India’s downcast IPO market, battered by the lackluster listing of payments giant One97 Communications, touted as India’s biggest-ever public issue, revived last week when the little-known Latent View Analytics made a sizzling stock market debut.
Latent View’s modest $80 million (6 billion rupees) IPO was oversubscribed 338 times. Shares of the Chennai data analytics firm listed at a 160% premium to its issue price of 197 rupees and are up a further 226% since. One97 Communications fell 9% on listing and has declined 9%.
For all its mighty brand power-One97 Communications owns popular payments app Paytm-the payments giant can’t match up to the data analyzer in one crucial aspect: Latent View is profitable.
The bootstrapped firm recorded a net profit of $14 million (914.6 million rupees) on revenue of $45 million (3.3 billion rupees) in fiscal 2021, and a net profit of $10 million (728.4 million rupees) on revenue of $44 million (3.3 billion rupees) in fiscal 2020.
“We’ve never paid out a dividend,” says Venkatraman Viswanathan, 51, Latent View’s low-profile cofounder and chairman, speaking to Forbes from San Francisco, where he was on a business trip. “All the profits have been re-invested into the business.”
Investors have applauded that approach, making Viswanathan a billionaire. His 60% stake is worth $1.01 billion. Together with his wife and fellow cofounder Pramadwathi Jandhyala’s 8% stake, the couple are worth a combined $1.2 billion
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Latent View offers data analytics, predictive analytics and data engineering and digital solutions to its customers, most of whom are based in the U.S., a market that contributes to 90% of the firm’s revenue. Viswanathan is looking to expand more into Europe through his offices in Germany, the Netherlands and the U.K. The IPO proceeds he explains will be used for expanding the client base and offerings through internal growth as well as acquisitions.
The firm is also hoping to take a bigger bite out of the $174 billion (fiscal 2020) global data analytics market, which is expected to grow at an 18% compounded rate, touching $333 billion by fiscal 2024, according to analysts at Investmentz, a Mumbai research and advisory portal.
“The reason we did the IPO was to do justice to this market opportunity,” says Viswanathan. “We are too small in the grand scheme of things. We want to take bolder risks.”
The entrepreneur and his wife cofounded the company in January 2006. A third founder Ramesh Hariharan–who is now the chief technology officer—joined three months later. A civil engineer from IIT Madras with a post graduate diploma in management from the premier Indian Institute of Management (IIM) in Kolkata, Viswanathan had worked in tech and sales at IT giant Cognizant and credit ratings firm ICRA. His wife, who has a computer science engineering degree from BITS Pilani and a post graduate diploma in management from IIM Kolkata, had worked at IBM and Ford in the finance area. She is currently an executive director on the company’s board. (The two of them met while at IIM Kolkata and got married in 1997.)
The initial years of Latent View from 2006 to 2010 were slow as they sought to “bring to life the hidden insights in a business” through data analytics. The concept itself was a difficult sell because Indian companies didn’t quite warm up to idea of analytics.“It’s one thing to sell under the Cognizant banner and quite another to sell as Latent View,” says Viswanathan.
The firm picked up after it secured U.S clients and later clients in Europe. Viswanathan outlines his sales strategy. “We sell only to the largest companies in the world thereby getting good margins,” he says. “We also don’t sell to the CIOS; we sell to the heads of marketing and CRM (customer relationship management) and supply chain.”
Viswanathan is focused on keeping the operations frugal. He says that while the company has $55 million in cash, the IPO was necessary to gain visibility and attract talent. His goal is to create a war chest of $675 million over the next five years. “We want to replicate all that we have done in the United States in European markets as well.”
Viswanathan says his new-found billionaire status hasn’t changed his life and he’s aware that these are paper riches. “Who knows where the valuations will be three months or six months from now?”
While he isn’t looking to upgrade his 12-year-old Honda car yet, he’s a self-confessed gadget geek who loves trying the latest tech products and wearables. “There’s one that studies my breathing patterns to see if I am stressed,” he says. “There is another that gives me a buzz on my shoulder when I slouch.”
And when he does find the time, he’s off birding or tiger watching. Mostly, he’s focused on building on what he calls a GOPGC–a good, old-fashioned, profitable growth company.”