There are some interesting IPOs scheduled to be launched in 2021. One such IPO is the Ease My Trip IPO that is being launched on March 03, 2021. Here is all you need to know about the issue:
Ease My Trip IPO Details
|IPO Date||March 08, 2021 to March 10, 2021|
|Issue Type||Book Built Issue IPO|
|Issue Size||Equity Shares of Rs.2 totaling up to Rs.510 Crore|
|Offer for Sale||Equity Shares of Rs.2 totaling up to Rs.510 Crore|
|Face Value||Rs.2 per equity share|
|IPO Price||Rs.186 to Rs.187 per equity share|
|Market Lot||80 shares|
|Min Order Quantity||80 shares|
|Listing At||BSE, NSE|
Ease My Trip IPO Tentative Timetable
|Bid/Offer Launch date||March 08, 2021|
|Bid/Offer Last date||March 10, 2021|
|Basis of Allotment finalization date||March 16, 2021|
|Initiation of Refunds||March 17, 2021|
|Credit of Shares to Demat Acct||March 18, 2021|
|IPO Shares Listing Date||March 19, 2021|
About the company – Easy Trip Planners Limited
Easy Trip Planners Limited is an online travel agency in India. In the nine months ended December 2020, it was ranked second in terms of booking volume and third in terms of gross booking revenues in the country. The company offers a wide range of travel-related products and services including (but not limited to) flight tickets, train tickets, holiday packages, hotel booking, bus tickets, cab booking services, visa services, etc.
Easy Trip Planners have managed to develop a significant market share in the country due to the quality of its services, user-friendly websites, mobile applications (Android and iOS), customer-centric approach, and effective marketing programs. The company has a dedicated in-house technology team focused on developing a secure, advanced, and scalable technology infrastructure and software.
Growth Story of Easy Trip Planners Limited
Easy Trip Planners Limited started operations in 2008 as a B2B2C (business to business to customer) distribution channel to provide travel agents access to its website to book domestic travel airline tickets to cater to the offline travel market in India. In 2011, the company entered the B2C segment by focusing on the growing travel requirements of the country’s middle-class population. The following year it introduced international flight bookings on its website. By 2013, the company had forayed into the B2E (business to enterprise) segment to provide travel solutions to corporates and introduced hotel bookings and holiday packages to its customers.
By 2014, the revenue of the company had crossed USD 150 million and launched the Android application. By 2018, the company had introduced travel insurance and started collaborating with IRCTC for train tickets.
Financials of Easy Trip Planners Limited
Here is a quick look at the financial performance of Easy Trip Planners Limited over the last three years:
|Dec 2020||Mar 2020||2019||2018|
|Profit After Tax||31.11||34.65||29.34||6.61|
All amounts in INR Crore
A quick glance at the financial performance of Easy Trip Planners over the last three years highlights significant growth. During this period, the total income of the company showed growth at a CAGR of 25.80%. Further, between 2018 and 2020, the profit after tax grew at a staggering CAGR of 128.96%. Also, the company’s total assets grew at a CAGR of 25.14%.
While the travel and tourism sector was adversely impacted due to the COVID-19 pandemic, the Indian travel industry is expected to grow at a CAGR of 2% from Fiscal 2020 to Fiscal 2023. As people have slowly started resuming air travel, the air ticketing segment is expected to grow at a CAGR of 1.5% by Fiscal 2023. Overall, the Indian online ticketing segment is expected to grow at a CAGR of 3% to 4% from 2020 to 2023. While the increased penetration of the internet and smartphones is expected to continue aiding the growth of the segment, the impact of the pandemic might take some time to wear off.
In India, the online ticketing segment can be divided into the following sub-segments:
- Airline ticketing – a market share of 60% to 62%
- Train ticketing – a market share of 23% to 25%
- Hotel booking – a market share of 13% to 15%
- Bus ticketing – a market share of less than 2%
The Indian Online Travel Agency Industry is expected to grow at a CAGR of 1% to 2% between 2020 and 2023 in terms of gross booking revenues. If you look at the net revenue, the expectation is a CAGR of 0% to 2% for the same period.
Strengths of Easy Trip Planners Limited
- Easy Trip Planners Limited is one of the leading online travel agencies in India with a customer-focused approach, including the option of a no-convenience fee.
- The company has a consistent t track record of financial and operational performance with lean and cost-efficient operations.
- Easy Trip Planners has a dedicated in-house technology team focused on developing secure, advanced, and scalable technology infrastructure and software. Its websites and mobile applications have been designed to provide customers with low-cost options and flexibility in choosing routes.
- The company has three distinct distribution channels, namely B2C, B2E, and B2B2C. These channels provide a diversified customer base and a wide distribution network. They also enable the company to provide end-to-end travel solutions for passengers traveling domestically, as well as traveling to and from international destinations. Further, its presence in three distinct distribution channels enables Easy Trip Planners to cross-sell its products and services between such distribution channels.
- Easy Trip Planners has the lowest marketing and sales expense as a percentage of its gross booking revenues in 2020 (CRISIL Report). EaseMyTrip is a well-recognized brand.
