Easy Trip Planners IPO opens: Should you subscribe?

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The Rs 510-crore initial public offering (IPO) of Easy Trip Planners opened for subscription on Monday, March 8, 2021, at a price band of Rs 186-187 per share. The issue will close on March 10.

The online travel company on Friday raised a little over Rs 229 crore from anchor investors. A total of 1,22,72,727 shares have been allocated to 35 anchor investors at Rs 187 per share, which is the upper end of the price band. At this price, the company mopped up Rs 229.5 crore, according to a circular uploaded on the BSE website.

EaseMyTrip.com is operated by Easy Trip Planners Private Ltd (ETPL). The company’s initial public offering is entirely an offer for sale. Through the IPO, the company’s founders Nishant Pitti and Rikant Pitti will each sell shares to the tune of Rs 255 crore through an offer-for-sale mechanism.

Nishant and Rikant hold 49.81% and 49.68% stake, respectively, in the company. The object of the public issue is to achieve the benefits of listing the equity shares on stock exchanges. The company expects that listing of the equity shares will enhance its visibility and provide liquidity to its existing shareholders.

Here’s what top brokerages have to say about the IPO:

Ventura Securities: Subscribe It is the only player among the key online travel agencies (OTA) in India which has been consistently earning profits. Being 100% bootstrapped, cost efficiency is in the DNA of the company and that has enabled them to manage profitability better than peers. Ventura believes that the ‘let go’ of convenience fee coupled with the strong customer connect should enable them to continue to gain market share and ensure sustenance of the high growth trajectory. The brokerage recommends a subscribe on the IPO. The company has increased its market share from 3.1% in FY18 to 4.6% in FY20 and has been ranked 2nd among key OTAs in India based on booking volumes for 9MFY21.

Reliance Securities: Not Rated

The IPO is valued at 58.7x and 49x EPS for FY20 and annualised FY21, respectively and 15.2x of current book value, which looks to be aggressively priced. Reliance Securities believes that the travelling industry is unlikely to recover significantly in FY22E. Further, the company’s involvement in unrelated businesses like coal, movies and share trading still raises apprehension. Besides, online travel agency operation is quite fragmented with low entry barriers and hence the company is prone to higher competition, which may impact its margins, going forward.

Geojit Financial Services: Subscribe

The asset-light business model, option of a no-convenience fee to customers, lean organisation structure has attributed to the consistent growth of ETPL. At the upper price band of Rs 187, ETPL is available at a P/E of 49x (annualised basis on FY21E EPS of Rs.3.8) which is fairly priced. With no listed peers and as the travel business is expected to pick up its charm going forward, Geojit assigns a “Subscribe” rating for the issue on a long-term basis considering the wide distribution network, rising digitalisation, negligible debt and asset-light business model of the company.

Anand Rathi Shares and Stock Brokers: Subscribe

Given the company’s strong operating and financial performance in a highly competitive and growing industry including strong margins, return on a net worth of 32.58% in FY20, strong balance sheet and management, Anand Rathi gives a ‘Subscribe’ rating to the IPO.