AI And BFSI Expansion Will Unlock Future Potential

Key Takeaways

• Expansion in financial services, new client wins, and sector diversification reduce concentration risk and drive strong, scalable revenue growth.
  
• Strategic investments in AI partnerships, talent, and proprietary solutions position Latent View for margin expansion and higher-value, recurring revenue streams.
  
• Persistent talent retention challenges, modest organic growth, macroeconomic uncertainty, limited efficiency levers, and rising competition threaten both revenue momentum and margin expansion.

Catalysts

Provides business analytics, consulting services, data engineering, generative AI, and digital solutions in India, the United States, Singapore, the United Kingdom, and the Netherlands.

• Latent View is seeing strong growth momentum from new client wins and particularly robust expansion in the Financial Services (BFSI) vertical, as well as an early recovery in consumer goods. This diversification across high-growth sectors positions the company to benefit from increasing digitization and automation by global enterprises, supporting top-line revenue growth and reducing concentration risk.
  
• The company is investing significantly in building partnerships and Centers of Excellence (CoEs) around leading AI and data platforms like Databricks and SAP, enabling it to provide clients with end-to-end analytics and data engineering solutions. This positions Latent View well to capture increasing deal sizes as enterprises accelerate their adoption of data analytics and advanced AI, expanding the company's addressable market and supporting scalable revenue growth.
  
• Latent View is deepening its capabilities in high-demand areas such as generative AI and agentic AI, already securing $6M in confirmed GenAI projects and a strong pipeline of additional deals. This proactive move to capitalize on accelerating adoption of AI technologies across industries should drive both revenue and margin expansion, as clients increasingly look for integrated and advanced analytics solutions.
  
• The Databricks partnership, including joint go-to-market initiatives and inclusion of Latent View's proprietary solutions in Databricks' platform ecosystem, is opening doors to more enterprise-level engagements and larger transformation projects. These developments not only diversify the client base but also increase the potential for higher-value, recurring revenue streams and longer client relationships, positively impacting both revenue visibility and net margins.
  
• Management expects operating leverage benefits from continued revenue growth, even as the company invests in top analytics talent and next-gen platforms. Increased efficiency and premium pricing capability from a strong talent pool and proprietary IP should help offset wage cost pressures seen in the sector, supporting the restoration and potential expansion of net margins over the long term.

Latent View Analytics Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Latent View Analytics's revenue will grow by 17.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 20.3% today to 20.5% in 3 years time.
• Analysts expect earnings to reach ₹3.0 billion (and earnings per share of ₹13.87) by about July 2028, up from ₹1.9 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 47.3x on those 2028 earnings, down from 49.8x today. This future PE is greater than the current PE for the IN Professional Services industry at 31.1x.
• Analysts expect the number of shares outstanding to grow by 0.33% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.79%, as per the Simply Wall St company report.

Latent View Analytics Future Earnings Per Share Growth

Risks

• Sustained high attrition levels (reported at 23%) coupled with above-average wage hikes to retain talent may continue to put pressure on operating margins and increase talent acquisition costs, potentially impacting earnings over the long term.
  
• The company's core (organic) business experienced soft sequential growth (0.3% in rupee terms and 1.6% underlying growth after adjusting for currency); much of recent revenue growth was driven by the Decision Point acquisition, indicating reliance on inorganic expansion and raising concerns about the sustainability of organic revenue momentum if pipeline conversions slow.
  
• Management acknowledges ongoing macroeconomic headwinds, protracted sales cycles, and persistent client caution around new/large-scale project initiations, which could delay revenue recognition and pose downside risk to future revenue growth guidance if these trends continue.
  
• High utilization (82%) and a largely maximized offshore ratio (83%) suggest limited room to further optimize these levers for operational efficiency, which may constrain the company's ability to improve margins via operating leverage, especially amid rising costs for upskilling in GenAI and investments in new Centers of Excellence.
  
• Increased competition is noted in the BFSI and analytics sectors from both large IT/consulting players and specialized analytics firms, and the possibility of clients insourcing analytics or shifting to self-service/AI-augmented analytics tools could result in pricing pressure and lost market share, potentially impacting both revenues and net margins over time.

Valuation

• The analysts have a consensus price target of ₹476.0 for Latent View Analytics based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹14.7 billion, earnings will come to ₹3.0 billion, and it would be trading on a PE ratio of 47.3x, assuming you use a discount rate of 12.8%.
  
• Given the current share price of ₹448.55, the analyst price target of ₹476.0 is 5.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.