EaseMyTrip IPO | 10 Things You Must Know

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EaseMyTrip IPO | 10 Things You Must Know

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The IPO bonanza doesn’t seem to be ending soon. The bootstrapped online travel aggregator, EaseMyTrip, making its way to the public markets. The ₹510 crore IPO of EaseMyTrip opened today (Mar 08, 2021) for public subscription.

Let's talk about 10 things you must know before subscribing.

Also Read : How to Apply for IPO online (step by step guide)

1) About:

Incorporated in 2008, Easy Trip Planners Ltd is the second largest online travel agency in India in terms of gross revenue. The online travel agency offers a range of travel products and services and end-to-end travel solutions including airline tickets, rail tickets, bus tickets, taxis, holiday packages, hotels, and other value-added services i.e. travel insurance, visa processing, etc.

Easy Trip offers a range of online traveling services through its website and Ease My Trip android and iOS mobile app. The company follows B2B2C (business to business to customer), B2C (business to customer), and B2E (business to enterprise) distribution channels to offers its services.

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2) IPO Details:

The company has not seen any external equity infusion since inception. The 510 Cr. IPO is an offer for sale by the existing promoters for the sole purpose of listing on stock exchanges. 75% of the net issue shall be allocated on a proportionate basis to qualified institutional buyers, while rest 15% and 10% is reserved for non-institutional bidders and retail investors, respectively.

IPO Date: Mar 08, 2021 - Mar 10, 2021
Face Value: ₹10 per equity share
IPO Price: ₹186 to ₹187 per equity share
Market Lot: 80 Shares
Listing At: BSE, NSE
Finalisation of Basis of Allotment: Mar 16, 2021
Initiation of Refunds: Mar 17, 2021
Credit of Shares to Demat Acct: Mar 18, 2021
IPO Shares Listing Date: Mar 19, 2021

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3) Business

The company provides customers an option to buy tickets without a convenience fee, ensuring a repeat transaction rate of 85.95% between April 1, 2017 and Dec. 31, 2020, according to its prospectus. The company had 10.32 million registered customers as of December.

Source: Bloombergquint
Source: Bloombergquint

Easy Trip allows customers to buy air tickets of two full-service and six low-cost airlines operating in India, and more than 400 full-service and nine low-cost airlines operating in other countries. 75.25% of its air ticket revenue comes from the domestic market.

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4) Financials:

  • The company derived 94% of its revenues from sale of air tickets and 5.40% from hotel packages in FY20. Airlines accounted for entire revenue for the nine month ended December 2020.
  • The company booked a negative revenue from the hotel industry in April-December as discounts exceeded commission received during this period.
  • The company is the only player among the online travel agencies to record a positive return on equity and is profitable.
  • In the third quarter ended December, Easy Trip recovered 70% of the booking volumes over a year earlier, MakeMyTrip achieved 46% and Yatra stood at 44%.
Source: Bloombergquint

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5. Valuations and Key highlights:

The issue that's available at P/E of 49x (annualised basis on FY21E EPS of Rs 3.8) is fairly priced.

  • According to the CRISIL Report, EaseMyTrip.com was the only profitable online travel agency among other key agencies in India in the fiscal years 2018 to 2020. The other key players in India include Cleartrip, MakeMyTrip and Yatra Online.
  • EaseMyTrip.com is the second largest online travel agency in India in terms of booking volume in the nine months ended December 31.
  • The company has been consistently profitable over the past three years, with its profit growing from ₹3 lakh in 2018 to 32.9 crores in 2020.
  • In terms of annual growth in operating revenues during FY 2018 to FY2020, Easy Trip Planners Limited recorded the fastest growth at a compound annual growth rate (CAGR) of approximately 19%, among key online travel agencies in India like MakeMyTrip Limited and Yatra Online.
  • Indian OTA industry is expected to grow at a CAGR of 1% to 2% from fiscal 2020 to fiscal 2023 in terms of gross booking revenues.

6) Peer comparison:

Source: Bloombergquint

7) Grey Market premium:

(As on Mar 08, 2021) The grey market premium of EaseMyTrip shares is at 160 Rs. or 86% up from the IPO price.

8) Objective:

Easy Trip Planners said the objective of the issue is to get benefit of listing the shares on the stock exchanges, which will further enhance its visibility and brand and also provide liquidity for the existing shareholders.

9) Pros:

  • One of the leading online travel agencies in India.
  • Strong brand name and distribution network.
  • In-house advanced technology infrastructure.
  • Consistent financial track record and operational performance.
  • As of November 2019, the firm has served customers with more than 400 domestic and international airlines, and 1,096,400 hotels. As of March 2019, it had 49,494 registered travel agents across major cities of India.

10)  Cons:

  • Pandemic has had a significant impact on the company's gross booking volumes and gross booking revenues as the government restrictions have impacted travel and tourism industry.
  • The travel industry is particularly sensitive to reductions in personal and business related discretionary travel and spending levels.
  • Dependent on airline ticketing business for significant percentage of its revenue. In 2019-20 and the 9MFY21, gross booking volumes for airline tickets comprised 94.43% and 92.53%, respectively, of its total gross booking volumes while gross booking revenues for airline tickets were 97.83% and 98.28%, respectively, for the same period.
  • Highly competitive travel industry. The key players in the domestic online travel agency market include Cleartrip Pvt., MakeMytrip Ltd. and Yatra Online Inc.
  • Risk of reduction in commissions by the airlines and GDS service providers.
  • Limited experience in operating newer segments—hotels and holiday packages, rail ticketing reservations, etc.

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Data source: Bloombergquint, LiveMint, moneycontrol, chittorgarh

Akshay Seth
Research Analyst (SEBI Regd.)
Linkedin | akshay.equity@gmail.com

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