Yatra eyes corporate travel for sales growth rebound, as Rs 775-crore IPO opens today
Yatra Online, which is gearing up for a Rs 775-crore initial public offering (IPO) set to open on Saturday, September 15th, is strategically targeting the resumption of corporate travel as a means to regain sales growth momentum and differentiate itself from competitors in the travel industry. The company places a strong emphasis on its specialized platform for the corporate travel sector as its primary distinguishing feature when compared to rivals like Cleartrip, Easy Trip Planners, Thomas Cook India, and MakeMyTrip.
Yatra Online’s CEO, Dhruv Shringi, highlighted the company’s leading position in India’s corporate travel sector, with a client base exceeding 800 major corporate clients. This significant presence in the corporate travel space allows Yatra Online to leverage its expertise and tailored solutions to cater to the unique needs of corporate travelers.
A key aspect that sets Yatra Online apart is its platform’s integration with client companies’ Enterprise Resource Planning (ERP) and Human Resources Management System (HRMS) systems. This integration provides employees with a seamless interface for booking travel, streamlining the process and enhancing efficiency. This feature positions Yatra Online as a leader in the enterprise travel sector, offering a level of convenience and integration that differentiates it from competitors.
As the travel industry evolves and adapts to changing conditions, Yatra Online’s focus on corporate travel and its specialized platform could prove to be a strategic advantage, especially if corporate travel resumes and gains momentum. The IPO provides Yatra Online with an opportunity to further strengthen its position and expand its offerings in this sector.
Yatra’s operating revenue growth trajectory reveals some interesting insights into its performance compared to competitors. While Yatra has achieved a compound annual growth rate (CAGR) of 73.8 percent during the fiscal years 2021-2023, it lags behind MakeMyTrip and Easy Trip Planners, which recorded growth rates of 98 percent and 104.8 percent, respectively, during the same period.
The primary reason for this difference in growth rates can be attributed to the unique dynamics of the travel industry during the COVID-19 pandemic. Business travel, a significant component of Yatra’s revenue, experienced a delayed recovery, only picking up momentum in the second half of fiscal year 2023. This delayed recovery had an impact on Yatra’s overall revenue growth, as the company had to navigate through the challenges of the pandemic’s impact on corporate travel.
However, there are positive signs for Yatra’s recovery. During the January-March quarter, despite the industry’s domestic passenger growth of 4.6 percent, Yatra managed to achieve an impressive 31 percent year-on-year growth in revenue from this segment. This indicates that Yatra is gaining traction in its core business as domestic travel resumes and the company benefits from the gradual recovery of business travel.
As the travel industry continues to adapt to changing conditions and recover from the pandemic, Yatra’s ability to capture a growing share of the market, especially in the corporate travel segment, will be a key factor in determining its future growth and competitive position within the industry.
Shringi expects even stronger growth going forward. “Given that organisations are now opening up and companies are returning to work, and travel has returned to pre-COVID levels, our recoveries in the second half of the year have been much faster. So it’s more about the business mix than anything else. I believe we are now operating in a more normalised and regular environment, and you will continue to see strong growth from us.”
Yatra, a company in the travel industry, experienced net losses in the financial years 2020-21 and 2021-22, but managed to achieve a modest net profit in FY23 while also attaining operational profitability in the last two years. CEO Shringi attributed the company’s bottom line performance primarily to the depreciation of investments made in building technology platforms.
However, he highlighted that automated back-office processes and streamlined customer flows have helped mitigate the impact of these losses. One aspect of Yatra’s upcoming IPO that has raised eyebrows is its pricing, with a price band set at Rs 135-142 per share, representing a significant discount of about 40 percent compared to the Rs 236 per share at which the company issued shares to one of its promoters just last year.
In response to questions about this pricing difference, the CEO defended it by stating that the previous issuance was to a holding company and was based on a fair market value assessment using methods like discounted cash flow (DCF), while the IPO pricing was determined through a process involving key anchor investors, including major institutions, using a price discovery mechanism.
