Fractal Analytics target price: Despite a more than double net profit in Q4, recently listed Fractal Analyst Ltd has seen a downgrade from brokerage firms, within a three-month of listing. During its IPO, Fractal Analytics had generated significant buzz as a premier 'pure-play' enterprise AI company based in India.

Fractal Analytics reported a net 109 per cent surge in the net profit on a year-on-year (YoY) basis to Rs 115.6 crore, while its revenue grew 17 per cent YoY to Rs 886 crore for the quarter ended on March 31, 2026. Its ajusted ebitda margin increased 189 bps to 22 per cent, while  net revenue retention (NRR) stood at 112 per cent for the reported period.

Shares of Fractal Analytics were down nearly 16 per cent from its all time high at Rs 1,119.60 hit on May 12, as of its close at Rs 935.85 on Wednesday. However, the stock rose more than 2 per cent on Thursday to Rs 955.15, commanding a market capitalization close to Rs 16,500 crore.

Fractal’s Q4 performance was mixed, below estimates of 8.3 per cent, while EBITDA margin expanded sharply by 530 bps QoQ. The revenue miss was largely attributable to weakness in the Fractal.ai business, particularly within the TMT vertical, which declined sharply by 14% QoQ, attributed to client-specific issues, said PL Capital.

"The Alpha segment continues to scale with losses steadily narrowing, aided by growing mix of IP-led and license-linked revenues through Asper.ai and Cogentiq. Management remains confident of robust medium-term growth, driven by accelerating enterprise AI adoption which will expand Fractal’s addressable opportunity," it said

The focus is to drive FPP/output/outcome-based constructs 60 per cent of revenue over the next three years. Given Q4FY26 revenue miss and challenges in the TMT segment, we reduce our FY27E/FY28E revenue growth estimates to 16.4 per cent/16.9 per cent  but raise our EBITDA margin estimates to 17 per cent/18 per cent, driven by strong Q4 margin performance," it added but downgraded the stock to 'hold' with a target price of Rs 1,040.

To recall, Fractal Analytics made its stock market debut on February 16, 2026 when the company raise a total of Rs 2,834 crore via IPO, by selling its shares of Rs 900 apeice. The stock is only 6 per cent above its IPO price, while it has gained nearly 30 per cent from its lows at Rs 732.05, hit in March 2026.

Fractals' Q4FY26 performance reinforces confidence in its improving growth-quality and profitability trajectory, driven by strong traction in healthcare, BFSI and IP-led businesses. Margin expansion remained a key highlight, supported by pricing gains, output-based engagements and improving operating leverage, indicating a structurally improving business mix, said Choice Institutional Equities.

Despite temporary weakness in TMT due to client-specific issues, healthy NRR, improving revenue productivity and strong growth in platform-led businesses, such as Asper and Analytics Vidhya reflect robust client mining and increasing monetisation of AI-led offering.

Continued investments in R&D alongside improving margin suggests that it is balancing growth and innovation, positioning it to benefit from rising enterprise AI adoption and platform-led transformation opportunities. We expect revenue, ebit and profit to grow at a CAGR of 21.4 per cent, 44.6 per cent and 46.5 per cent over FY26E–FY29E," it said with a 'buy' and target price of Rs 1,250.