Easy Trip Planners IPO: Information Analysis

If there is one sector that has seen the most brunt of COVID, it has to be the travel and tourism sector. Yet, despite suffering one of the toughest hardships, the online travel agency (OTA) , Easy Trip Planners, the parent company of EaseMyTrip.com, was profitable till December 2020. The company, through its website and mobile application, offers a range of travel services such as air ticket booking (97.8 per cent of gross booking revenue in FY20), hotel and holiday packages (1.4 per cent), bus tickets, rail tickets, taxi rentals and more. The company has devised a unique business model, wherein to build customer loyalty, the company lets go of the convenience fee charged on bookings. Further, the company maintains profitability by running very tight business operations. Its major revenue comes from commissions and incentives received from airlines, global distribution service (GDS) providers and others. The company also earns from unclaimed refunds. This part of income is added to 'other income' and is substantial in nature (around 12 per cent of total revenue). EaseMyTrip has a market share of 4.5 per cent in the OTA industry in terms of gross booking revenue for FY20. The company as of December 2020, provided access to more than 400 international and domestic airlines, more than 10,96,400 hotels in India and outside, along with railway bookings, bus tickets and taxi rentals for major cities in India. The company saw 5.16 crore visitors on its website in FY20, and has a total of around 55 lakh app downloads as of December 2020. However, COVID has had a severe impact on the company's business. Its gross booking revenue fell by around 60 per cent for nine months of FY21 (April-December 2020) when compared to the same period in the previous year. Despite the challenging environment, the company recorded profits in the said period. This was achieved on the back of aggressive cost cuts and income from unclaimed refunds adding to the top line. The company has zero debt, and remains cash rich having cash and cash equivalents worth Rs 44.6 crore as of December 2020. The management of the company intends to pursue growth in the high margin hotel and holiday packages segment and also plans to reach tier-2 and tier-3 towns through its 55,981 registered travel agents. However, one should note that COVID-led uncertainty still overlooks the future of the travel industry. Strengths With a market share of 6.5 per cent of the gross booking revenue in the air tickets market, the company is a formidable player. The company has devised a profitable business model wherein it does not charge convenience fees to the customers. The company earns its revenue through commissions and incentives and also through refunds not claimed by customers. Though this strategy reduces margin earned on gross booking, letting go of convenience fees has helped the company to build a loyal customer base. The company has a strong presence in both browsing and app-based search. It recorded 5.16 crore website visits in FY20 and its app had 55 lakh downloads as of December 2020. Furthermore, the company has 55,981 travel agents registered with it, providing access to tier-2 and tier-3 cities. Risks/Weaknesses Travel and tourism sector has been one of the most affected sectors due to the pandemic. During