RateGain Travel Technologies was expected to give around 10-15 percent return on listing but a bleeding market amid weak global cues after a surprise rate hike by the Bank of England spoiled the sentiment. The stock opened sharply lower and finally settled with a 20 percent loss on December 17.
RateGain listed at Rs 364.80 on the BSE, down 14 percent from its issue price of Rs 425 a share and fell to Rs 334.10, an intraday low, a loss of 21.4 percent. It ended the session at Rs 340.50, down 6.66 percent from the opening price and 19.88 percent from the offer price.
On the National Stock Exchange (NSE), the stock touched an intraday high of Rs 383 and a low of Rs 333.85 after starting off the first trade at Rs 360. It settled at Rs 340.05, down 19.99 percent.
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The benchmark index Nifty crashed 263 points or 1.53 percent to close below the crucial 17,000 mark, and the BSE Sensex plunged 889 points, or 1.54 percent, to 57,012 as all sectors, barring IT, saw major selling pressure.
RateGain Travel Technologies, the largest SaaS (software as a service) company in the hospitality and travel industry in India, raised Rs 1,335.7 crore through its public issue at a price of Rs 425 a share.
Also read: RateGain Travel lists at discount. What should investors do now?
“The timing of the RateGain IPO (initial public offering) doesn’t fit despite most IPOs witnessing a handsome return because Covid is hurting its business in the near term, while worry of the Omicron variant is another challenge,” said Santosh Meena, head of research at Swastika Investmart.
He added that the outlook for the company in the long run is promising and hence long-term investors can stay invested while new investors can look for entry opportunities at 25-30 percent correction.
The Covid-19 crisis adversely affected the company’s earnings. RateGain recorded a loss of Rs 28.57 crore in FY21, widening from Rs 20.1 crore a year earlier, and revenue declined to Rs 250.79 crore from Rs 398.7 crore.
The bad run continued in FY22. The loss was at Rs 8.33 crore in the five months ended August 31, 2021, against a loss of Rs 7.85 crore in the previous corresponding period, though its revenue increased considerably to Rs 125.27 crore from Rs 97.89 crore over the same period.
“We find the company attractive since it has no listed peers currently,” said Mohit Nigam, head, portfolio management service at Hem Securities. RateGain has a niche set of products and technology backed by artificial intelligence and is deriving 95 percent of its revenue from leisure travel including 65 percent from the US, Nigam said.
“Investors can accumulate stock for a longer run but keeping in mind the volatile nature of the sector due to prevailing covid-related developments. Overall, any restrictions in travel can be a dampener for the stock since this can be a frontline sector to be hit,” he added. Hence “we advise buying with caution and for the long term based on the risk profile of the investor”.
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