Yatra Online IPO to open on Friday. What GMP signals ahead of subscription

Analysts at brokerage Anand Rathi recommend investors to 'Subcribe' to the IPO for long term since Yatra is a one-stop destination for travel information, pricing, bookings, and more.

The company offers a wide range of services, including domestic and international air ticketing, bus and rail ticketing, cab bookings, hotel reservations, and ancillary services. The company also recently ventured into the freight forwarding business with Yatra Freight, expanding its corporate services.

"At an upper band, company is valued at P/E (price-earnings) of 219 times while on marketcap/sales it is valued at 5.8 times post issue of equity shares, compare to its peer (Easy trip planners - 15.7 times) on FY23 basis," said Anand Rathi.

Therefore, the brokerage believes that for Yatra, there is a scope of business improvement on the back of industry tailwinds, brand recall and business scalability, resulting in expansion of EBITDA margin from here on.

The offer consists of a fresh issue of equity shares worth Rs 602 crore by the company and an offer for sale (OFS) of up to 1.21 crore equity shares.

Promoter THCL Travel Holding Cyprus Ltd will offload 1.17 crore equity shares, while investor Pandara Trust – SCHEME I, represented by its trustee Vistra ITCL (India), plans to exit the company by selling its entire 4 lakh equity shares via the OFS.

The company undertook a pre-IPO placement of Rs 62 crore by way of rights issue and alloted 26 lakh equity shares to THCL.

The size of the fresh issue, aggregating up to Rs 750 crore, has been reduced by Rs 148 crore and accordingly, the size of the fresh issue is for an aggregate amount of up to Rs 602 crore.

The net proceeds of the fresh issue will be utilised for strategic investments, acquisitions and inorganic growth; investment in customer acquisition and retention, technology, and other organic growth initiatives; and general corporate purposes.

SBI Capital Markets Ltd, DAM Capital Advisors Ltd and IIFL Securities Ltd are the book-running lead managers to the issue, while Link Intime India is the registrar.

Incorporated on December 28, 2005, Yatra is claimed to be India's largest corporate travel services provider in terms of number of corporate clients and the third largest online travel company in India among key OTA players in terms of gross bookingrevenue and operating revenue, for fiscal 2023.

The company has the largest number of hotel and accommodation tie-ups amongst key domestic OTA players of over 2,105,600 tie-ups, as on March 31, 2023.

Yatra is the leading corporate travel service provider in India with 813 large corporate customers and over 49,800 registered SME customers and the 3rd largest consumer online travel company (OTC) in the country in terms of gross booking revenue for fiscal 2023.