The initial public offering (IPO) of RateGain Travel Technologies, the travel and hospitality solutions provider, was subscribed 41 percent on December 7, the first day of bidding.
Investors had bid for 71.88 lakh equity shares against an IPO size of 1.73 crore units. The portion reserved for retail investors had been subscribed 2.23 times and that of employees saw a 34 percent subscription.
The offer size was reduced to 1.73 crore equity shares from 3.18 crore after the company mopped up Rs 598.83 crore from anchor investors.
Non-institutional investors have bought 4 percent shares, so far, against their reserved portion, while qualified institutional buyers were yet to put in bids for the offer.
RateGain, the largest software as a service (SaaS) company in the hospitality and travel industry, aims to raise Rs 1,335.7 crore through the issue.
The IPO comprises a fresh issue of Rs 375 crore and an offer-for-sale of up to 2.26 crore shares.
Also read: RateGain Travel Technologies IPO: Should you subscribe?
The offer includes a reservation of shares worth Rs 5 crore for the company’s employees who will get shares at a discount of Rs 40 to the final issue price. The price band for the offer is Rs 405-425 a share.
The repaying of debts, payment of deferred consideration for acquisition of DHISCO, strategic investments, investment in technology innovation, artificial intelligence, and other organic growth initiatives and purchase of capital equipment for data centre are key objectives of the issue.
“Given the price band of Rs 405-425, the issue is priced at price/sales multiple of 17.3x and 18.1x of its FY21 sales, respectively, that we believe is reasonable, keeping in mind the unique nature of its business and almost nil competition in the Indian market,” said KR Choksey Research.
With the easing of restrictions and the travel industry getting back to normal, the company will further improve its business going forward, said the brokerage. Hence, it assigned a ‘subscribe’ rating to the IPO.
The company has maintained a focus on capital efficiency and has grown in the conservative manner by operating with low debt to remain in a good position during the COVID-19 crisis.
However, the company has reported losses of Rs 28.57 crore and Rs 8.34 crore and negative EPS of Rs 3.1 and Rs 0.9 respectively in FY21 and five-month of FY22 period.
“We believe, the adoption of AI (artificial intelligence) and ML (machine-learning) in the travel sector and opportunity to giving a better experience to the customers will enhance the growth potential of the company going forward,” said KRChoksey.
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