Ixigo IPO puts spotlight on rival travel platforms

Analysts caution against chasing momentum in the pack

Shares of Le Travenues, which operates online travel booking platform Ixigo, soared 78 per cent on their market debut (June 18) and surged 80.4 per cent in the three days over their issue price. Ixigo has joined competitors Easemytrip and Yatra on the bourses.

Analysts believe the blockbuster response to ixigo may lead to greater scrutiny of the financial performance of other online travel aggregators (OTAS) like Easy Trip Planners, and Yatra Online.

They, however, expressed caution against chasing the momentum in the pack, given the cyclical nature of the industry.

“After the general elections, we are witnessing continuity of the bull run in both secondary and primary markets. The kind of run-up that ixigo shares saw was an impact of it. Investors, however, must remember the uncertainty that pertains in such tech-enabled, travelbased companies because of the seasonality in the tourism industry," said Narendra Solanki, head of fundamental research (investment services), at Anand Rathi Shares and Stock Brokers.

The stocks’ potential re-rating, they said, would hinge on their individual quarterly performance and growth strategies. They suggest short-term investors to partially book profit or follow strict stoplosses in these counters, whereas long-term investors are advised to hold the stocks.

“Given the expensive valuations of ixigo, new investors may adopt a wait-and-watch approach. While existing investors can consider holding their positions, further buying at this price point could be risky,” said Shivani Nyati, head of wealth at Swastika Investmart.

Yatra Online’s FY24 loss and stagnant revenue growth made it a less attractive proposition. Investors, she added, should stay on the sidelines.

“As for Easy Trip Planners, the profitability and healthy revenue growth present a relatively compelling case. However, a cautious approach should be taken here as well,” Nyati said.

On the bourses, Easy Trip Planners and Yatra have underperformed the markets thus far in 2024 (CY24). The former has risen 6.43 per cent and the latter has shed 10.8 per cent year-to-date (YTD), as against an 8.4-per cent gain in the benchmark Nifty 50 index.

Le Travenues reported a net profit of ~65.7 crore for the nine months ended December 2023, with revenue from operations worth ~491 crore.

Its profit margin stood at 13.38 per cent during the period, marking a sharp improvement over the margin of 4.67 per cent clocked in FY23.

According to the pre-ipo report by Anand Rathi, the company’s estimated price-to-earnings (P/E) for FY24 (calculated on the estimated earnings per share of FY24 and post issue number of equity shares issued) was 150x. They expect this ratio to have risen after the bumper rally. Easy Trip Planners reported a net loss of ~15 crore for the fourth quarter of financial year 2023-24 (Q4FY24) against the profits of ~31 crore in Q4FY23.

For FY24, the net profit was ~103.17 crore, with an EPS of ~0.58. Its blended twelve-month (BTM) P/E stands at 33.8x.

Yatra Online reported a net profit of ~5.6 crore in Q4FY24, but a net loss of ~4.5 crore for the entire financial year. Its profit margin was (-)1 per cent for the year and EPS of (-) ~0.33. Its BTM P/E stands at 32.1x at present. By comparison, the current BTM P/E for the benchmark Nifty 50 stands at 20.2x.

“There has been a lot of buying interest in tech-enabled travel agencies, largely with a futuristic view. Given their valuations, however, these stocks are suitable for long-term investors, having a high-risk appetite,” said Kranthi Bathini, director-equity, Wealthmills Securities.