and DCM Limited.
He is the founder of BMR Legal Advocates, a law firm engaged in Tax policy, Advocacy & Disputes.
Prior to that, he co‐founded and was the Chairman of BMR Advisors, a firm engaged in Tax and M&A
Independent Director
advisory services. He is a Commerce graduate from University of Bombay and holds a Bachelor’s
degree in Law. He is also a qualified Chartered Accountant.
He holds a post graduate degree in diploma in management from IIM Ahmedabad, and a Bachelor of
Technology in Mechanical engineering in IIT Madras. He is a member of the Institute of Cost and
Independent Director
Works Accountants of India. He is acting as the Chief Executive Officer of GDCIE, IIT Madras and is
director on board of several companies.
He holds a Bachelor of Arts degree from Wesleyan University. He has previously served as CEO of the
Independent Director Americas for Kantar LLC, and prior to that was the General Manager of global insights for the Microsoft
Corporation
Key Risks & Concerns
• Revenue from operations from top five clients together was INR 52.1 cr, INR 42 cr, INR
165.2 cr, INR 166.6 cr and INR 157.4 cr, and represented 59.31%, 57.55%, 54.00%,
53.69% and 54.66%, of revenue from operations in the Q1FY22 and Q1FY21 and in
FY21, FY20 and FY19, respectively.
• The company derive more than 90% of revenues from clients located in the United
States and any adverse developments in this market could adversely affect business.
• The company is substantially dependent on the continued service of existing sales and
delivery personnel owing to the industry and functional expertise involved in offerings.
The company having an attrition rate of lower 20% which is higher than global average
of ~14%.
• The company propose to utilize the Net Proceeds to undertake acquisitions for which
targets have not been identified. Net Proceeds to be utilized towards inorganic growth
initiatives may be insufficient for the cost of proposed inorganic acquisition and the
deployment of Net Proceeds towards inorganic growth initiatives may not take place
within the period currently intended, and may be reduced or delayed.
• Exchange rate fluctuations may adversely affect results of operations as significant
portion of revenues and expenditures are denominated in foreign currencies.
For any further query, please email us on research@ventura1.com
 • The company face intense competition in markets, and the company may lack
sufficient financial or other resources to maintain or improve competitive position.
Certain of competitors include Mu Sigma, Fractal, Tiger, Palantir, Accenture, TCS and
Capgemini.

Issue Structure and Offer Details

The proposed issue size of Latent’s offer for sale & fresh issue of IPO is INR 600 cr. The price
band for the issue is in the range of INR 190-197 and the bid lot is 76 shares and multiples
thereof.

Issue Structure

Category No. of shares offered Allocation

QIB At least 2,28,42,640 At least 75% of public issue

Non-Institutional Bidders Not more than 45,68,528 Not more than 15% of public issue

Retail Not more than 30,45,685 Not more than 10% of public issue

Source: RHP, Company Reports

Shareholding Pattern

Category Pre-Issue Post Issue

Promoters 79.3% 66.0%
Public 20.7% 34.0%
Total 100.0% 100.0%

Source: RHP, Company Reports

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 Financial Statement Analysis & Projections

