IPO Size: Rs. 775 cr

• Rs. 602 cr fresh issue: Rs.392 for customer retention and organic growth and Rs. 150 cr for inorganic opportunities
• Rs. 173 cr offer for sale (OFS) by the promoter (98.6% to drop to 64.5%) and investor Pandara Trust completely exiting its 0.4% holding at 22% loss.

Price band: Rs. 135-142 per share

• 75% reserved for institutional investors, 10% for retail, as loss in FY21 and FY22

M cap: Rs. 2,228 cr, implying 35% dilution

IPO Date: Fri 15^th Sep to Wed 20^th Sep 2023, Listing Fri 29^th Sep 2023

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

India’s 3^rd Largest Online Travel Company

Yatra Online is India’s largest corporate travel service provider, yet enjoys just 5% market share with FY23 topline of only Rs. 380 cr. Even on this topline, PBT was just at Rs. 12 cr, implying highly competitive nature of the travel industry. Company has raised over Rs. 1,500 cr capital in past 17 years. Yet it is hardly making profits even before covid. Loss before tax stood at Rs. 205 cr in FY19, Rs. 14 cr in FY20, Rs. 67 cr in FY21, Rs. 26 cr in FY22. The marginal profit of FY23 can be hence attributed to sharp demand revival due to ‘revenge travel’ post covid. Company also faces extremely high attrition level of almost 60%, which is rather scary.

Promoter’s Partial Exit at a Loss

Promoter THCL had invested Rs. 62 cr into the company via a rights issue in Dec 2022, at Rs. 236 per share. It is now looking to sell 10% stake at a 40% lower price in 9 barely months. Historic average cost to promoter is Rs. 139 per share and the fact that it is looking to exit at Rs. 142 per share, just highlights the dire need for funds.

The Rs. 167 cr offer for sale is being sought to potentially provide partial exit to the NASDAQ-listed ultimate holding company’s shareholders. This is extremely unwarranted when business itself needs funds for growth and sustenance.

Poor Track Record

This business is already listed on NASDAQ in the US, since early 2017. The NASDAQ listed entity has been a severe wealth destructor, with share price down from over USD 11 in 2017 to USD 2.35 at present. 80% erosion in last 7 years is a big enough deterrent for prospective IPO investors. Don’t get swayed by the brand recall of the business as its consumer, when wearing an investor’s hat!

Exorbitant Valuations

Company is seeking a pre-money valuation of Rs. 1,626 cr (Rs. 2,228 cr post-money), implying a historic PE multiple of 214x. Peer Easy Trip, with m cap of Rs. 6,785 cr and FY23 PAT of Rs. 147 cr, is trading at a PE multiple of 46x. On Rs. 430 cr topline, which is not very different from Yatra’s Rs. 380 cr, Easy Trip reported 40% EBITDA margin, despite lower mix of higher-margin hotel and holiday packages. Yatra’s 380 cr topline fetches barely 14% EBITDA, implying poor fundamentals and expensive valuations.