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The initial public offering (IPO) of India’s second-largest online travel portal Easy Trip Planners, owner and operator of EaseMyTrip.com hits the market on March 8. The company plans to raise Rs 510 crore and has fixed a price band of Rs 186-187 per share.

Investors can bid for a minimum of 80 equity shares and in multiples, thereafter, translating to a minimum bidding amount of Rs 14,960 at the upper end of the price band. A retail investor can at max apply for 13 lots or 1,040 shares for Rs 1,94,480.

The Delhi-based online travel agency issue is a complete offer for sale in which promoters Nishant Pitti and Rikant Pittie will sell up to Rs 255 crore worth of shares each. The quota for retail investors is fixed at 10%, while the portion reserved for QIBs is 75%, and that for NIIs is 15%.

Grey market premium

Ahead of the public issue, the share is quoting at a GMP (grey market premium) of Rs 165 per share offering close to 90% premium over the offer price.

Abhay Doshi, Founder of Unlisted Arena who tracks grey markets said, “Easy Trip Planners operates under highly competitive sector and Covid-19 pandemic has highly dented travel and tourism industry. On the financial front, CAGR growth of gross booking revenue in fiscal 2018-2020 stood at 47% which is impressive. The issue might look expensive but as the digital theme is playing out the issue should attract the investors.”

Recently, most of the IPOs have listed inline or even at a premium to the estimates of the grey market, added Doshi.

Brokerage view

Hem Securities – Positive

“Even in the times of lockdown the company demonstrated its strength and was able to report revenue of Rs 50 crores in 9MFY2021 and positive earnings per share of Rs 2.86. The company stands at 3rd among the key online travel agencies in India in terms of gross booking revenues in FY 2020. They were the only profitable online travel agency among the key online travel agencies in India in 2018, 2019 and 2020, in terms of net profit margin,” said Yash Gupta of Hem Securities.

SMC Global – Subscribe

“Easy Trip Planners is well known for its online tour web portal EaseMyTrip.com. and EaseMyTrip.in. According to the management, it follows the most advanced and latest technology including mobile applications for its operations that helps it for better cost controls and higher yields. The company is operating an asset-light model of business with negligible borrowings. Investors may consider investing in this IPO with a long-term perspective,” said the report.

Marwardi Shares and Finance – Subscribe

“Considering FY20 EPS of 3.04 on a post-issue basis, the company is going to list at a P/E of 61.51X with the market cap of Rs.2032 crores. There are no listed entities in India that are engaged in a similar line of business and whose business is comparable with that of this business. Going ahead there will be opening up of the economy post COVID leading to an increase in demand for travel and tourism and increasing online penetration,” said Marwardi Shares and Finance in a note.

Ventura – Subscribe

“Total revenue is expected to grow at a CAGR of 5.5% over FY20-23 to Rs 166 crore. EBITDA over the same period is expected to grow at 75% CAGR to Rs 55 crore with margin expansion of 2580 bps to 33.0% in FY23. PAT is expected to grow at 34.2% to Rs 80 crore with margin expansion of 2470 bps to 42.1% over FY20-23. ROE in FY23 is forecasted to be 28.4% and ROCE to be 14.4%. At the higher price band of Rs 187 per share, Easy Trip Planners is valued at 25.5X FY23 earnings,” noted the report.

GEPL Capital – Subscribe

“Issue is aggressively priced at a ~59x P/E on the FY20 EPS, at the upper end of the price band. We recommend a SUBSCRIBE rating to the issue, for potential listing gains only. We would remain cautious as a long-term investment given the competitive intensity, and ambiguity of international travel revival,” said the brokerage firm in a report.

The issue will close on March 10 and the basis of allotment is likely to finalize by March 16. Initialization of refunds will take place by March 17, while the credit of equity shares to depository accounts of allottee on March 18. The travel portal is expected to make its stock market debut on March 19, 2021.

The book operating lead managers to the problem are Axis Capital Ltd and JM Financial Ltd, whilst the registrar to Easy Trip Planners is KFin Technologies.

Easy Trip will be the 10th issue of the calendar year 2021, after Indian Railway Finance Corporation, Indigo Paints, Home First Finance Company, Stove Kraft, Brookfield India REIT, Nureca, RailTel Corporation of India, Heranba Industries and MTAR Technologies.

(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)