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Ixigo makes a solid debut on stock exchanges, but what's next for the share?

Ixigo makes a solid debut on stock exchanges, but what's next for the share?
Travel aggregator Ixigo made a resounding debut on the Indian stock exchanges today, listing at Rs 138.10 on NSE and Rs 135 on BSE this morning. The stock of Le Travenues Technology’s stock, Ixigo’s parent company, which had an issue price of Rs 93, marked around 48% premium for its investors.

The company, whose public offer worth Rs 720 crore was subscribed 53.95 times by retail investors, received a thumping approval from non-institutional investors (110.25 times) and qualified institutional investors (106.73 times) as well. Out of the Rs 720 crore issue, Rs 120 crore were to be generated from fresh issue (IPO), while the remaining Rs 620 crores were to be raised via offer for sale (OFS), or sale of shares by existing shareholders.

Per the company’s draft red herring prospectus, the company is set to utilise around Rs 450 crore from its net proceeds towards funding its working capital requirements, and another Rs 258 crores to enhance its cloud infrastructure and technology. The remaining funds will be deployed for strategic acquisitions and general purposes.
What's so special about Le Travenues?
The company, which is home to three applications, namely ConfirmTkt, Ixigo and AbhiBus, claims to be India’s highest online travel agency (OTA) app usage, with a total of 8.3 crore monthly active users across the 3 platforms. As of 31st December 2023, the combined number of registered users across their applications stood at 21.321 crores.

Between 2020 and 2023, the Indian OTA industry grew at a CAGR of 18%, going from gross booking revenues worth Rs 74,900 crores in 2020 to Rs 1,23,900 crore in FY2023.

The company also earned Rs 501.25 crores in net revenue during FY23. It also saw a sharp reversal in its profit after tax (PAT) margins between FY22, where it was -6.42% to 4.63% in FY23. The company’s PAT grew at a CAGR of 76.2% between FY 2021-23.
What are the experts saying?
Brokerage firms like Canara bank securities and BP Wealth foresee long-term growth potential in the stock, given its dominant position in the OTA segment. The company is positioned as the leading OTA for India’s next one billion consumers.

As compared to its peers in the industry, namely Yatra and Easy Trip planners, Le Travenues has lower earnings per share (EPS), which is generally considered a measure of the company’s profitability. While Yatra has an EPS of Rs 0.69, Easy Trip has an EPS of Rs 0.77. In contrast, Le Travenues has an EPS of Rs 0. 58.

The company also has its fair share of pitfalls to overcome. Its ticketing agreement with IRCTC is non-exclusive basis, which means if IRCTC decides to engage with its competitors, or terminate the agreement, it will have an adverse impact on the company’s business.

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