Easy Trip Planners- Fundamental Analysis
Tenth IPO of the year 2021 is going to be launched by Easy Trip Planners on 8th March 2021. Easy Trip Planners is one of the key online travel agency that specialize in sale of travel-related products and services, such as, booking of air tickets, hotel rooms, travel packages, bus tickets and railway tickets through their websites and applications. Offer Details of the IPO
OTAs (Online Travel Agency) are typically third-party agents, reselling products and services provided/ organised by others, for an agreed commission. For the OTA industry size, net revenues, i.e. typical commissions earned across segments are defined as gross bookings less procurement costs of relevant services and products.
Following products and services are offered by Easy Trip Planners:
- Airline Tickets
- Hotels and Holiday Packages
- Rail Tickets, bus tickets and Taxi on rent
Air ticketing segment accounts to dominant share in the Indian OTA sector. Bifurcation of revenues by service category can be seen below from the table.
|Types of services offered||% of Total Revenue|
|FY18||FY19||FY20||9 months ending 31st Dec 2020|
|Other services (bus and rail tickets and taxi rentals)||0.23%||0.18%||0.60%||0.76%|
Key Financial Highlights Easy Trip Planners- Fundamental Analysis
Easy Trip Planners posted total revenue of Rs 81.47 crore for the 9 months ended 31st Dec 2020. PAT was Rs 30.54 crore for the same period. 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 negative impact is visible in the financial results for the nine months ended 31st Dec 2020.
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 negative impact is visible in the financial results for the nine months ended 31st Dec 2020.
Easy Trip Planners posted total revenue of Rs 81.47 crore for the 9 months ended 31st Dec 2020. PAT was Rs 30.54 crore for the same period.
The Issuer’s consolidated revenues increased 20% to Rs 181.01 crore in FY20 from Rs 151.11 crore in FY19. PAT increased by 12.41% to Rs 32.98 crore in FY20. The financial and operating results in the fourth quarter of Fiscal 2020 were affected by the impact of the COVID-19 pandemic and the related lockdown measures introduced by the governmental authorities.
Operating and the net margins are strong for the last three fiscals.
Debt to equity is low at 0.98. The company has strong return on net worth being 32.57%, 43.19% and 15.04% for the last three fiscals.
Valuation and Peer Comparison
Easy Trip Planners have no listed peers as per the RHP. The key online travel agencies in India include Make My Trip limited, ClearTrip Private Limited, and Yatra Online. As per RHP, Easy Trip Planners was the only player among the online travel agencies to record positive RoE and RoCE for the last three fiscals.
Considering the Issuer’s annualised EPS at 3.75, P/E is 50x at the upper price band of the offer. At NAV of Rs 12.16, the issue is priced at 15.38x (P/BV).
|Peers (fig for FY20)||Net Margin||Operating Revenue growth yoy in FY20||Gross Booking Revenues (in INR Crore)||RoE||RoCE|
|Easy Trip Planners||23.33%||40%||4204.7||39.50%||58.50%|
|Make My Trip||-87%||11%||45155.8||-208.73%||-197.58%|
Future Outlook and Conclusion
Easy Trip Planners have been able to develop relationships across their portfolio of suppliers for airlines, hotels, holiday packages, buses and taxis. The customer centric approach of the company, user-friendly websites and android, OS based mobile applications as well as efficient marketing programs have contributed to develop significant market share in the domestic airline ticket business in India.
However, travel and tourism sector has been adversely impacted. A number of countries suspended flights or halted international travel in light of the COVID-19 pandemic. The gross booking amount for the company decreased from Rs 3179.80 crore in the nine months ended December 31, 2019 to Rs 1220.76 crore in the nine months ended December 31, 2020.
The pandemic scenario has led to unprecedented levels of cancellations, customer refunds and limited new air travel, hotel and holiday bookings. This may continue until cancellations stabilize and travel demand begins to recover from current levels.
The vaccination drive in India is also a positive development for the tourism sector. Despite the covid challenges, Easy Trip has reported revenue from operations of Rs 50 crore during 9 months ending 31st Dec 2020 and a positive EPS of 2.81 per share. So, the company seems to have decent potential to grow once the situation normalises.