Fractal Analytics IPO Gets Sebi Nod: Know Key Details About India’s First AI Public Issue From DRHP

Fractal Analytics IPO: Artificial Intelligence is a theme which has ruled conversations in 2024 and 2025. AI stocks have traded with significant momentum since 2023, despite recent dips. Shares of companies such as Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla are considered aspirational as they provide investors an opportunity to participate in the AI theme. However, no pure-play AI stocks have been listed on the Indian exchanges so far. This is likely to change soon, as the market regulator has green-lit the public issue of Fractal Analytics Ltd.

On November 25, the capital market regulator green-lit the public issue of Fractal Analytics Ltd. Ahead of the announcement of the key dates and price band, here’s a look at some of the key details of the public issue from the draft red herring prospectus (DRHP):

Fractal Analytics IPO: Issue Size

Fractal Analytics Ltd. plans to raise Rs 4,900 crore via its public issue, which consists of a fresh issuance of shares worth Rs 1,279.3 crores and an offer-for-sale component worth Rs 3,620.7 crore. The price band and key dates for the enterprise-AI company’s public issue have not been announced yet.

Fractal Analytics IPO: Selling Shareholders

Several existing shareholders of Fractal Analytics Ltd will sell their stake in the company as part of the offer-for-sale. According to the DRHP, the major sellers who will participate in the OFS include investment company Quinag Bidco Ltd, Singapore-based investment company TPG Fett Holdings Pte. Ltd and individual shareholders such as Satya Kumari Remala, Rao Venkateswara Remala and GLM Family Trust.

Fractal Analytics IPO: Reservation

Fractal Analytics Ltd plans to set aside a significant portion of the offer size for qualified institutional buyers (QIBs), up to 10 per cent of the issue size has been set aside for retail investors, and 15 per cent of the issue will be reserved for non-institutional investors.

Fractal Analytics: Key Financials

Fractal Analytics Ltd's total income for FY25 stood at Rs 2816.2 crore, increasing by over 25 per cent from Rs 2241.9 crore in FY24. The enterprise AI company turned profitable in FY25 as the company reported a net profit of Rs 220.6 crore, in the preceding fiscal, the company’s net loss stood at Rs 54.7 crore. The net worth of the company grew by 25 per cent to Rs 1748.3 crore in FY25 from Rs 1397 crore in the preceding fiscal.

Fractal Analytics: Key Competitors

Fractal Analytics Ltd has no listed competitors in India which operate on a similar business model.

Fractal Analytics: Business Model

Fractal Analytics Ltd is an artificial intelligence company which caters to large global enterprises by providing data-driven insights and assisting them in their decision-making through end-to-end AI solutions. The company mentioned in its DRHP that it builds AI-based solutions for its clients by leveraging its technical, domain and functional capabilities. The company lists industries such as consumer products and grocery retail (CPGR), technology, media and telecommunications (TMT), healthcare and life sciences (HLS) and banking, financial services and insurance (BFSI) as its focus industries. The company’s business is divided into two verticals: Fractal.ai (comprising AI services and AI products primarily hosted on Cogentiq) and Fractal Alpha (comprising AI businesses). As of fiscal year 2025, the majority of its revenue (about 97 per cent) came from offering its clients AI-based analytical services.

Fractal Analytics: Key Strengths and Risks

Some of the key strengths mentioned in Fractal Analytics’s DRHP include:

Fractal Analytics IPO: Key Strengths

• Fractal Analytics claims to have long-standing and growing relationships with global clients, contributing to its revenue base. As per the DRHP, the company’s clients include Citi, Costco, Franklin Templeton, Mars, Mondelez, Nationwide, Nestle, Philips, among others.

• The company claims to have an integrated technical, domain and functional expertise along with an operational history of 25 years, which it uses to design, build and deliver end-to-end AI solutions for its clients.

• The company claims to have a track record of identifying emerging trends in AI and developing new AI solutions, evidenced by investments in R&D. As of FY25, the company invested Rs 143.6 crore in research and development investments or 5.2 per cent of its revenue.

Fractal Analytics IPO: Key Risks

Some of the key risks mentioned in Fractal Analytics' DRHP include:

• The company disclosed in its RHP that it derived 53.8 per cent of its revenue from operations in its Fractal.ai segment from its top-10 clients, of which one client contributed 9.8 per cent of the total revenue in Fiscal 2025. The company added that the inability to maintain or expand its relationships with its existing client base or add new clients can negatively affect the financial condition, cash flows and results of operations.

• Fractal Analytics Ltd derived 65.2 per cent of its revenue from operations in the United States for Fiscal 2025. The company added that its global operations involve challenges and risks that can increase its expenses and adversely affect its results of operations.

• The AI solutions provider stated that exchange rate fluctuations can adversely affect its results of operations, as a significant portion of its revenues is denominated in foreign currencies.

Fractal Analytics IPO: Objective

Fractal Analytics Ltd plans to use the proceeds from the public issue for investment in its subsidiary, Fractal USA, and for prepayment of its borrowings. The funds will also be used for purchasing laptops and setting up new office premises in India, along with investment in research and development, and sales and marketing under its vertical Fractal Alpha. The company will also use a part of the proceeds for funding inorganic growth through unidentified acquisitions and other strategic initiatives, and general corporate purposes.