Strong tailwinds make it the right time to list Yatra Online, says CEO

The company’s IPO will be priced at ₹135-142 per share. Mint earlier reported that this is a big reduction from the shares it issued to a promoter THCL Travel Holding Cyprus Ltd. last year. It had shares worth ₹62.01 crore by way of a rights issue in December 2022 at an issue price of ₹236 per share. He said the current pricing is governed by market forces and investors while the earlier issuance to existing shareholders was based on the estimated fair market value.

With IPO’s proceeds, Shri-ngi said it would consider acq-uiring offline businesses that may have a large customer base but no access to technology and this would help them drive up operating margins of the businesses they acquire. The company will invest in customer acquisition and go deeper into tier II and III markets. It will look at building a service platform for corporate businesses it works for.

“There is a big tier II and III story now in travel, especially given the context that there are more and more airlines offering additional routes because of which we are seeing a significant amount of growth from them. Travel is no longer a phenomenon that emanates from the top eight or ten cities anymore. The incremental supply from airlines is being added on secondary routes," he added. Though Shringi agreed that selling airline tickets was a lower gross margins business, it being an automated process, helps drive volumes in the business. Its hotels and accommodations business, while being far smaller at 20% is the higher margins. Today 70% of its revenues are driven by air ticket bookings and remaining 10% from other services. These figures could change in favour of accommodations to about 35%, but for now aviation will remain a high growth market.

“The hotel industry is tremendously fragmented but there is tremendous demand both from a consumer and the corporate side. Corporates are now moving to “managed stay" programmes where they get access to better rates because the demand is being funneled into these properties," he added.

The company has seen an increased business from domestic business travel and there are also pockets of international business travel that it has seen recovering now, though that part of the business, like the rest of the industry has not completely returned. Sectors like IT services firms are still behind on business travel.

Pre-covid, the company was doing an equal number of bookings in terms of direct consumer business as well as in the B2B segment. Last year the recovery happened in consumer first than business travel. The company expects this to become equal again by next year.

“In terms of travel, the saying hasn’t been truer that the rising tide lifts all boats. The frequency of trips has gone up. Business travel that everyone thought Zoom had killed, is back with a vengeance. People have gotten used to taking multiple short breaks a year too. These will be strong drivers of demand in the country in the coming years," said Shringi.

Yatra Online Inc is listed in Nasdaq and is the parent company of Yatra Limited. Shringi did not comment on the US entity during this conversation. The IPO in India has a fresh issue of shares worth ₹602 crore. There is also going to be an offer for sale of up to 12.2 million shares by a promoter and existing investor. In total, the public float will be ₹775 crore at the upper price band, according to its draft red herring prospectus.