IPO: Yatra Online

Yatra Online, India's leading online travel agency, launched its IPO (initial public offering). Here's a breakdown of the company's strengths, weaknesses, and growth prospects to help investors make an informed decision. In a nutshell Quality: Yatra Online's three-year average ROE and ROCE are -40.8 and -13.6 per cent, respectively. Moreover, it reported negative cash flow from operations in the last two financial years. Growth: The company grew its topline by 57.9 and 91.9 per cent in FY22 and FY23, respectively, on the back of a recovery in customers and corporate travelling. Valuation: The stock has a value at a P/E and P/B of 292.0 and 2.9 times, compared to its peers' median and an average of 60.1 and 10.9 times, respectively. Overview: Customers are shifting their preferences towards one-stop solutions for all travel needs, such as booking tickets, hotel accommodations, and holiday packages. It will be a significant growth driver for online travel agencies. Also, developing tourism infrastructure and rising income levels will provide further support. However, the industry remains highly competitive, and brands must compete in pricing and deal offerings. About Yatra Online Incorporated in 2005, Yatra Online is an online travel agency. It provides pricing information and booking facilities for domestic and international travellers. According to a CRISIL report, Yatra Online is India's most prominent corporate travel services provider (in terms of clients) and the third-largest online travel company (by gross booking revenue and operating revenue in FY23). Its platform caters directly to customers, corporate travellers, and travel agents and offers services like air ticketing, hotels & lodging, holiday packages and more. Moreover, its parent company, Yatra Online Inc., is listed on NASDAQ. Strengths of Yatra Online Yatra Online is India's largest corporate travel services provider (in terms of clientele), with over 800 large corporate clients. In FY23, it reported a retention ratio of 98 per cent. As per a CRISIL report, it has the highest number of hotel and accommodation tie-ups among key domestic OTA players (over 21 lakh as of FY23). Weaknesses of Yatra Online Trade receivables accounted for around 42.2 per cent of total assets in FY23. Any issues concerning delay/default in payments can significantly hamper the company's operations. Operates in a highly competitive industry and faces stiff competition from peers. IPO Details Total IPO size (Rs cr) 775 Offer for sale (Rs cr) 173 Fresh issue (Rs cr) 602 Price band (Rs) 135-142 Subscription dates September 15, 18 and 20, 2023 Purpose of issue To fund acquisitions and customer acquisition costs Post-IPO M-cap (Rs cr) 2228 Net worth (Rs cr) 772 Promoter holding (%) 64.5 Price/earnings ratio (P/E) 292 Price/book ratio (P/B) 2.9 Financial history Key