Introduction
The initial public offering (IPO) of Le Travenues Technology Ltd. The company behind the popular travel booking platform Ixigo, opens for subscription today. June 10. This marks a significant event for the travel-tech industry, as Ixigo is one of the foremost players in India’s online travel agency (OTA) market. The IPO is expected to attract substantial interest from investors, given Ixigo’s strong market position and growth potential.
Company Overview
Founded in 2006, Ixigo has carved out a substantial niche in the Indian travel industry. The company allows users to plan, book, and manage travel across various modes of transport, including rail, air, buses, and hotels. Ixigo’s user base is impressive, with the platform recording a cumulative 83 million monthly active users across its apps. This extensive user engagement underscores Ixigo’s role as a crucial player in the travel booking ecosystem in India.
Market Position
Ixigo is the largest distributor of train tickets in India’s OTA rail market, commanding a significant market share of approximately 51% as of March 31, 2023. This dominance in the rail segment highlights Ixigo’s strength in catering to a large segment of Indian travelers who rely on trains for their journeys. Additionally, Ixigo’s diversified services, including flight status updates, automated web check-in, price and availability alerts, and AI-based travel planning, position it well for continued growth.
IPO Details
The bidding for the Ixigo IPO opens on June 10 and closes on June 12. The IPO allotment is expected to be finalized on June 13, with the listing date set for June 18. The price band for the IPO is set at ₹88 to ₹93 per share, with a lot size of 161 shares. Retail investors need a minimum investment of ₹14,973 to participate in the offering.
At the upper end of the price band, the Ixigo IPO size amounts to ₹740.10 crore. This includes a fresh issue of 1.29 crore equity shares, aggregating to ₹120 crore, and an offer for sale (OFS) of 6.67 crore shares, totaling ₹620.10 crore. The IPO has already garnered significant interest, with the company raising ₹333 crore from anchor investors last week. Key anchor investors include prominent names like the Government of Singapore, Morgan Stanley, WhiteOak Capital, Tata Investment Corporation, Bajaj Allianz Life Insurance, SBI Mutual Fund, and HDFC Mutual Fund.
Utilization of IPO Proceeds
Ixigo plans to utilize the net proceeds from the IPO for various strategic initiatives. These include part-funding working capital requirements. Like investing in cloud infrastructure and technology, and supporting inorganic growth through acquisitions and other strategic moves. Additionally, the proceeds will be used for general corporate purposes, which are essential for sustaining the company’s growth trajectory.
Financial Performance
Ixigo has demonstrated strong financial performance in recent years. For the nine months ended December 31, 2023, the company reported a net profit of ₹65.81 crore on a revenue of ₹497.10 crore. For the financial year 2022-23, Ixigo’s bottom line stood at ₹23.40 crore, with a revenue of ₹517.57 crore. This growth trajectory is a testament to the company’s effective business model and its ability to capitalize on the increasing shift towards online travel bookings.
Financial Report 2022-23:ANNUAL REPORT 2022-23
Analyst Recommendations
Most analysts have recommended subscribing to the Ixigo IPO, citing the company’s leadership in the online travel segment, favorable industry trends, and future growth prospects. Domestic brokerage firm Anand Rathi has noted that Ixigo is value at a P/E of 154x, with a market-cap-to-sales ratio of 7.2x post-issue. Anand Rathi believes that Ixigo’s strong brand recall, scalability, and the positive industry environment will drive profitability, leading to a “Subscribe – long term” rating for the IPO.
Similarly, BP Equities has recommended a “Subscribe” rating, highlighting Ixigo’s platform business nature and large industry opportunity size. They acknowledge that while the valuations are high, the potential for sustained and high earnings growth makes the IPO attractive.
Canara Bank Securities also endorses the IPO for long-term investment, pointing to Ixigo’s leadership in market share and the significant shift from offline to online bookings. They emphasize the company’s robust financial position and consistent revenue streams as key factors instilling investor confidence.
Grey Market Premium
As of today, the Grey Market Premium (GMP) for the Ixigo IPO is around ₹23 per share. This suggests that the shares are trading at ₹116 apiece in the grey market. A premium of 29.73% over the upper price band of ₹93 per share. This substantial premium indicates strong investor interest and positive market sentiment towards the IPO.
Competitive Landscape
Ixigo operates in a highly competitive industry with players like Yatra Online and EaseMyTrip. Despite the competition, Ixigo has managed to carve out a significant market share due to its comprehensive service offerings and user-friendly platform. The company’s focus on leveraging AI for travel planning and customer support further differentiates it from competitors.
Strategic Acquisitions
Ixigo has been proactive in expanding its market presence through strategic acquisitions. Over the past three years, the company has completed three acquisitions, integrating these entities seamlessly into its platform. This strategy not only broadens Ixigo’s service offerings but also enhances its competitive edge in the rapidly evolving travel-tech landscape.
Future Outlook
The future looks promising for Ixigo, given the ongoing recovery in the travel industry post-pandemic and the increasing preference for online booking platforms. The company’s robust growth in revenue, EBITDA, and PAT underscores its strong operational efficiency and market adaptability. With the IPO proceeds aim at enhancing technology infrastructure and pursuing strategic acquisitions. Ixigo is well-positioned to capitalize on the expanding market opportunities.
Conclusion
The Ixigo IPO represents a significant milestone for Le Travenues Technology Ltd and the broader travel-tech industry in India. With its strong market position, diverse service offerings, and strategic growth plans, Ixigo is poised for continued success. The positive analyst recommendations and strong grey market premium further underscore the attractiveness of this IPO. Investors looking for long-term growth opportunities in the online travel segment may find Ixigo a compelling addition to their portfolios.
As the IPO opens for subscription today, it will be interesting to see the response from retail and institutional investors. Given the company’s robust financials and growth potential. The Ixigo IPO is expect to garner significant attention and could pave the way for further innovations and expansions in the travel-tech sector.
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