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Below are Views On Easy Trip Planners IPO By Mr. Yash Gupta Equity Research Associate, Angel Broking Ltd   

Easemytrip.com ranked second among the Key Online Travel Agencies in India in terms of booking volume in the nine months ended December 31, 2020, and third among the Key Online Travel Agencies in India in terms of gross booking revenues in Fiscal 2020. It offers a comprehensive range of travel-related products and services for end-to-end travel solutions, including airline tickets, hotels, and holiday packages, rail tickets, bus tickets, and taxis as well as ancillary value-added services.

Key Positives: (a) One of the leading online travel agencies in India with a customer-focused approach, including the option of a no-convenience fee. (b) Good track record of financial and operational performance, even in the time of lockdown the company demonstrated its strength and was able to report revenue of 50 crores in 9MFY2021. (c) Company business has shown robust recovery in Q3FY21 and reaches normalcy of 70%. (d) A very strong balance sheet with cash & bank balance of 140 Crores along with zero debt.

Investment concerns: (a) Competition will always remain a concern for this industry as well as companies need to compete with Paytm in Air tickets booking and aggregators like OYO in hotel business etc. (b) COVID-19 pandemic has had and is expected to have, a material adverse effect on the travel industry along fear of the second wave of covid cases in India may adversely affect the company performance. (c) Any reduction in commissions or fees by our travel suppliers may adversely affect the business operations. (d) Company revenue majorly depends on the Air tickets business as 94% of revenue comes from it in FY2020.

Outlook & Valuation: based on FY2020 the IPO is priced at a PE of 58x at the upper end of the price band along with a very good ROE of 34% and ROCE of 35%. The company has the potential to grow exponentially in near future. Looking at the company performance in FY 2020 and strong balance sheet is given that we have certain concerns regarding competition in this business we are assigning a “SUBSCRIBE” recommendation to the issue.

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