Yatra Online’s Weak Debut on Indian Exchanges

Yatra Online, a travel service provider, experienced a challenging debut on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on Thursday, with its shares opening at a decline from the issue price. The stock started trading at ₹127.5 on the NSE, representing a 10.2% decrease from the issue price of ₹142. On the BSE, shares opened at ₹130, reflecting an 8.45% drop.

The ₹775 crore ($104 million) Initial Public Offering (IPO) was available for subscription from September 15 to September 20, with a price band set between ₹135 and ₹142 per share. Overall, the offering was subscribed 1.66 times, receiving bids for 5.45 crore (54.5 million) equity shares against an offer of 4.98 crore shares. The retail investor segment demonstrated the strongest demand, with subscriptions reaching 2.19 times, while qualified institutional bidders (QIBs) subscribed 2.10 times their allocated share.

Conversely, participation from non-institutional investors was relatively subdued, with subscriptions covering only 51% of their category during the three-day bidding period.

The IPO included a fresh issuance of 4.23 crore shares amounting to ₹602 crore, alongside an offer for sale (OFS) of up to 1.22 crore shares from promoter THCL Travel Holding and existing investor Pandara Trust, which was valued at ₹173 crore.

Yatra Online intends to utilize the net proceeds from this offering for strategic investments, acquisitions, and inorganic growth, as well as for general corporate purposes and efforts related to customer acquisition and retention, technology enhancements, and other organic growth initiatives.

In its fiscal year ending March 2023, Yatra Online reported a substantial 81% rise in revenue, reaching ₹397 crore ($53 million), up from ₹198 crore ($26 million) the previous year. The company also recorded a profit of ₹7.6 crore ($1 million), marking a significant turnaround from a loss of ₹30.7 crore ($4 million) the year before.

Despite the sluggish start, multiple brokerages maintain a positive outlook on the stock, citing potential business improvements, favorable industry trends, brand recognition, and the possibility for expanded EBITDA margins. However, some analysts voice concerns regarding Yatra’s negative cash flow and the relatively high price-to-earnings multiple of 205x associated with the IPO.