Ganesh Komma compares two open IPOs: a lending company with declining profits and rising bad loans, versus Fractal Analytics, a data-analytics firm with strong growth and 100%+ revenue retention. One is a turnaround bet; the other trades at a premium for its SaaS model.
A quick comparison between a finance IPO and Fractal Analytics IPO A finance IPO is the traditional NBFC lending to small businesses to mature and capital intensive business. Fractal analytics it's a pure play AI to data analytics. Regarding SaaS and consulting related It's a high growth technology business. Speaking about the financial health a finance declining profitability and a major red flag is rising NPAs right? Bad loans. This asset quality is deteriorating. It's a big red flag. Practical analytics yes, a strong revenue growth and recently it turned profitable. And the key metric which is your net revenue retention is more than 100%. It shows client satisfaction levels. Talking about the risk AE Finance Asset Quality is deteriorating. The core lending business is seeing increasing defaults which threatens the future earnings which means the NPAs are increasing. Fractal analytics high valuation as well as client concentration. It is trading at a very rich PE also over half of its revenue is dependent on the top 10 claims. Talking about the IPO objective A finance mainly to raise raise capital for lending means they wanted to strengthen their balance sheet Fractal analytics. They want to fund the growth and R D especially for their fractal alpha segment which is also providing an exit to the early investors as well. Talking about the growth story AI finance slow and cyclical growth try to economic cycles and credit risk management. Talking about fractal analytics. Yes, it's a high growth and a structural happening which is riding the global wave of enterprise AI adoption. Investor suitability. AI finance may be for high risk or tolerant investors who can analyze and bet on a turnaround in asset quality. You need a turnaround in the quality of the assets. NPA should be coming low with a very high caution. We need to be there. Fractal analytics is a growth focused investors portfolio stock. If you are comfortable with a higher valuation, high client concentration and you believe in the long term AI thesis, you can be there. And in a quick nutshell, AI finance might be a value trap story with clear operational risks. Whereas Fractal analytics is a high growth high valuation technology bit. They cater to completely different investor appetites. So between these two IPOs which are right now open, what is your thought process and which IPO you are applying and which IPO you are skipping? Do let me know in the comments.
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