Brokerage firm Prabhudas Lilladher has initiated coverage on Fractal Analytics with a 'Buy' rating and a price target of Rs 1010. The outlook is supported by robust demand for enterprise AI and growth in the healthcare vertical. However, investors may monitor the company’s ability to stabilize its TMT segment and manage margin pressure following a soft start to the fiscal year.
Prabhudas Lilladher has initiated coverage on Fractal Analytics with a 'Buy' rating, setting a target price of Rs 1010 for the stock. This outlook comes as the company works to scale its enterprise AI services amid a changing demand environment. The brokerage's positive stance is driven by strong client retention metrics and a shift toward high-growth sectors, though it also considers the recent hurdles the company has faced in certain parts of its business.
The company, which listed on the NSE and BSE in February 2026, reported pressure on revenue and operating margins in the first quarter of the fiscal year. This was largely due to weakness in its Technology, Media, and Telecom (TMT) vertical. However, analysts believe that this segment is now showing signs of stabilization. A key factor supporting the brokerage's outlook is the 59% year-over-year growth in the healthcare and life sciences segment, which now makes up about 19% of the company's total revenue.
To maintain its competitive edge, Fractal Analytics is pushing the use of its Cogentiq platform, which is designed to automate routine tasks and improve delivery consistency. The company also recently won a multi-year contract worth over USD 17 million from a US-based healthcare client, suggesting sustained interest in its AI offerings. Management is focused on improving operational efficiency, which the brokerage expects will support margin recovery in the second half of fiscal year 2027.
Despite the optimistic target, the company faces distinct challenges. The valuation of the stock is currently at a premium compared to some peers, which investors may watch closely. Furthermore, wage costs and continued investment in research and development could create short-term margin volatility. The company also faces execution risks, as it needs to successfully commercialize its newer product offerings to drive profitability. Moving forward, the key monitorables for investors will be the pace of margin recovery and whether the TMT vertical can show a sustained improvement in performance.