Synopsis :- The brokerage sees 43% upside driven by strong revenue growth, high client retention, margin expansion, AI-led enterprise positioning, improving unit economics, and attractive valuations compared to long-term earnings potential.
A Recently listed company that is a global enterprise AI and analytics firm that provides AI Solution, is in the spotlight after receiving Buy rating with target price by Prabhudas Lilladher.
With the market capitalization of Rs. 15,192.26 crore, the shares of Fractal Analytics Limited closed at Rs. 883.45 per equity share, up by 4.28 percent from its previous day’s close price of Rs. 847.15 per equity share.
Consistent Growth Backed by Strong Client Metrics
Fractal has delivered consistent performance over the past decade, reporting approximately 27 percent CAGR USD revenue growth, along with robust client retention of around 98 percent . Around 80 percent of revenue is derived from existing accounts, supported by ~98 percent annuity-led revenue and a strong Net Promoter Score (NPS) of ~77.
Cross-sell and up-sell strategies are evident in net revenue retention (NRR) of 120 percent +, clients graduating into the USD 20 million+ revenue bucket, and 20 percent + USD revenue CAGR (FY23–H1FY26) among top accounts. The company’s robust sales engine of approximately 150 members continues to drive account mining, with the USD 5–10 million client cohort doubling over the past two years.
Margin Expansion and Improving Unit Economics
A key pillar of the bullish thesis is margin improvement. Fractal is targeting EBITDAM expansion from ~13 percent in FY25 to 20 percent +. The brokerage expects the decoupling of revenue and headcount growth, narrowing ESOP costs, and higher contribution from high-margin SaaS-based revenue under Fractal Alpha to support profitability.
While commercialization of more products under Alpha may increase R&D and sales & marketing expenses beyond a certain threshold, Fractal Alpha is expected to break even by FY27E, which could enhance consolidated margins over time. The brokerage estimates USD revenue / INR EBITDA / INR PAT CAGR at 19.3 percent / 30.9 percent /44.5 percent respectively over FY26E–FY28E.
Strong Positioning in High-Growth AI Verticals
Fractal operates in the analytics space, enabling enterprise decision-making through AI tools and services. Its engagements are centered on upstream AI architecture, combining data engineering, enterprise-grade customized reasoning models, and agentic AI.
Approximately 40 percent of revenue comes from revenue growth management (RGM) and optimization practices, while over 50 percent exposure is to Healthcare & Life Sciences (HLS) and Consumer Packaged Goods (CPG), aligning the company with high-growth industry segments and AI-driven functions.
Sustained Momentum Despite Segment Drag
Excluding Neal Analytics, Fractal reported revenue growth of ~20 percent YoY (in INR terms) in FY24. Despite certain drags, Fractal.ai delivered a USD revenue CAGR of ~16 percent over FY23–FY25, with Healthcare & Life Sciences (HLS) and Technology, Media & Telecom (TMT) contributing above consolidated-level growth.
Overall, with strong client metrics, improving profitability, structural exposure to AI-led enterprise transformation, and attractive valuations at ~15.1x FY28E EV/EBITDA versus the 22x target multiple, Prabhudas Lilladher sees significant re-rating potential—translating into a projected 49 percent upside from current levels.
Financials
The company reported steady balance sheet growth, with total assets increasing to Rs. 2,965.40 crore as of September 30, 2025, from Rs. 2,857.60 crore in March 2025. Net worth rose to Rs. 1,957.50 crore, backed by reserves of Rs. 1,937.10 crore, while total borrowings stood at Rs. 274.60 crore, reflecting a relatively comfortable leverage position.
In terms of performance, total income for the latest period was Rs. 1,594.30 crore, with a profit after tax of Rs. 70.90 crore. EBITDA stood at Rs. 185.60 crore, resulting in an EBITDA margin of 11.90 percent. The return on net worth was 3.6 percent, and the PAT margin was 4.50 percent, indicating moderate profitability levels.
Fractal Analytics, founded in March 2000, is a global enterprise AI and analytics firm that helps large organisations make data-driven decisions through scalable AI solutions. As of September 30, 2025, it operates through two key segments: Fractal.ai, which delivers AI services and products via its Cogentiq platform with low-code, governance, and security capabilities, and Fractal Alpha, which focuses on independent AI ventures in high-growth markets. The company serves leading global clients such as Citi, Costco, Franklin Templeton, Mars, Mondelez, Nestle, Philips, and Nationwide, reflecting its strong global credibility and leadership in the expanding AI market.
With a price range of Rs. 857 to Rs. 900 per equity share, Fractal Analytics Limited launched its initial public offering (IPO). The subscription period was open from February 9 to February 11, 2026. On February 16, 2025, the company’s shares went public on the BSE and NSE platform, initially trading for Rs. 876 per share.
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