- Nasdaq-listed Ebix Inc’s Indian subsidiary
EbixCash has filed for a ₹6,000 crore IPO. - The IPO is a completely fresh issue of shares, which means that the money raised through the IPO will go entirely to the company.
- The company is far more profitable than other players like Paytm, Mobikwik, Fino Payment Bank.
The IPO is a completely fresh issue of shares, which means that the money raised through the IPO will go entirely to the company.
The company said it will use ₹1,035 crore of the IPO issue proceeds towards working capital requirements of its subsidiaries and ₹2,748 crore for purchase of outstanding convertible debentures from its subsidiaries, and funding strategic acquisitions and investments.
While the company has several business segments, it earned huge money from only one segment.
EbixCash earns ₹8 out of ₹10 from one business -- payment solutions
While EbixCash operates into four segments, it receives over 80% of its revenue from the payments services business.
The company provides everything under one roof through its online platform EbixCash in India and 75 international jurisdictions. .
“Our diversified financial exchange platform allows us to harness deep synergies and provides cross-selling and upselling opportunities to both consumers and businesses,” said the company.
The company claims to have leadership positions in international remittance and foreign exchange, digital payments solutions, domestic money remittance, pre-paid cards, travel, insurance and corporate and incentive solutions.
Revenue from EbixCash’s payment services grew over 14 times in the last three years
Under the payment solutions business, the company primarily offers domestic remittance, forex, international remittance and pre-paid cards/gift cards. It largely generates revenue based on commissions and transaction fees from providing these services.
The payment solutions business segment accounted for 82% of its revenue in FY21.
Revenue from its travel services segment went down sharply due to COVID-19 restrictions. “Our travel business has continued to grow sequentially throughout 2021, but is still operating at significantly lower levels as compared to the pre-COVID-19 period,” said the company in its draft red herring prospectus (DRHP).
Under information technology (IT) services, it provides software-as-a-service (SaaS) to various clients in the areas of wealth, asset and lending management, insurance, and travel and bus exchange channels.
Revenue from this business segment is generated by a combination of subscription fees, licence fees and consulting fees for any custom development.
EbixCash’s profit has nearly halved in the last three years
The company’s net profit has dropped down significantly in the last three years because of COVID-19 restrictions impacting its travel and other operations.
“Many of our agents, business counterparties, clients, and service providers temporarily ceased their operations as a result of the lockdowns. Further, there is significant uncertainty regarding the duration and long-term impact of the COVID-19 pandemic, as well as possible future responses by the Indian government, which makes it impossible for us to predict with certainty the impact that COVID-19 will have on our business and operations in the future,” said EbixCash in its DRHP filed for the IPO.
Further, it also mentioned that rising inflation in India will also hinder its profitability as they might not be able to increase the prices of our services in order to pass costs on to our customers.
EbixCash comparison with peers
EbixCash believes it has the most diversified portfolio amongst non-bank entities, with a wide range of products and services across the payment solutions and financial services, travel solutions and technology solutions segments. This enables EbixCash to offer various services under one roof through a combination of technology and physical distribution to customers.
And in terms of profitability, the company is the top player in the industry:
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