Yatra Online, whose Rs 775-crore initial public offering (IPO) opens on Saturday, September 15, is eyeing a resumption in corporate travel to regain sales growth momentum versus competitors. The company says its specialised platform for the corporate travel sector primarily distinguishes it from its peers such as Cleartrip, Easy Trip Planners, Thomas Cook India and MakeMyTrip.
Yatra Online serves over 800 major corporate clients, and is a market leader in the corporate travel sector within India, CEO Dhruv Shringi
said in an interview with Moneycontrol ahead of the IPO. Its platform integrates with the client company’s ERP and HRMS systems, providing employees an interface to seamlessly book travel. This sets the company apart in the enterprise travel, Shringi.
Growth momentum lost to peers, but set to rebound as employees get back to work
Yatra’s operating revenue grew at a compound annual growth rate of 73.8 percent during FY21-23, which is lower than MakeMyTrip and Easy Trip Planners at 98 percent and 104.8 percent, respectively. This difference can be primarily attributed to the delayed recovery of business travel, a key component, which only began picking up in the second half of FY23.
Notably, during the January-March quarter, while the industry saw domestic passenger growth of 4.6 percent, Yatra's revenue from this segment grew by an impressive 31 percent year-on-year.
Shringi expects even stronger growth going forward. "Given that organisations are now opening up and companies are returning to work, and travel has returned to pre-COVID levels, our recoveries in the second half of the year have been much faster. So it's more about the business mix than anything else. I believe we are now operating in a more normalised and regular environment, and you will continue to see strong growth from us."
Yatra’s financial performance: Depreciation eats into profit
Yatra incurred net losses in the financial years 2020-21 and 2021-22, but turned a modest net profit in FY23. However, the company has achieved operational profitability in the last two years.
Shringi claimed that the company’s bottom line performance was primarily impacted by depreciation of investments made in building technology platforms. However, he added that the automated back-office processes and streamlined customer flows have effectively reduced servicing costs.
Discounted IPO pricing versus promoters’ acquisition cost
What has raised some eyebrows over the IPO is its price band of Rs 135-142 per share. This appears to be at a significant discount of about 40 percent over the Rs 236 per share at which the company issued shares to one of its promoters last year.
The CEO justifying this pricing difference, stating, "The issuance conducted earlier was to a holding company and was based on a fair market value assessment using methods like DCF (discounted cash flow). In contrast, the IPO pricing we have now was determined through a process involving key anchor investors, including major institutions, using a price discovery mechanism.”
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