Easy Trip Planners IPO: Should You Invest?

We all love consumer-facing companies, ones that we see every day. Easy Trip Planners Pvt. Ltd., the parent company of easemytrip.com, is all set to go public with its IPO applications starting on 8th March 2020. For the travel industry, the winds are against it, revenues are down and so are valuations because of the pandemic-led lockdown, yet the company has decided to come up with an IPO. Let’s find out more about the company and its IPO. 

About the Company

• Easy Trip Planners, is an online travel portal that offers a variety of products and services like rail tickets, taxis, bus tickets, holiday packages, hotels, and other services like travel insurance, VISA services, etc. The company offers most of its services through its website (easemytrip.com) and its mobile application(available on iOS and Android). 

Segment	% Contribution To Revenue
Flight Bookings	94.0%
Hotels and Holiday Packages	0.6%
Others	5.4%

• Flight bookings contribute the highest to its revenue stream at 94% followed by Hotels and Holiday Packages at 0.6% and others at 5.4%. In flights bookings, ~75 percent of its revenue comes from domestic flight bookings

• In FY20, 86% of the users who booked flights on the portal were repeat users who had previously used the portal for a booking

• The company follows three kinds of distribution channels
  • Business To Business To Customer(B2B2C) for travel agents to use the platform for offline customers
  • B2E or Business to Enterprise for corporates to book tickets for their employees
  • B2C or Business To Customer - For customers to make bookings online using either the website or app. This segment had the highest volume amongst the three. 

• The company’s gross booking volumes almost doubled after the company pumped up its mobile application interfaces. However, the booking volumes have definitely taken a hit due to the COVID-19 pandemic. 

• The company faces a tiff from companies like MakeMyTrip which has more than half the market share followed by Yatra. EaseMyTrip however has managed to gain a 3% market share in a short period of time and therefore exhibits great potential as a competitor to MakeMyTrip. Both Yatra and MakeMyTrip are listed on NASDAQ and have a strong foreign presence which EaseMyTrip lacks. 

Financial Vitals

Financial Vital	FY2018	FY2019	FY2020
Revenue	1001.8	1011.07	1409.85
Net Profit	66.13	293.5	346.48
Assets	1558.02	2248.36	2526.19

• Easy Trip Planners has recorded positive and consistent growth in Revenue, Net Profit, and Total Assets. Even in the COVID-19 pandemic situation, the company has recorded a Net Profit for FY2021 9 Months ended.

• In the third quarter ended December 2020, EaseMyTrip recovered recovered 70% of the booking volumes, MakeMyTrip covered 46% and Yatra stood at 44%, as compared to last year’s booking volumes. 

• Easy Trip Planners happens to be the only online travel portal to have a positive return on equity(RoE) and Return on Capital Employed(RoCE) consistently for three consecutive years. MakeMyTrip has recorded a negative RoE and RoCE for the past two years.

• The company is debt-free as of December 2020.

Risks

• COVID-19 pandemic has impacted the travel industry as a whole. Any change in domestic or international travel regulation will have an impact on the flight booking volumes of the company.

• 94% of the company's revenue comes from online flight bookings. Any change in the market conditions of the segment will have a serious impact on the company's revenue The company is yet to expand on hotel, travel package, rail booking, bus booking, taxi rental and other such segments. Essentially, the needs to diversify its revenue mix

• The company has litigations amounting to Rs 140 crore pending in the Indian courts of law. Out of these one is a serious case amounting to Rs 37 crores in compensation, where a ticketing partner of the company has alleged manipulation and fraud in company books of accounts.

• The company has previously lent money to movie producers and other branding companies for advertisement and branding of travel, tour, and ticketing business during the making and release of movies and award functions.

• The company faces high competition in the flight booking segment from big market players like PayTM, MakeMyTrip, Amazon, and many more.

IPO Snapshot

IPO Opening Date	March 8, 2021
IPO Closing Date	March 10, 2021
Issue Type	Book Built Issue IPO
Face Value	Rs 2 per equity share
IPO Price	₹186 to ₹187 per equity share
Market Lot	80 Shares
Issue Size	Rs 510 crore
Offer for Sale	Rs 510 crore
Listing Date	March 19, 2020

Conclusion

EaseMyTrip might not have the market share or huge numbers but has definitely fared better than its giant competitors in recovering in the post-pandemic market. The company has a grey market premium of close to 90%. It is trying to list at a 58 times valuation than last year's revenue numbers. Although, a small player in the market, the company still has huge growth potential in the space. They have shown excellent financials and fairly good management. The company is also debt-free. In the current IPO bull run, it can be a perfect runner for listing gains, but long term gains is questionable as competition gets tougher.