Lackluster Response to Yatra Online IPO as Subscription Remains Low

Lackluster Response to Yatra Online IPO as Subscription Remains Low
Lackluster Response to Yatra Online IPO as Subscription Remains Low
Lackluster Response to Yatra Online IPO as Subscription Remains Low
Lackluster Response to Yatra Online IPO as Subscription Remains Low

Lackluster Response to Yatra Online IPO as Subscription Remains Low

Lackluster Response to Yatra Online IPO as Subscription Remains Low

The initial public offering (IPO) of Yatra Online, which opened for subscription on September 15, has not generated significant investor enthusiasm. Yatra Online, one of India’s largest corporate travel service providers offering integrated travel solutions to both corporate clients and direct consumers, is seeking to raise ₹775.00 crore through its IPO.

As of the second day of the bidding process, the Yatra Online IPO has seen a tepid response, with a total subscription of only 20%. Bids have been received for 61.45 lakh equity shares out of the 3.09 crore shares on offer. In terms of category-wise subscription, the retail category has seen a subscription of 1.03 times, while the Non-Institutional Investor (NII) category has only reached 7%. Qualified Institutional Buyers (QIBs) are yet to place their bids.

Yatra Online IPO Details

The IPO consists of a fresh issuance of ₹602 crore worth of shares and an offer for sale (OFS) of up to 1.22 crore shares by a promoter and existing investor. The price band for the Yatra Online IPO has been fixed at ₹135 to ₹142 per equity share, with a face value of ₹1 each. The lot size for the public issue is 105 equity shares, requiring a minimum investment of ₹14,910 for retail investors.

The company raised ₹348 crore from anchor investors on September 14, just before the IPO opened. The basis of IPO share allotment is expected to be finalized on September 25, with refunds initiated on September 26. Shares will be credited to eligible allottees’ demat accounts on September 27, and Yatra Online Ltd shares are proposed to be listed on BSE and NSE on September 29.

Utilization of IPO Proceeds

Yatra Online intends to utilize the net proceeds from the IPO for strategic investments, acquisitions, inorganic expansion, and general corporate purposes. The funds will also support customer acquisition and retention, technology enhancements, and other organic growth activities.

Yatra Online IPO GMP and Valuation

As of the latest information, the grey market premium (GMP) for Yatra Online IPO stands at ₹0, indicating that shares are trading at par with their issue price of ₹142, with no premium or discount in the grey market.

On the financial front, Yatra Online has achieved impressive revenue growth at a CAGR of 74% from FY21-23. While the company has posted losses on operational and bottom-line levels in the past, it turned profitable in FY23. However, its valuation is notably high, trading at a price-to-earnings (PE) ratio of approximately 213.1x on FY23 earnings per share (EPS).

Caution from Religare Broking

Religare Broking remains cautious on the Yatra IPO, citing the highly competitive market in which the company operates, seasonality in the leisure travel industry, and heavy reliance on the air ticketing business as key risks.

In summary, the Yatra Online IPO has faced a subdued response from investors, and market participants are advised to carefully consider the risks and fundamentals before making investment decisions.

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