How EaseMyTrip doubled investors’ money during one of the worst periods for the travel industry

• EaseMyTrip had initially planned to carry on its IPO at a valuation of ₹4,500 crore, but had to take a huge cut in its valuation.
• The company has listed out three potential reasons that have contributed to the investors making a good return on EasyMyTrip’s shares.
• These factors also include the fact that the founders were not hesitant to sell the shares of the company at a lower value.

EaseMyTrip was one of the best bets for retail investors in 2021 as it doubled investors' money since its listing 10 months ago. It does sound rather odd given the fact that the last two years have been the worst ones for any travel and hospitality business due to the pandemic.

Amidst all this, EaseMyTrip has brought great returns for its investors and the thirteen-year-old startup has a rather perfect explanation to summarise how.

‘We left a lot on the table’

“It’s because we left a lot on the table,” EaseMyTrip's Prashant Pitti tells Business Insider's editor in chief Sriram Iyer at "Zilch to Zillion: Celebrating a Decade of Unicorns” summit by IIM Udaipur.

The company had initially planned on listing in March 2020 at a valuation of ₹4,500 crore, but the first wave of COVID-19 delayed that plan by a year.

The second time, the valuation was nearly ₹3,000-₹3,500 crore, but hints of a second wave had left EaseMyTrip with only two options — delay the initial public offering (IPO) or go for a lower valuation.

With ₹8 crore already lost in the first attempt at listing due to advisor and investment banker costs, EaseMyTrip decided to not take this loss once again. “We were done with the lawyers and bankers. Either we are getting listed now or we are never getting listed. This was the thought process,” Pitti jokes.

“We thought that there is not going to be a second wave… As we got closer to the IPO the second wave started to come back into the picture,” Pitti says. The company had then decided to go ahead with its plan at a lower valuation of ₹2,000 crore.

The company — which offers deals on flight booking, hotels and holiday packages — sits on a market cap of ₹5,600 crore, as of January 27. It crossed ₹7,500 crore ($1 billion) market cap milestone in September last year.

‘We had to set a benchmark for other startups’

Another reason why EaseMyTrip decided to not run after higher valuation was because of the added pressure of being the first tech startup IPO in India.

“We knew we had to set the right precedent, we knew from Day 1 that dekho puri zindgai gali khani pade gi agar kuch gadbad ho gaya toh [we will be bashed for the rest of our lives if something goes wrong]. Because then we are closing the road for others,” Pitti notes.

‘Not having any investors gave us space to maneuver’

EaseMyTrip had been bootstrapped since its inception in 2008, all thanks to its profitability streak. EaseMyTrip even doubled its net profit to ₹61.4 crore in the financial year 2021, when the entire travel segment was brought down to its knees due to COVID-19.

The company’s founders — brothers Nishant Pitti, Rikant Pitti and Prashant Pitti — owned 100% of the shares in the company before the listing. Going public and diluting 25% shares in the company at a lower valuation wasn’t much of a concern as the founders still had a majority shareholding in the company.

“The reason why one [investors] has seen a 2.5x increase in EaseMyTrip’s shares is actually because we left a lot on the table. The true value of EaseMyTrip is getting discovered on the way,” Pitti asserts.

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