Fractal Analytics (FRACTAL IN) – Company Initiation – Scaling AI-Led analytics, improving unit economics – BUY
Published on 16 Feb 2026
We initiate coverage on Fractal with ‘BUY’ rating and TP of Rs1,260, valuing at 22x EV/EBITDA FY28E, with potential upside of 40%. Fractal operates in the analytics space that powers decision making process for large enterprises by leveraging AI tools and services. Fractal has demonstrated consistent and steady revenue performance over the past decade (~27% CAGR USD growth) along with robust client retention (~98%), a strong sales engine and R&D-led innovations. The cross-sell and up-selling efforts are clearly visible in net revenue retention (NRR) of 120%+, clients graduating to USD20mn+ bucket, and 20%+ USD revenue CAGR (FY23-H1FY26) for top accounts. Fractal is now focusing on EBITDAM expansion from ~13% in FY25 to 20%+. We believe the decoupling of revenue and headcount growth, narrowing of ESOP costs, and improvement in high-margin SaaS-based revenue (Fractal Alpha) would help increase EBITDAM going forward. However, as more products get commercialized (under Alpha), R&D and S&M activities could weigh on margins beyond certain threshold. We estimate USD revenue/INR EBITDA/INR PAT CAGR at 19.3%/30.9%/44.5% over FY26E-28E. Valuation remains inexpensive (~15.1x EV/EBITDA FY28E).
