Are initial public offerings (IPOs) losing their sheen on the listing day due to the recent subdued sentiment in markets? Well, analysts have toned down their expectation from Haryana-based Online Travel Agency (OTA) Yatra Online's debut at Dalal Street on Thursday, September 28.

Share Market Live

NSE

The stock listed on the bourses at a discount. Shares of Yatra Online listed on the National Stock Exchange (NSE) at Rs 127.50 apiece, down 10 percent from the IPO price of Rs 142 apiece, and on the Bombay Stock Exchange, it debuted at Rs 130 apiece.

"Yatra Online's shares witnessed a negative listing. This is likely due to the company's high P/E (price-earning) valuation, its reliance on the airline ticketing business, and the competitive nature of the travel industry," said Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.

Nyati further said that Yatra Online is a risky investment, and investors who have receive an allotment of this IPO should consider exiting their position.

The grey market premium (GMP) for Yatra Online stood at zero, implying no expected listing gains from the public issue, according to market observers. It's essential to recognize that grey market premiums provide an insight into how a company's shares are perceived in the unlisted market and are subject to rapid change.

Astha Jain, Senior Research Analyst at Hem Securities, anticipated a flat listing for Yatra Online IPO. Jain suggested holding shares for the long term, emphasizing the company's trusted brand, proven track record, and targeted marketing strategy.

Prathamesh Masdekar of StoxBox also foresees a tepid listing for the issue, considering the relatively subdued subscription of Yatra Online IPO (about 1.66 times) compared to recent high subscription issues in the market.

“We expect the IPO to open close to the issuance price of Rs. 142 per share as IPOs are losing their sheen on the listing day due to the recent subdued sentiment in markets. However, with the growth in the tourism industry, we expect the share of the online travel market (OTA) to increase faster than captive players, improving the company's profitability,” noted Masdekar.

The analyst, however, remained positive on the company and recommended investors who have received allotment to hold shares from a medium to long term perspective as the company has posted profits in FY23 along with strong revenue growth in the past.

Yatra Online subscription status

On the final day of bidding, the public issue of Yatra Online was subscribed 1.61 times, with bids for 4.98 crore equity shares against an offer size of 3.09 crore shares. Retail investors played a significant role, buying 2.11 times the allotted quota, which constituted 10 percent of the offer size.

The portion reserved for qualified institutional buyers (QIB) and high net-worth individuals, constituting 75 percent and 15 percent of the IPO size, was subscribed 2.05 times and 42 percent, respectively.

About the offer

The price band for the offer, which was open from September 18-September 20, is Rs 135-142 per share.

The company raised up to Rs 775 crore through a combination of a fresh issue of Rs 602 crore and an offer for sale (OFS) of Rs 173 crore.

Of the fresh issue proceeds, Rs 392 crore will be used for customer acquisition and retention and Rs 150 crore for strategic acquisitions. Its holding company is Yatra Online Inc., which is listed on the NASDAQ exchange in the US. The promoter stake will fall to 64.5 percent.

SBI Capital Markets Ltd, DAM Capital Advisors Ltd and IIFL Securities Ltd were the book-running lead managers to the issue, while Link Intime India was the registrar.

Company overview

The online travel agency reported losses in FY21 and FY22 before showing marginal profit in FY23. It operates in a highly competitive sector with low entry barriers.

Yatra Online spans the entire value chain of travel and hospitality covering B2C and B2B segments. It is claimed to be India's largest corporate travel services provider in terms of the number of corporate clients and the third-largest online travel company in India among key OTA players in terms of gross booking revenue and operating revenue, for fiscal 2023, according to a CRISIL report.

(Edited by : Akanksha Upadhyay)

First Published:Sept 28, 2023 9:02 AM IST