Easy Trip Planners ipo: Easy Trip Planners IPO to open tomorrow. Should you subscribe?
Coming from a Covid-hit sector, can this IPO deliver?
Analysts are largely mixed on the issue. While some see the company’s positioning among key players and its scalable business as key considerations, others aren’t too excited about the fact that the company had in the past made investments in unrelated businesses. Besides, they say that competition in the industry is fierce and believe it would take the travel industry some time to recover from Covid blues.
Nonetheless, investors are liking the IPO, as suggested by a 90 per cent premium the stock was commanding in the grey market.
Easy Trip Planners was ranked second among key online travel agencies in India in terms of booking volume in the nine-month period ended December 31, 2020. In terms of net profit margin, the travel company was the only profitable online travel agency among key online travel agencies in India in FY18-20.
The IPO is valued at 58.7 times FY20 earnings on a trailing basis, and 49 times on an annualised FY21 basis. Besides, it is valued at 15.2 times the book value, which Reliance Securities said is aggressively priced.
The brokerage said that the travelling industry is unlikely to recover significantly in FY22. The company’s involvement in unrelated businesses like coal, movies and share trading — even as Easy Trip discontinued them in FY18 — still raises apprehension.
“Besides, online travel agency operation is quite fragmented with low entry barriers, and hence the company is prone for higher competition, which may impact its margins, going forward,” it said.
Choice Broking said that the company’s financial performance on operating level is inconsistent, considering its market positioning among key online travel agencies (OTAs), but feels that the company has a scalable business model, business growth in excess of the sector, and cash generation ability. This brokerage has a ‘subscribe’ rating on the issue.
The company has access to 400 international and domestic flights, and around 11 lakh hotels in India and abroad. The travel agency has 96 lakh registered customers and a network of close to 60,000 travel agents.
Nearly 90 per cent of the company’s revenue is from the sale of air tickets while the remaining is from bookings of hotel rooms. It has tie-ups with most of the domestic airlines and 23 hotel aggregators. Due to these tie-ups, the company provides attractive deals to travellers and does not charge a convenience fee from customers.
Angel Broking said that despite Covid, the company was able to report revenue of Rs 50 crore in the April-December period, and positive earnings per share of Rs 2.86.
“Competition will always remain a concern for this industry as well as companies, Easy Trip Planners need to compete with Paytm in Air tickets booking and aggregators like OYO in hotel business etc,” it said, suggesting a positive outlook for the online travel company.
SMC gave this IPO a 2.5 rating out of 5. It said that the company is operating an asset-light model of business with negligible borrowings and that investors may consider investing in this IPO with a long-term perspective.
The company’s total income grew 26.2 per cent annually between FY18 and FY20 to Rs 181 crore, while net profit rose 51.8 per cent to Rs 33 crore.
Investors can subscribe to the IPO by betting for a lot of 80 shares or in multiples thereof.
Retail investors can bid for a maximum of 13 lots.
The quota for retail investors in the Easy Trip Planners IPO is fixed at 10 per cent of the net offer. The QIB quota is fixed at 75 per cent, whereas 15 per cent of the issue is reserved for NIIs. The finalisation of the basis of allotment is likely by March 16, and the initialisation of refunds by March 17. Meanwhile, credit of shares in the demat account is likely by March 18. If successful, Easy Trip Planners’ listing is likely by March 19.
