The initial public offering (IPO) of online travel agency Easy Trip Planners opened for subscription on Monday at a price band of Rs 186-187 per share. The issue will close on March 10.

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The Rs 510-crore public issue is a complete offer for sale by promoters who currently held 100 percent shareholding in the company. Through the IPO, the company's founders Nishant Pitti and Rikant Pitti will each sell shares to the tune of Rs 255 crore.

Nishant and Rikant hold 49.81 percent and 49.68 percent stake, respectively, in the company. Post offer, they will hold 75 percent shareholding in the company.

The company will not receive any funds from the OFS. The objective of the issue is to get the 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.

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EaseMyTrip is ranked second amongst Key OTAs in India, based on booking volumes for 9MFY21 and third among the Key Online Travel Agencies in India in terms of gross booking revenues in Fiscal 2020.

The company was the only profitable online travel agency among the Key Online Travel Agencies in India in Fiscals 2018, 2019 and 2020, in terms of net profit margin. It has the highest CAGR growth because of lean and cost-efficient operations.

The company has increased its market share from 3.1 percent in FY18 to 4.6 percent in FY20 and has been ranked 2nd among key OTAs in India based on booking volumes for 9MFY21.

Most brokerages have advised subscribing to the issue on the company’s strong repeat transaction rate in the B2C segment, fastest CAGR growth, fair valuation, rising digitalisation and likely growth in the travel industry in coming years.

“Taking cognisance of the huge growth opportunities for EaseMyTrip and a lean cost of operations that would aid flow of profitability to the bottomline, we recommend Subscribe rating to the issue. The company is available at a P/E of 61.5x on FY20 PAT,” ICICI Direct said.

Choice Broking said, “Even though its financial performance on operating level is inconsistent, considering its market positioning among the key OTAs, we feel that the company has advantages like scalable business model, business growth in excess of the sector, cash generation ability etc,”

Thus considering the above observations, Choice Broking assigned a “subscribe” rating for the issue.

Hem Securities said it liked the strong fundamentals of the company as it is the only profitable OTA with the highest CAGR growth because of lean and cost-efficient operations.

Also, the fact that the company have been able to manage growth through internal accruals since inception depicts the strong management by promoters, Hem Securities noted.

“The company’s Q3FY21 booking volumes represent 70 percent of booking volumes of Q3FY20 demonstrating robust recovery. Also with the ongoing vaccination drive we believe that in coming months the airline industry will be back to normalcy and volume will surge which largely benefits the company. Hence, looking after all, we recommend investor to subscribe the issue for short & long term,” the brokerage house said.

Easy Trip is the only player among the key OTAs in India to record a positive average return on equity (RoE) and return on capital employed (RoCE) of 36 percent and 19 percent respectively over FY18-FY20.

"The company claims that it is using sophisticated technology which is helping them to reduce costs and improve margins. On the valuation front, at the upper price band, the company is reasonably priced. However, the company is a niche player in the online travel service segment with an operating asset-light business model. Considering all these factors, we give a subscribe rating on this IPO issue for medium to long term," said BP Equities.

Meanwhile, GEPL recommends subscribing to the issue for the purpose of potential listing gains only.

“We would remain cautious as a long term investment given a competitive intensity, and ambiguity of international travel revival,” GEPL said.

"The Indian travel market is intensely competitive. The key players in the domestic online travel agency market include Cleartrip Private Limited, MakeMytrip Limited and Yatra Online, Inc. Due to the heightened competitive intensity and ambiguity on the revival of international travel to pre-COVID levels," the brokerage said.

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(Edited by : Ajay Vaishnav)

First Published:Mar 8, 2021 11:07 AM IST