The newly listed company Yatra, an online travel platform saw some turbulence in its new business — the freight segment.
The company reported its Q1 FY24 (April-May-June, 2023 period) results on October 16 and the earnings show a decline in the freight business.
Revenue of the company from other services decreased by 44 percent year-on-year (YoY), said Rohan Mittal, Group Chief Financial Officer, during the earnings call. "The decrease in other services is because of a decrease in the freight business," he added.
Dhruv Shringi, Whole Time Director & Chief Executive Officer (CEO) said that the company was focusing on large corporate customers where there were cross-sell opportunities. "We gave up some of the mid-end smaller tier customers on the freight side and that led to a drop in business. But our strategy has worked and we have made progress in this segment," he said.
Also read: IPO-bound Yatra bets on travel boom, freight
Before the launch of its initial public offering (IPO), the company had highlighted that it is building freight solutions for corporate customers. "Some of our large customers including Havells and SRF are the companies that are spending hundreds of crores on freight a year. So, we're building out this (technology-enabled digital freight forward platform) solution for the next 5-10 years. This is a new initiative. It will be a great revenue driver," Shringi had said.
While the freight segment is yet to take off, the air segment made a smooth landing in the June quarter. The company reported its strongest quarter on the air front since the advent of the pandemic with the highest number of air passengers booked since pre-Covid in December 2019. The segment was up 41.5 percent YoY, outpacing domestic air passenger industry growth of 14.8 percent YoY.
The company’s domestic passenger traffic grew 6 percent sequentially, at 2x the pace of India’s domestic passenger traffic.
"We are seeing double-digit growth which is there in the industry. In the first nine months of 2023, the travel industry has grown by 29 percent. We expect the momentum to continue in the second half of the year. There was a slight slowdown in July and that was because of seasonal factors, heavy rains. But beyond that we have seen travel to be fairly robust," Shringi said.
Also read: Yatra Online's debut likely to disappoint investors, say analysts
Yatra's revenue from the hotels and packages business was Rs 44.8 crore in Q1 FY24 compared to Rs 38.1 crore in the year-ago quarter, up by 17.6 percent. The increase was on account of recovery in domestic travel, along with the addition of new distribution partners.
Shringi said that the highest percentage growth comes from the hotel-corporate side, followed by B2C (business-to-customer) air, corporate-air segment and B2C hotel. "Our focus is to increase the business of the highest contributing segment. The B2C hotel segment's profitability contribution is limited. We are looking to drive the share of this business. Hotels on the corporate side have higher operating margins."
He added, "The IPO helps us with a stronger balance sheet and that helps us to negotiate with suppliers and get access to better rates both on airline and hotel side which helps us to compete and look at higher margins."
On the overall front, the company reported a net profit of Rs 6 crore, up 3 percent YoY. Revenue from operations stood at Rs 110.2 crore, up 24 percent YoY.
Mittal noted that on the back of market share gain, the company was able to grow its gross bookings to 1,983.2 crore in Q1, up 11 percent YoY.
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