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Founded in 2013, Tracxn Technologies is database platform for private companies, started by ex-PE employees, Neha Singh (ex-Sequoia) and Abhishek Goyal (ex-Accel), backed by Flipkart Founders, Mr. Ratan Tata, etc.
It has profiled ~20 lakh companies (vs ~10 lakh as on FY20). IB & PE investors are the major customers of their service. Once a company is profiled, then the software uses web-crawling across a wide range of online data to update. Incremental human effort is limited to verifying the broad-level accuracy. Hence, the business model should yield operating leverage as more customers use the existing data. Overall customer accounts have grown at ~23% CAGR over FY20-23, from 640 accounts in FY20 to 1190 today. At the same time, Tracxn has been able to take ~8-10% price hikes pa over this period, resulting in revenue CAGR of 30%. Things have slowed down recently as private market has been impacted, and it has started to get partially built in stock price post the recent correction.
At the current scale, business is Rs 80 crore ARR, largely breaking even at current scale. Ignoring the near term growth slowdown, fair case would be to build 20% revenue growth (mix of price hikes & account growth) over FY23-26, yielding Rs 140 crore revenue. Assuming 10% cost inflation, it would imply 55% op margin on incremental sales, yielding FY26 EBIDTA of Rs 30 crore. At Rs 600 crore Enterprise Value (CMP Rs 65), it would imply 20x FY26 EV/EBIDTA or 30x FY26 PE. Medium term risk-reward is balanced now, hence a good name to “gradually” accumulate in the current private capital market weakness.