The Yatra Online IPO, which opened for subscription on Friday, garnered positive recommendations from most analysts. The IPO aims to raise Rs 775 crore, consisting of a fresh equity issue of Rs 602 crore and an offer for sale (OFS) of up to 1.21 crore shares. Prior to the IPO, the company raised Rs 62 crore through a pre-IPO placement via a rights issue.
Yatra Online provides a wide range of travel and travel-related products and services, serving both domestic and international travelers. The company offers tools and information to help customers research, plan, book, and purchase travel products and services within India and abroad.
With the tourism industry’s growth, the company anticipates a faster expansion of its online travel market share (OTA) compared to competitors with captive operations, which is expected to enhance profitability.
The Indian travel industry is forecasted to grow at a 9-11% Compound Annual Growth Rate (CAGR) during the FY23-28 period, reaching Rs 4.54 lakh crore in FY28. This growth is driven by infrastructure development in tourism, rising income levels leading to increased discretionary spending on travel, and more frequent travel for business and leisure.
Yatra Online has demonstrated profitability in FY23 and has a history of strong revenue growth. Analysts hold a positive outlook for the company from a medium to long-term perspective, recommending a “SUBSCRIBE” rating for the IPO.
The IPO price band is set at Rs 135-142, allowing investors to bid for a minimum of 105 equity shares, with multiples thereafter.
At the upper price band, the company is valued at a P/E ratio of 219x and a market cap/sales ratio of 5.8x post the issuance of equity shares, in comparison to its peer, Easy Trip Planners, which has a P/E ratio of 15.7x on an FY23 basis.
Analysts anticipate business improvement for Yatra, citing industry tailwinds, brand recognition, and business scalability, which they expect to result in an expansion of EBITDA margin.
Approximately 75% of the IPO offering is reserved for qualified institutional buyers, 15% for non-institutional investors, and 10% for retail investors.
The proceeds from the fresh issue will be allocated towards strategic investments, acquisitions, inorganic growth, customer acquisition and retention, technology, and other organic growth initiatives, along with general corporate purposes.
For the fiscal year ending in March 2023, the company reported a YoY revenue growth of 81%, reaching Rs 397 crore, with a profit of Rs 7.6 crore, compared to a loss of Rs 30.7 crore in the previous year.
SBI Capital Markets, DAM Capital Advisors, and IIFL Securities are the book-running lead managers, and Link Intime India is the registrar for the offer. The equity shares are intended to be listed on the BSE and NSE.
