IPO Analysis: Easy Trip Planners
IPO rating- Invest for Listing gains
About the issue
If you are missing investing in the IPO market, then soon, you are going to get a new option! On March 8, the online travel agency, Easy Trip Planners is going to launch its IPO. It may be listed on the stock market on March 19, 2021.
The company is entering the capital market with its initial public offering (IPO) of equity shares of the face value of Rs 2 each. This will mark the tenth public offering of the year. The price band of the issue has been fixed at Rs 186 to Rs 187 per equity share. The opening date of the IPO is March 8, 2021, while its closing date is March 10, 2021. Up to 75 per cent of the portion of the net issue will be reserved for qualified institutional buyers (QIB) and not more than 15 per cent of the offering for non-institutional investors (NII). The remaining 10 per cent would be reserved for retail investors. A retail-individual investor can apply for up to 13 lots. The objective of the offer is to achieve share listing benefits and to sell equity shares, aggregating up to Rs 510 crore.
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Easy Trip Planners Ltd
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Issue open
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March 8, 2021 – March 10, 2021
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Issue type
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Book built issue IPO
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Issue size
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Equity shares of Rs 2
(aggregating up to Rs 510 crore)
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Face value
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Rs 2 per equity share
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Issue price
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Rs 186-Rs 187 per equity share
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Market lot
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80 shares
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Min. order quantity
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80 shares
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Listing at
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BSE, NSE
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About the company
Easy Trip Planners Ltd is the second-largest online travel agency in India in terms of gross revenue. The company offers a range of travel products & services along with end-to-end travel solutions including airline tickets, rail tickets, bus tickets, taxis, holiday packages, hotels, and other value-added services i.e., travel insurance, visa processing, etc. Easy Trip offers services via its website and Ease My Trip android and iOS mobile app. The company follows B2B2C, B2C, and B2E distribution channels to offer its services. Easy Trip Planners is the parent company EaseMyTrip. As of December 2020, it had 59,274 travel agents registered with the company across almost all major cities in India. As per the CRISIL report, it has the largest network of travel agents among key online travel agencies. Easy Trip Planners is known to avoid any hidden cost in its travel arrangements that can increase the fare prices for the customers to make it affordable and accessible. It also provides the option of a no-convenience fee, so that the customers are not required to pay any service fee where there is no discount or coupon.
Strengths
One of the leading online travel agencies in India with a customer-focussed approach, including the option of no-convenience fee with lean and cost-efficient operations.
Strong brand name and distribution network.
Consistent financial track record and operational performance.
In-house advanced technology and analytics capabilities.
Financials
Easy Trip reported revenue worth Rs 81.46 crore for the nine-month ended December 2020, including other income worth Rs 32.19 crore. Its restated net profit stood at Rs 30.52 crore during the period. For the financial year ended March 2020, the company’s revenue stood at Rs 181 crore, including other income worth Rs 39.6 crore. Restated net profit was at Rs 32.98 crore. The company has been consistently profitable over the past three years, with its profit growing from Rs 3 lakh in 2018 to Rs 32.9 crore in 2020.
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Particulars (crore)
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20-Mar
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19-Mar
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18-Mar
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17-Mar
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Sales
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140
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101
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100
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102
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Employee Benefit Expenses
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30
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22
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16
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11
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Other expenses
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94
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84
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85
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65
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Operating Profit
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16
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-5
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-1
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26
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OPM (per cent)
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11.40
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-4.95
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-1.00
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25.49
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Other Income
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38
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50
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13
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2
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Interest
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1
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3
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1
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1
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Depreciation
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0.4
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0
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0
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0
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Profit before tax
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41
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41
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10
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27
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Net profit
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31
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23
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0.03
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20
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No. of shares
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10.86
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10.86
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10.86
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10.86
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EPS in Rs
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2.85
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2.21
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0
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1.85
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Recommendation
The company has been consistently profitable since incorporation, and it was the only profitable online travel agency among the key online travel agencies in India during FY18-FY20 in terms of net profit margin. Easy Trip Planners has entered into various agreements with third parties including airlines, GDS and API service providers, managers of channels, IRCTC, companies, and International Air Transport Association (IATA) for the conduct of commercial activities. Although it was the only profitable online travel agency among the top online travel agencies in India in the fiscal years 2018 to 2020; in terms of net profit margin, considering that the industry has been hit the hardest due to the pandemic, it is yet to recover to a large extent. Moreover, the near-term outlook also looks bleak. Due to the COVID-19 pandemic outbreak, its businesses, results of operation, financial positions, and cash flows were materially and adversely affected. Domestic and international travel restrictions imposed in India also disrupted its revenue lines. The company plans to expand in the B2B and B2C space, aiming to tap enterprises and travel agents directly. The operational expense for expanding this segment is expected to be marginal. Looking at the above positives, we believe that the company will keep growing its business at a healthy rate, and hence, you can invest for a listing gain.