In a highly price-sensitive market like India, where a slight difference in airfare and hotel charges leads to users switching to other online platforms, Yatra.com has maintained its leadership position in the online travel market despite the entry of heavily-funded new players. Its parent, Yatra Online, recently got approval from SEBI to raise ₹750 crores through IPO and have its stock publicly traded in India after being listed on Nasdaq in 2016.
This article will review Yatra Online IPO and analyze whether you should subscribe.
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Yatra Online IPO Details
Yatra Online filed a draft red herring prospectus (DRHP) with SEBI on March 25th, 2022, for an IPO to raise ₹750 crores in a combination of fresh issuance of equity shares and an offer for sale (OFS) from existing investors. SEBI approved it on November 19th, 2022.
A total of 93.2 lakh equity shares will be issued, of which 88.9 lakh equity shares will be issued by promoter- THCL Travel Holding Cyprus Limited, and Pandara Trust will sell the remaining 4.31 lakh equity shares.
| IPO Status | Approved |
| IPO Date | Not Announced |
| Total IPO Size | ₹750 crores |
| No. of shares for IPO | 93,28,358 |
| Issue Type | Book built |
| Issue Price Band | Not Announced |
| IPO listing at | NSE & BSE |
| Face Value | ₹1 |
Yatra Online: Overview of the Company
Yatra Online is India’s most prominent travel service provider and second-largest online travel company in gross bookings and operating revenue. The company was founded on 1st August 2006 by Dhruv Shringi (CEO), Manish Amin (CTO), and Sabina Chopra (COO).
Currently, Yatra Online provides comprehensive travel-related services, including flights, hotels, train and bus bookings, holiday packages, and other activities, on its website, www.yatra.com, and mobile application.
Yatra Online focuses both on B2B and B2C segments. It provides travel-related services to over 700 large corporate customers that employ over 7 million people. In addition, Yatra is also an integrated technology provider that helps aggregate customer demand from over 28,000 travel agents in more than 840 cities.
In the hotel booking space, Yatra provides access to room bookings in over 93,500 hotels, homestays, and other accommodations in about 1400 cities and towns in India.
Yatra Online has raised a total funding of $2.1 billion in over 11 rounds from 12 investors, according to data from Crunchbase.
Yatra Online Financials
According to DRHP filed with SEBI, Yatra Online reported total revenue from operations at ₹125.4 crores in FY21, down from ₹673.3 crores in FY20, primarily due to the impact of the pandemic on the travel industry. In H1FY22, the company reported ₹74.7 crores in revenue from operations.
In the filings made to the US regulator, the Securities Exchange Commission (SEC), Yatra Online reported revenue for FY22 from operations at ₹198.9 crores, per IFRS accounting standards. In H1FY23, the revenue from operations is at ₹154.44 crores.
In the filing made to SEC for FY22, Yatra Online reported a net loss of ₹48.24 crores. And, in H1FY23, the net loss for the period is ₹7.81 crores.
| Particulars | FY20 | FY21 | H1FY22 |
| EBITDA (in cr.) | (₹2.45) | (₹4.96) | ₹0.08 |
| Return on Net Worth | (32.89%) | (96.26%) | (16.88%) |
| EPS | (₹6.62) | (₹11.08) | (₹1.71) |
Segment-wise Revenue Breakup
Yatra Online has four segments- Air Ticketing, Hotel & Packages, and Others. First, check out the segment-wise revenue breakup for H1FY22, FY21, and FY19.
| Segment | FY20 | FY21 | H1FY22 |
| Air Ticketing (in cr.) | ₹261.3 | ₹89.3 | ₹49.5 |
| Hotel & Packages (in cr.) | ₹30.7 | ₹15.6 | ₹13.2 |
| Others (in cr.) | ₹107.70 | ₹22.06 | ₹11.9 |
Source: DRHP (243)
What will Yatra Online do with IPO Money?
