EaseMyTrip is set to become the first Indian online travel firm to list on the local bourses as it prepares to launch an INR 510 crore initial public offering (IPO) by the end of March, said two people with direct knowledge of the matter, reports Mint.
The company will look to exploit a surge in liquidity in primary markets that has led to blockbuster demand for IPOs in recent months. It could, however, face the uphill task of convincing investors at a time when the travel industry is struggling to ride out the adverse impact of the pandemic though news on coronavirus vaccines and a steady revival in the domestic travel industry have raised hopes of a full recovery.
There is a lot of liquidity in the market right now, and that has been driving IPO deals. Investors are keenly looking for differentiated stories, and technology companies are definitely attractive at this point of time. With vaccines coming in and given that Covid-19 cases have dropped, the travel sector, especially domestic, will eventually recover,” one of the two people cited above said, asking not to be named.
Indian online travel firms MakeMyTrip and Yatra that went public so far did so overseas.
EaseMyTrip wants to launch its IPO before March 31 as its approval from the Securities and Exchange Board of India (SEBI) expires by then, the person said. He said any failure to launch the share sale by March-end means it will have to revisit the entire process, including a fresh filing of its draft prospectus, which will stretch the listing plans by several months.
EaseMyTrip received the nod from Sebi for its IPO on 30 January 2020. While such approvals are usually valid for a year, the market regulator had extended the validity of approvals that were to lapse between October and March to March-end due to the pandemic.
Nishant Pitti, Co-Founder, EaseMyTrip declined to comment. “The impact of covid-19 has significantly reduced travel demand in terms of consumer sentiment and their ability to travel, which has caused airlines and hotels in India and around the world to operate at significantly reduced service levels,” the company said in an earlier disclosure to SEBI.
For EaseMyTrip, gross booking revenue in the nine months to December plunged 62% to Rs 1,220.7 crore from Rs 3,179.8 crore a year ago. Booking volumes fell to 1.77 million from 4.05 million in the same period.
EaseMyTrip recorded a net profit of INR 31 crore on a revenue of INR 81.57 crore in the nine months to December, according to documents submitted by the company to SEBI. It had a net profit of INR 35 crore on revenue of INR 180 crore in the fiscal to March 2020.
While the pandemic had a significant impact on the travel sector, domestic air passenger traffic has been rising month-on-month, in line with improving consumer confidence and easing of caps on aircraft seat capacity.
The Economic Survey 2020-21 tabled in Parliament last month said India’s air passenger traffic is expected to reach the pre-Covid level in early 2021.
The proposed IPO will have the promoters of the company selling a portion of their holdings through an offer for sale OFS. The company won’t look to raise fresh capital. An OFS involves a sale of shares by an existing shareholder.
(Source: Live Mint)