Fig in INR Cr (unless specified) FY19 FY20 FY21 FY22E FY23E FY24E Fig in INR Cr (unless specified) FY19 FY20 FY21 FY22E FY23E FY24E
Income Statement Per share data & Yields
Revenue 288.9 310.4 305.9 361.1 451.5 551.2 Adjusted EPS (INR) 3.2 3.7 4.6 4.7 6.4 7.6
YoY Growth (%) 7.4 (1.4) 18.0 25.0 22.1 Adjusted Cash EPS (INR) 3.3 4.0 5.0 5.1 6.9 8.1
Raw Material Cost 0.0 0.0 0.0 0.0 0.0 0.0 Adjusted BVPS (INR) 13.5 17.6 22.1 50.8 56.2 62.7
RM Cost to Sales (%) 0.0 0.0 0.0 0.0 0.0 0.0 Adjusted CFO per share (INR) 3.0 3.2 4.5 4.8 6.3 7.5
Employee Cost 172.1 198.0 177.2 207.6 259.4 315.5 CFO Yield (%) 1.5 1.6 2.3 2.5 3.2 3.8
Employee Cost to Sales (%) 59.6 63.8 57.9 57.5 57.4 57.2 Adjusted FCF per share (INR) 3.0 2.9 3.8 3.6 4.1 5.1
Other Expenses 49.5 32.0 24.1 40.4 53.5 65.3 FCF Yield (%) 1.5 1.5 1.9 1.8 2.1 2.6
Other Exp to Sales (%) 17.1 10.3 7.9 11.2 11.9 11.9
EBITDA 67.3 80.4 104.6 113.0 138.6 170.4 Solvency Ratio (X)
Margin (%) 23.3 25.9 34.2 31.3 30.7 30.9 Total Debt to Equity 0.0 0.0 0.1 0.0 0.0 0.0
YoY Growth (%) 19.5 30.0 8.1 22.7 22.9 Net Debt to Equity (0.7) (0.6) (0.6) (0.8) (0.8) (0.8)
Depreciation & Amortization 2.8 6.7 6.9 8.1 9.6 11.4 Net Debt to EBITDA (2.9) (2.8) (2.4) (7.0) (6.2) (5.5)
EBIT 64.6 73.8 97.7 104.9 129.0 159.0
Margin (%) 22.3 23.8 31.9 29.1 28.6 28.9 Return Ratios (%)
YoY Growth (%) 14.3 32.4 7.4 23.0 23.2 Return on Equity 23.5 20.9 20.9 9.2 11.4 12.1
Other Income 10.8 19.3 20.8 16.2 37.1 40.7 Return on Capital Employed 20.2 17.1 16.7 8.1 8.9 9.6
Finance Cost 0.2 2.9 2.6 2.3 0.6 0.0 Return on Invested Capital 88.9 58.7 51.1 48.8 50.6 53.5
Interest Coverage (X) 430.3 25.5 37.4 46.3 226.0 NA
Exceptional Item 0.0 0.0 0.0 0.0 0.0 0.0 Working Capital Ratios
PBT 75.2 90.2 115.9 118.9 165.6 199.7 Payable Days (Nos) 8 4 4 4 4 4
Margin (%) 26.0 29.1 37.9 32.9 36.7 36.2 Inventory Days (Nos) 0 0 0 0 0 0
YoY Growth (%) 20.0 28.5 2.6 39.2 20.6 Receivable Days (Nos) 64 62 73 73 74 73
Tax Expense 12.2 17.4 24.5 26.2 38.9 50.3 Net Working Capital Days (Nos) 56 59 69 69 70 69
Tax Rate (%) 16.3 19.2 21.1 22.0 23.5 25.2 Net Working Capital to Sales (%) 15.3 16.0 18.8 18.9 19.2 18.9
PAT 62.9 72.9 91.5 92.8 126.7 149.4
Margin (%) 21.8 23.5 29.9 25.7 28.1 27.1 Valuation (X)
YoY Growth (%) 15.8 25.5 1.4 36.5 18.0 P/E 61.9 53.5 42.6 42.0 30.8 26.1
Min Int/Sh of Assoc 0.0 0.0 0.0 0.0 0.0 0.0 P/BV 14.5 11.2 8.9 3.9 3.5 3.1
Net Profit 62.9 72.9 91.5 92.8 126.7 149.4 EV/EBITDA 55.0 45.7 34.9 27.5 21.9 17.3
Margin (%) 21.8 23.5 29.9 25.7 28.1 27.1 EV/Sales 12.8 11.8 11.9 8.6 6.7 5.4
YoY Growth (%) 15.8 25.5 1.4 36.5 18.0
Cash Flow Statement
Balance Sheet PBT 75.2 90.2 115.9 118.9 165.6 199.7
Share Capital 0.8 0.8 0.8 19.8 19.8 19.8 Adjustments (8.2) (4.4) 6.2 13.5 15.5 17.2
Total Reserves 267.0 347.1 437.0 984.8 1,092.4 1,219.4 Change in Working Capital 4.4 (5.4) (7.8) (10.8) (18.3) (17.6)
Shareholders Fund 267.8 347.9 437.8 1,004.5 1,112.2 1,239.2 Less: Tax Paid (12.2) (17.4) (24.5) (26.2) (38.9) (50.3)
Long Term Borrowings 0.0 0.0 22.6 7.6 0.0 0.0 Cash Flow from Operations 59.1 63.0 89.9 95.5 123.8 149.0
Deferred Tax Assets / Liabilities (3.5) (31.7) (29.8) (29.8) (29.8) (29.8) Net Capital Expenditure (1.6) (3.3) (1.8) (8.0) (9.8) (11.9)
Other Long Term Liabilities 2.1 26.7 23.3 27.5 34.4 42.1 Change in Investments (45.4) (30.4) (43.6) (40.7) (66.7) (73.6)
Long Term Trade Payables 0.0 0.0 0.0 0.0 0.0 0.0 Cash Flow from Investing (47.0) (33.6) (45.4) (48.7) (76.5) (85.5)
Long Term Provisions 2.1 2.9 3.3 3.9 4.9 5.9 Change in Borrowings (0.7) (2.9) 19.7 (15.0) (7.6) 0.0
Total Liabilities 268.5 345.9 457.3 1,013.8 1,121.7 1,257.4 Less: Finance Cost (0.2) (2.9) (2.6) (2.3) (0.6) 0.0
Net Block 4.4 35.4 30.4 30.3 30.5 31.0 Proceeds from Equity 0.1 0.4 0.3 474.0 0.0 0.0
Capital Work in Progress 0.0 0.0 0.0 0.0 0.0 0.0 Buyback of Shares 0.0 0.0 0.0 0.0 0.0 0.0
Intangible assets under development 0.0 0.0 0.0 0.0 0.0 0.0 Dividend Paid 0.0 0.0 0.0 0.0 (19.0) (22.4)
Non Current Investments 0.0 0.0 91.4 107.9 134.9 164.7 Cash flow from Financing (0.8) (5.4) 17.3 456.7 (27.2) (22.4)
Long Term Loans & Advances 32.9 2.9 2.9 3.5 4.3 5.3 Net Cash Flow 11.3 23.9 61.8 503.5 20.1 41.1
Other Non Current Assets 0.0 24.4 0.0 0.0 0.0 0.0 Forex Effect 0.8 4.1 (1.4) 0.0 0.0 0.0
Net Current Assets 231.2 283.1 332.6 872.1 952.0 1,056.4 Opening Balance of Cash 34.8 46.9 75.0 135.1 638.6 658.7
Total Assets 268.5 345.9 457.3 1,013.8 1,121.7 1,257.4 Closing Balance of Cash 46.9 75.0 135.4 638.6 658.7 699.8

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