The proceeds of the IPO money will be used for the following items:
- ₹150 crores will be utilized for strategic investments, acquisitions, and inorganic growth
- ₹500 crores will be utilized for investment in customer acquisition and retention, technology, and other organic growth initiatives
- And the remaining sum will be utilized for general corporate purposes
Should You Subscribe to Yatra Online IPO?
Yatra Online has established itself as a trusted name in the Indian travel industry, a space in a few large players, like MakeMyTrip, IRCTC, and EaseMyTrip, who dominate many other small online and offline players.
Strengths
- Large and loyal user base: 90% of the total traffic source comes from direct and organic traffic, with a 98.7% booking success rate. Over 12 million cumulative travel customers as of September 30, 2021.
- Strong presence in the B2B segment: Tie-up with 700 large corporates and over 46,000 registered SME customers. The B2B segment in Indian OTA is expected to grow at a CAGR of 12% to 14%
- A comprehensive selection of products and services: Provide booking facility in over 93,500 properties – hotels and homestays on the platform across 1400 cities in India.
- Integrated technology platform: Developed a single standard user view across B2C and B2B channels, enabling smooth inventory integration. Have a dedicated in-house advanced technology infrastructure and data analytics capability.
Weaknesses
- Failed to generate profits: The company has failed to generate profits over the last many years and is also not EBITDA positive
- High dependency on air ticketing revenue: The company has failed to scale up other business segments, primarily the holidays & packages segment. A drop in air ticketing revenue directly impacts the company’s financial position.
Threats/ Risks
- Highly competitive industry: Indian online travel industry is a highly competitive industry, with almost all players working on razor-thin margins
- Macro and geopolitical risks: The performance of the travel and tourism industry largely depends on the state of the economy. People tend to reduce spending if the economy is not performing well or has a weak outlook.
- Health emergencies: A pandemic-like situation severely impacts the travel and tourism industry and is the last sector to witness a rebound.
Opportunities
- Improving outlook for air travel in India: With record-breaking aircraft orders from Indian airlines and the government’s push to increase the number of airports from 140 to 220 by 2025, online OTA platforms have enormous growth potential. Indian OTAs are expected to grow at a CAGR of 10%-12% between the FY20-25 period.
- THE B2B segment is expected to drive growth: The B2B category’s share of the overall OTA industry is expected to increase from ₹33 billion in FY20 to ₹62-66 billion in FY25. Yatra can directly benefit from the growth potential because it is a strong player in the B2B segment.
- Strengthening its presence in the holiday packages segment: Being a higher-margin segment, Yatra can benefit significantly if it strengthens its presence in the holiday packages segment, currently dominated by large TTAs.
Yatra Online Share Price Performance in Nasdaq
Yatra Online was listed on Nasdaq in December 2016 through a reverse merger with Terrapin 3 Acquisition Corporation valuing the enterprise at $218 million. Yatra raised more than $92.5 million as a part of the process.
Since its listing on Nasdaq, Yatra Online share price has failed to give positive returns to investors over the long term, falling from a high of $12.85, which it made in July 2017, and is currently trading at $2.2 level.
Conclusion
Despite its presence in the high-growth travel and tourism industry, Yatra Online’s failure to churn profits from operations is a cause of concern. Moreover, cost pressure will likely persist with new players entering the market.
Yatra Online’s ability to turn around performances in the holiday packages segment and other activities is likely to strengthen its position.
Study the company and read the DRHP thoroughly before subscribing to Yatra Online IPO.
Disclaimer: The numbers mentioned in this article are for information purposes only. He/she should not consider this a buy/sell/hold recommendation from Research & Ranking. The company shall not be liable for any losses that occur.
FAQs
How much is Yatra Online raising through IPO?
Yatra Online plans to raise ₹750 crores through IPO in a combination of fresh issuance of equity shares from promoters and offers for sale from existing investors.
Is Yatra Online a profitable company?
No, Yatra Online is not a profitable company. In FY20, FY21, and H1FY22, it reported losses of ₹65.9 crores, ₹112.2 crores, and ₹18.7 crores respectively.
When will the Yatra Online IPO be launched?
The company has not finalized the dates and price band for the IPO launch.
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