Brokerages Split on Fusion CX IPO as Customer Concentration Raises Concerns

Mixed Brokerage Ratings Highlight Concerns Over Fusion CX IPO

As the Fusion CX IPO opens for subscription, brokerages express varied opinions, particularly focusing on customer concentration risks.

IPO Details and Market Capitalization

Fusion CX, an AI-driven customer experience solutions provider, is set to open its IPO for subscription today. The company has established a price band of ₹275-289 per share for its ₹702 crore offering. At the upper end of this price range, the IPO is expected to result in a post-issue market capitalization exceeding ₹4,170 crore. The three-day public issue will conclude on October 16, following a successful anchor investor bidding that raised ₹315 crore at ₹289 per share.

Brokerage Recommendations: A Divergent View

Brokerages have provided mixed ratings on the Fusion CX IPO, reflecting differing views on its growth potential and risks. SBI Securities has issued a ‘Subscribe’ recommendation, highlighting the increasing adoption of AI-led customer engagement solutions as a driver for long-term growth. They noted that at the upper price band of ₹289, the IPO is valued at a FY26 Restated/Proforma P/E multiple of 24.6x/22.0x, which they consider reasonable relative to peers, especially given the company’s strong return ratios.

However, SBI Securities cautioned that customer concentration and the execution of AI-led initiatives are critical factors to monitor. The company reported impressive revenue, EBITDA, and PAT growth rates of 35.4%, 99.5%, and 116.4%, respectively, over the FY24-FY26 period.

Concerns Over Customer Concentration

On the other hand, Swastika has rated the IPO as ‘Neutral’, pointing out that the valuation is broadly in line with peers, which limits the potential for re-rating. They raised concerns about customer concentration, noting that the largest client accounts for 30.05% of the projected FY26 revenue. This high dependency on a single client could pose risks, especially in a competitive market.

Swastika suggested that while the IPO may not offer substantial short-term gains for listing flippers, it presents a reasonable entry point for long-term investors interested in a high-return, low-debt BPO/KPO player trading under 20x FY26 earnings.

Market Sentiment and Grey Market Premium

In the grey market, Fusion CX shares are currently trading at a moderate premium of approximately 8-9%. As of the latest updates, the shares are priced at ₹314, indicating a grey market premium (GMP) of ₹25 or 8.65%. The IPO allotment is expected to be finalized on October 19, with the listing scheduled for October 22 on both the BSE and NSE.

Key Highlights

• Fusion CX IPO price band set at ₹275-289 per share, aiming to raise ₹702 crore.
• SBI Securities recommends ‘Subscribe’ based on long-term growth potential.
• Swastika rates the IPO as ‘Neutral’, citing high customer concentration risks.
• Grey market premium for Fusion CX shares at approximately 8-9%.
• Final allotment expected on October 19, with listing on October 22.

Investor Note: Investors should weigh the potential growth driven by AI solutions against the risks posed by customer concentration. While the long-term outlook may be promising, careful consideration of these factors is essential before making investment decisions.