Easy Trip Planners IPO: All You Need To Know
Easy Trip Planners Pvt., parent of easemytrip.com, will launch its initial public offering next week as the online travel portal joins the IPO rush that has extended to 2021.
The company will sell shares at Rs 186-187 apiece in its Rs 510-crore maiden float in the three-day offer opening on March 8, the tenth so far in 2021. It comprises an offer-for-sale of 2.72 crore shares, amounting to 25.10% of the paid-up equity. At the upper end of the price band, Easy Trip will be valued at Rs 2,031 crore.
Issue open: March 8-10.
Face value: Rs 2 per share.
Offer for sale: Up to Rs 510 crore.
Shares on offer: 2.72 crore.
Minimum bid size: 80 shares.
Listing on: National Stock Exchange and BSE.
Book running lead managers: Axis Capital and JM Financial.
Why It Is Going Public
The company has not seen any external equity infusion since inception. The issue is an offer for sale by the existing promoters for the sole purpose of listing on stock exchanges.
The company has more than Rs 200 crore in cash and the issue will help it get a valuation, Prashant Pitti, whole-time director at Easy Trip, told BloombergQuint.
Easy Trip allocated 1.22 crore shares to anchor investors at Rs 187 apiece, raising Rs 229.49 crore from 35 entities, including 26 mutual find schemes.
Easy Trip's Business
Easy Trip was founded in 2008 as a distribution channel (business to business to consumer) allowing travel agents book tickets for the offline market. In 2011, it started selling directly to customers (business to consumers) and two years later to corporates (business to enterprise). The company offers air, rail and bus tickets, hotel and holiday packages, and other value-added services.
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.
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.
Easy Trip's Revenue Model
The company earns revenue from airline tickets booked by customers via its platforms in the form of commissions and incentives.
Its gross booking volumes jumped 54.43% in the year through March 2019 to 3.66 million; and rose 48.36% to 5.43 million in FY20.
Gross booking volumes stood at 1.77 million in the nine months ended December, impacted by the pandemic-led lockdown .
Gross booking revenue was Rs 4,205 crore in FY20 and at Rs 1,221 crore in the nine months ended December.
Look-to-book ratio—a measure of site visits to conversion—improved from 5.08% in FY19 to 5.32% in FY20. It stood at 3.43% in April-December 2020.
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%.
Easy Trip competes with the like of Makemytrip.com and Yatra Online. It was the second-largest online travel agency in the nine months ended December.
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.
Catch Easy Trip’s Prashant Pitti talk about the company’s plans ahead.