- The company has an experienced management team with an established track record.
Weaknesses of Easy Trip Planners Limited
- The company is primarily into travel-related products and services. Hence, situations like the pandemic can have a long-term impact on its results of operations.
- A major portion of its revenue depends upon the airline ticketing business from a small number of airlines. This exposes the company to a risk of a drop in revenue if the airlines come up with a more cost-efficient way of selling their tickets.
- The company has a relatively limited operating history in certain areas of its business.
According to the Red Herring Prospectus, there are no listed companies that have a business portfolio comparable with that of Easy Trip Planners. Hence, it is not possible to provide any industry comparison.
Opportunity to investors – valuation of the IPO
Since there are no peers to compare the valuation of the EasyMyTrip IPO with the peer benchmark, investors will need to look at the intrinsic value of the company and compare it with its proposed share price.
We will use the intrinsic value formula provided by the founder of value investing – Benjamin Graham:
Intrinsic Value = Current Earnings x (8.5 + [2 x expected annual growth rate])
In FY 2020, EasyMyTrip booked profits of Rs.34.65 crores. Also, let’s take the estimated annual growth rate at 2% (based on the estimated growth rate of the precision engineering industry for 2020-2023). Therefore,
Intrinsic Value of Easy Trip Planners = 34.65 x (8.5 + [2 x 2]) = Rs.433.125 crores
Even if we deduct a margin of safety of 10%, the intrinsic value of Easy Trip Planners = Rs.389.81 crores
As per the IPO structure, the company has a market cap of Rs.2034 crores.
- The COVID-19 pandemic has had and is expected to have, a material adverse effect on the travel industry and the company’s business, financial condition, results of operations, and cash flows.
- A significant portion of the Gross Booking Volumes and Gross Booking Revenues on EasyMyTrip’s website and mobile application platforms are made for air tickets, by both customers and travel agents registered with the company. It primarily earns revenue from the air tickets booked by customers through its platforms in the form of commissions and incentives. Any impact on airline bookings can adversely impact the revenue of the company.
- The travel industry for India and India-related travel is intensely competitive, and Easy Trip Planners may not be able to effectively compete in the future.
- If some of the company’s travel suppliers, including airlines and GDS and API service providers, reduce or eliminate the commission, incentive, and other compensation they pay for the sale of airline tickets, the company’s business and results of operations could get adversely affected.
- Easy Trip Planners has a limited experience and operating history in certain areas of its business, particularly in hotels and holiday packages, and railway ticketing operations, which makes it difficult to accurately assess its future growth prospects and may negatively affect its business, financial condition, cash flows, and results of operations.
- Any failure to maintain the quality of its brand and reputation or protect its intellectual property could have a material adverse effect on its business.
- Any failure to maintain quality of customer service, products and deal with customer complaints could materially and adversely affect its business and operating results.
- The company’s success depends on maintaining the integrity of its systems and infrastructure and adapting to technological developments, which may suffer from failures, capacity constraints, business interruptions, and forces beyond its control.
- Any disruption to the supply of air, train, and bus tickets, and reduced demand for hotel accommodation and related services or other travel elements, or an increase in the prices of travel elements could adversely affect its operations, turnover, and profitability.
Objects of the Offer
Easy Trip Planners Limited intends to achieve the benefits of listing the equity shares of the company on stock exchanges like enhancing the visibility of the brand and providing liquidity to its existing shareholders.
Promoters of Easy Trip Planners Limited IPO
- Mr. Nishant Pitti
- Mr. Rikant Pittie
- Mr. Prashant Pitti
How can you apply for the Ease My Trip IPO?
You can apply for the Ease My Trip IPO by using one of these two methods of payment:
- ASBA – available via the net banking interface of your bank account. Almost all banks offer this facility
- UPI – available with brokers who do not offer banking services.
Things to keep in mind before investing in the Easy Trip Planners Limited IPO
Here are some things that you need to keep in mind before investing in the Easy Trip Planners IPO:
- The IPO seems to be fairly priced based on the financials and intrinsic value calculation.
- Easy Trip Planners Limited is a leading player in the online travel agency industry.
- The company depends on a few airlines and online air ticketing for the bulk of its revenue. Any disruption in the same can adversely affect its profitability.
Q1. What is the Ease My Trip IPO?
The Ease My Trip IPO is a Main Board IPO for the issue of equity shares having the face value of Rs.2 totaling up to Rs.510 crores. The registrar for the IPO is KFintech Private Limited and the shares are proposed to be listed on the BSE and NSE.
Q2. What are the open and close dates of the Ease My Trip IPO?
The Ease My Trip IPO opens on March 08, 2021, and closes on March 10, 2021.
Q3. What are the lot size and minimum order quantity of the Ease My Trip IPO?
The lot size of the Easy Trip Planners IPO is 80 shares. Also, the minimum order quantity is 80 shares.
Q4. What are the allotment and listing dates of the Ease My Trip IPO?
According to the RHP, the basis of allotment will be finalized by March 16, 2021. Further, investors can expect to receive the credits in their demat accounts by March 18, 2021.
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