Yatra fails to fly: Stock lists at Rs 127.50, over 9% discount to IPO price
The debut of Yatra, the online travel agency, on the stock exchanges on September 28 was disappointing, with its shares listing at a 9 percent discount to the issue price. The stock began trading at Rs 127.50 on the National Stock Exchange (NSE) and Rs 130 on the Bombay Stock Exchange (BSE), significantly below the issue price of Rs 142.
This subdued listing performance was in line with what analysts had anticipated, as the company’s initial public offering (IPO) had not generated strong demand during its subscription period, which was open from September 15 to September 20. The issue received tepid interest from investors, with a subscription of 1.61 times, indicating bids for 4.98 crore equity shares against an offer size of 3.09 crore shares.
The discount at which Yatra’s shares listed suggests that market sentiment and investor appetite for the company’s stock were not particularly strong at the time of its IPO. Factors such as market conditions, industry dynamics, and company-specific factors can influence the performance of IPOs on the stock market.
Investors and market participants will likely continue to monitor Yatra’s stock performance in the days and weeks following its listing to gauge how it fares in the market and whether it can attract investor interest and confidence over time.
Yatra’s financial journey leading up to its IPO and its recent net profit in FY23 paint a complex financial picture. The company had been incurring losses for the fiscal years ending in March 2021 and March 2022, indicating financial challenges and a struggle to generate profits during that period. However, in FY23, Yatra managed to achieve a net profit of Rs 7.6 crore, driven in part by a deferred tax expense that allowed it to offset previous losses against the current period’s profit.
While this accounting practice provided a temporary boost to profitability, the key question that investors and analysts will be closely monitoring is whether Yatra can sustain this profitability in the coming years. Additionally, it’s worth noting that the IPO was criticized by analysts for being exorbitantly priced, with a trailing price-to-earnings multiple of 205x, a factor that may have contributed to its challenging debut on the stock market.
Yatra Online asserts its position as India’s third-largest online travel company among key Online Travel Agency (OTA) players, based on gross booking revenue and operating revenue for the fiscal year 2023 (FY23). The company also highlights its substantial partnerships with hotels and accommodations, making it a leader in this aspect among major domestic OTA players.
Furthermore, Yatra Online positions itself as a prominent corporate travel service provider in India. It claims to serve 813 large corporate customers, indicating a strong presence in the corporate travel sector. Additionally, the company reports having more than 49,800 registered Small and Medium-sized Enterprise (SME) customers, underscoring its reach in catering to the travel needs of both large corporations and smaller businesses.
These claims and market positions, as detailed in its prospectus, are significant indicators of Yatra Online’s standing in the Indian online travel industry. They provide valuable insights for investors and stakeholders evaluating the company’s potential and competitive position in the market. However, it’s essential for investors to conduct thorough due diligence and consider various factors, including market dynamics and competitive pressures, when assessing the investment potential of any company.
