IGI Logo

Salient features of the IPO:

* Online travel agency Easy Trip Planners Ltd. (Easy Trip), is planning to raise up to Rs. 5,100mn through an IPO, which opens on 8th Mar. and closes on 10th Mar. 2021. The price band is Rs. 186 - 187 per share.

* The issue is fully an OFS. The company will not receive any fund from the OFS. The objective of the issue is to get benefit of listing the shares on the stock exchanges, which will further enhance its visibility & brand and also provide liquidity for the existing shareholders.

Key competitive strengths:

* One of the leading online travel agencies in India with a customer focused approach, including the option of no-convenience fee

* Consistent track record of financial and operational performance with lean and cost efficient operations

* In-house advanced technology and analytics capabilities

* Wide distribution network supported by a hybrid platform

* Well-recognized brand with a targeted marketing strategy

* Experienced management team with an established track record

Risk and concerns:

* Subdued macro economic environment

* Continued pandemic related air travel restrictions

* Lower commission/compensation by air lines and travel suppliers

* Unfavorable business-mix

* Business seasonality

* Intense competition

Peer comparison and valuation: There are no listed peers in domestic market, having similar operating model. At higher price band of Rs. 187, Easy Trip is demanding a P/E multiple of 58.6x (to its restated FY20 EPS of Rs. 3.2).

Below are a few key observations of the issue: 

* Based on gross booking revenues, the Indian Online Travel Agencies (OTA) market has increased by 20-22% CAGR over FY15-20 to around Rs. 900-910bn in FY20. This rapid growth is mainly driven by a rapid growth in affordable access to internet penetration, growing awareness & comfort with online transactions, competitive prices offered by OTA players and growing network of service providers on OTA platforms. These factors will continue to drive growth in the medium term, with gross booking revenue further growing by 1-2% CAGR over FY20-23 to reach at Rs. 950-960bn in FY23.

* On net basis, the OTA market is expected to increase by a modest rate of 0-2% CAGR during FY20-23 (to Rs. 90.5-92.5bn in FY23) as compared to a CAGR growth of 28-30% over FY15-20. The slower growth is on account of slow revival in international passenger traffic, revival to pre-COVID-19 levels of domestic passenger traffic only in FY23 and decrease in the market size of the hotel industry on account of decline in average room rents.

* According to Crisil, the key players in the OTA market are Clear Trip Pvt. Ltd., MakeMyTrip Ltd., Yatra Online, Inc. and Easy Trip (collectively referred as the key OTAs). Based on the gross booking revenue, the company has consistently grown its market share in the OTA market from 3.1% in FY18 to 4.6% in FY20.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://choicebroking.in/disclaimer

Above views are of the author and not of the website kindly read disclaimer