Yatra Online

Ticketing to fly

Full-service online travel company offering the entire spectrum of travel and hospitality

Yatra Online (Yatra) is India‘s leading corporate travel services provider in terms of number of corporate clients and the third largest online travel company in India among key Over-the-air (OTA) players interms of gross booking revenue and operating revenue for FY2023. 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. The company has 813 large corporate customers, 49,800 small and medium enterprises (SME) as its customers.

Yatra Online, Inc., a publicly traded company listed on NASDAQ and a professionally managed company, is the ultimate holding company of Yatra.

The company‘s go-to-market strategy spans the entire value chain of travel and hospitality covering business to consumer (B2C) and business to business (B2B, which includes business to enterprise and business to agents). The company believes that the combination of its B2C and B2B channels enable it to target India‘s most frequent and high spending travelers, namely, educated urban consumers, in a cost-effective manner. Over 813 large corporate customers of the company employ over 7.00 million people who along with their families form a large part of the consuming upper middle class of India. In addition, the company‘s travel agent network provides additional scale to its business by leveraging its integrated technology platform in order to aggregate consumer demand from over 29,800 travel agents in above 1,000 cities across India as of March 31, 2023.

Leisure and business travelers use the company‘s mobile applications, its website, www.yatra.com, and its other offerings and services to explore, research, compare prices and book a wide range of travel-related services. These services include domestic and international air ticketing on nearly all Indian and international airlines, as well as bus ticketing, rail ticketing, cab bookings and ancillary services within India. The company also provides access through its platform to hotels, homestays and other accommodations, with about 105,600 hotels in 1,490 cities and towns in India, as on Fiscal 2023 and more than two million hotels globally, which is the highest hotel inventory amongst key Indian OTA players. To ensure that the company‘s service is a “one-stop shop” for travelers, the company also provides its customers with access to holiday packages and other activities such as visa facilitation, tours, sightseeing, shows, and events.

To further strengthen customer loyalty and provide an incentive to the employees of the company‘s corporate customers to transact with the company as B2C customers, the company operates a proprietary eCash loyalty program that enables travelers that book through its platform to accumulate and redeem points, where applicable. The company‘s eCash loyalty program acts as a surrogate and fills the loyalty gap that exists across product categories such as air travel and hotels in the travel market in India. The company currently has about seven million eCash registered users on its platform. In the last three fiscals, over 90% of the company‘s customers‘ visits have been from direct and organic traffic. The company has moved towards a ‘Mobile First‘ business and has experienced rapid user growth on its platform with mobile being the primary channel for customers to engage with it.

Object of the offer

The IPO consists of a fresh issue of Rs 602 crore and an offer-for-sale of up to 1,21,83,099 shares by its existing promoters and shareholders. The OFS comprises up to 1,17,51,739 shares by THCL Travel Holding Cyprus and up to 4,31,360shares by Pandara Trust Scheme-I.

Out of the proceeds from the fresh issue, Rs 150 crore will be used for strategic investments, acquisitions, and inorganic growth, Rs 392 crore towards investment in customer acquisition and retention, technology and other organic growth initiatives and the balance towards general corporate purposes.

On December 22, 2022, the company raised Rs 62.01 crore from a rights issue and allotted 26,27,697 shares to THCL Travel Holding Cyprus at an issue price of Rs 236 each, which is a part of the pre-IPO placement. Hence, the size of the fresh issue of Rs 750 crore has been reduced by Rs 148 crore, including the pre-IPO placement of Rs 62.01 crore, and accordingly, the fresh issue is for Rs 602 crore.

Strengths

Yatra is one among the trusted brands with a proven track record and targeted marketing strategy. The company is full-service online travel company in India and one of the well-recognized travel brands in the country, addressing the needs of both leisure and business travelers.

The company‘s comprehensive selection of travel-related services makes it a ‘one-stop shop‘ for its customers‘ business and leisure travel needs, thereby providing it with multiple points of contact with travelers allowing it to develop an ongoing repeat relationship with its customers.

The company has a large and loyal customer base and has served over 14 million cumulative travel customers as of March 31, 2023, with over half of them having signed up for the company‘s eCash loyalty program. The company‘s websites and mobile applications have been designed to provide customers with flexibility in choosing travel options. The company recorded a booking success rate of 97.8% on the company‘s websites and mobile applications in the B2C channel for domestic transactions during FY2023. In the company‘s corporate travel business, it has served over 800 large corporate customers where its customer retention rate in relation to corporate accounts has improved from 97% in FY2021 to 98% in FY2022 and remains consistent in fiscal year 2023, i.e., 98%.

The company has designed a unique ‘go-to-market‘ strategy that is a mix of B2C and B2B. This comprehensive approach creates a robust network effect resulting in cross-sell between business and leisure travelers which helps the company to address the entire travel market in India.

The company‘s integrated platform approach provides it with a scalable, comprehensive, and consistent user experience across each of its three go-to-market channels. This approach drives user familiarity with its service and encourages repeat usage by its customers, which further enhances customer loyalty for the company‘s business.

Weaknesses

The competition in the travel segment is intense. Travelers have a range of options, both online and offline, to research, find, compare, plan and book air, packages, hotels, and other travel products. Competition varies by market,geographic areas and type of product.

The company‘s dependence on a limited number of domestic airlines means that recent reductions or eliminations in base commissions and incentive payments by these airlines have had, and any further reductions or eliminations in such commissions and payments could have, a material adverse effect on the company‘s revenue as the company earned around 46.8% of its revenues from air ticketing in FY2023.

Further, the company‘s reliance on a limited number of Indian airlines exposes it to the risks associated with the domestic airline industry, such as rising fuel costs, high taxes, currency depreciation, liquidity constraints and health concerns, such as the covid-19 pandemic.

The covid-19 pandemic, or any future pandemic or widespread public health emergency, could affect the company‘s business and financial condition.

Statutory Auditors have qualified with respect to material weakness on internal controls over financial reporting for FY2022 and FY2023.

Operating cash flow of the company in FY2022 and FY2023 was negative at Rs 83.39 crore and Rs 153.06 crore, respectively. Negative operating cash flows in the future would adversely affect the company‘s cash flow requirements, which in turn may adversely affect its ability to operate its business and implement its growth plans.

The company incurred net losses in 2 of the last 3 financial years. Any losses in the future could adversely affect the company‘s financial condition.

The company may be negatively affected by changes in Internet search engine algorithms and dynamics, or search engine disintermediation.

The company is exposed to the proceedings or claims arising from travel-related accidents or customer misconduct during their travels, or deterioration in quality of services provided by the company, the occurrence of which may be beyond the company’s control.

Contingent liabilities as on March 31, 2023, stood at Rs 40.20 crore.

Valuation

In FY2023, consolidated sales were up by 91.9% to Rs 380.16 crore compared to FY2022. OPM increased from -4.48% to 9.64%, which led to an increase in operating profit to Rs 36.66 crore. Other income decreased 16.6% to Rs 17.31 crore. Eventually, net profit stood at Rs 7.63 crore as against net loss of Rs 30.79 crore in FY2022.

The company has issued 26,27,697 equity shares on December 22, 2022, 2023 on a pre-IPO placement to TCHL Travel Holding Cyprus (Holding company) at a price of Rs 236 per equity share.

FY2023 EPS on post-issue equity works out to Rs 0.49. At the upper price band of Rs 142, P/E FY2023 works out to 289.8 times.The company has one listed peer namely Easy Trip Planners. Easy Trip Planners trades at a P/E of 46.07 times.