Latent View - Muted FY24; Rebound Expected In The Medium Term: Systematix

Systematix Research Report

Latent View Analytics Ltd.’s Q4 FY24 performance was steady but fell short of management’s expectations, due to delays in the closure of couple of large opportunities (deals in $2 million range). The company anticipated 25% revenue growth at the start of FY24 but ended the year with 19% growth due to the challenging macro environment.

For FY25, management expects similar revenue growth as in FY24, alluding to a conservative revenue guidance for FY25, as growth has been strong in the previous years (30%+ in FY22 and FY23 each).

The company hopes to complete the integration of Decision Point Analytics in Q1 FY25, which would add about a month’s revenue to the quarter, with the full quarter revenue likely add from Q2 FY25 onwards. Improved utilization and rationalisation of onsite costs propelled Q4 FY24 Ebitda margin, with the company ending FY24 with 21.2% Ebitda margin.

The company indicated 21-23% Ebitda margin for H1, as Q1 FY25 would include the full impact of wage hikes (8-10% in India, 4-5% onsite) and annual visa costs, with margin likely touching 25% in H2. Even though its recent acquisition, Decision Point Analytics, operates at 30%+ margins, management believes it is unlikely to have a substantial impact on Latent View’s margins, as it is only 1/7th the size of the latter in terms of revenues.

The company estimates the Global Data and Analytics market to expand at 18-20% annually to $332 billion by CY24. We do not have a rating on the stock, which currently trades at 53 times one-year forward multiple as per consensus estimates for FY25 and FY26 EPS.

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