The public issue of leading corporate travel company Yatra Online has been getting a tepid response from investors, even on the second day of bidding, September 18, subscribing 31 percent with bids received for 94.36 lakh shares against an offer size of 3.09 crore shares.
Retail investors were only among the participants at the forefront in terms of bidding, buying 1.34 times the portion set aside for them which is 10 percent of the total offer, while high networth individuals (HNIs) and qualified institutional buyers (QIBs) have bid for only 9 percent and 6 percent of their reserved portion, which is 15 percent and 75 percent of the offer size, respectively.
The online travel agency intends to mobilise Rs 775 crore via public issue at the upper price band, which comprises a fresh issue of shares worth Rs 602 crore, and an offer-for-sale (OFS) of 1.2 crore shares worth Rs 173 crore by promoter THCL Travel Holding Cyprus and investor Pandara Trust – Scheme I Represented by its Trustee Vistra ITCL (India).
Pandara Trust will be exiting the company by selling its entire shareholding of 4.31 lakh shares.
The price band for the offer, which was subscribed 11 percent on September 15 has been fixed at Rs 135-142 per share. The offer will close on September 20.
The country's third-largest online travel company has already raised Rs 348.75 crore from anchor investors including Societe Generale, Morgan Stanley, BNP Paribas Arbitrage, Goldman Sachs, Elara India Opportunities Fund, ICICI Prudential Mutual Fund, Mirae Asset, Tata Mutual Fund and Bandhan Mutual.
Of the net fresh issue proceeds, Rs 150 crore will be utilised for strategic investments, acquisitions and inorganic growth and Rs 392 crore for investment in customer acquisition and retention, technology and other organic growth initiatives. The remaining funds will be kept for general corporate purposes.
Click Here To Read Moneycontrol's Exclusive Note on Yatra Online IPO
The travel industry in India is expected to grow at a 9-11 percent CAGR during FY23-FY28 to reach Rs 4,54,000 crore in FY28 driven by the development of tourism infrastructure, rising income levels translating into higher discretionary spending on travel and tourism and an increase in the frequency of travel for business and leisure purposes.
With the growth in the tourism industry, Stoxbox expects the online travel market share to increase faster than captive players, improving the company's profitability.
With the company posting profits in FY23 and strong revenue growth in the past, the brokerage remains positive on the company from a medium to long-term perspective.
Also read: Yatra Online IPO: 10 things to know before subscribing to Rs 775-crore issue
Yatra Online turned the corner in the last financial year FY23 with a profit of Rs 7.63 crore on revenue of Rs 380.16 crore against a loss of Rs 30.78 crore on a topline of Rs 198.07 crore in the previous year.
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