Latent View shares crack nearly 10% after sequential dip in Q4 margins – what should investors do?

Latent View Analytics shares suffered steep losses on Wednesday a day after the data analytics company reported a weak set of Q4 results. The Latent View stock fell almost 10 per cent to Rs 337.1 apiece at the weakest level of the day on BSE, coming within Rs 32 of its 52-week low of Rs 305 apiece (June 20).

Latent View Analytics' operating profit declined 38 per cent on a quarter-on-quarter basis to Rs 34.2 crore, and EBIT fell 31.2 per cent, according to a regulatory filing. Its margin — a key measure of profitability for a business — shrank to 27.9 per cent from 19.8 per cent sequentially.

The company said its revenue and profit margin for the full year were its highest ever. 

“Our revenue grew at 32 per cent on a year-on-year basis for FY23. The growth was broad-based across technology, financial services and CPG (segments),” said Rajan Sethuraman, CEO, Latent View Analytics. 

“Cash and Investments (excluding proceeds from the IPO) as of March 31, 2023, stood at Rs 824.7 crore,” he said.

Latent View shares in a free fall: What should investors do? 

TradeSwift Director Sandeep Jain told Zee Business Latent View shares appear to be facing the double whammy of expensive valuations and a weak margin. He suggests investors to hold the stock for a likely bounceback given its correction from Rs 700 to Rs 340-odd levels.

The stock trades at a price-to-earnings multiple of 32 times basis its estimated earnings for the year ending March 2025, according to Anand Rathi Research.

Reflecting its 23 per cent revenue CAGR over FY23-FY25, and the expectation that it will achieve scale benefits in the coming years, and it should command a P/E of 40x FY25e EPS, according to the brokerage.

“The company is in a high growth stage and is far from a mature stage. It is likely to continue so beyond the explicit forecast period. Our target multiple of 40x reflects the scale-up opportunities afforded to the company,” said Anand Rathi Research, which has a ‘buy’ call on a stock with a target price of Rs 455 per share.

Latent View Analytics is a global digital analytics consulting and solutions firm that enables companies to excel in the digital world by harnessing the power of data and analytics.

Latent View shares: Historical performance

Latent View shares have more than halved in value since their secondary market debut in November 2021. The counter is down over 15 per cent in the last one year, a period in which the Nifty index has risen about 12 per cent.

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