GRategain Travel Technologies IPO entails to raise ₹ ₹1,336 Crore via a fresh issue of Rs 375 crore and an offer for sale (OFS) of 2.26 crore equity shares worth Rs 960.74 crore from existing shareholders and promoters. The promoters Bhanu Chopra, Megha Chopra, and Usha Chopra will offload 54.91 lakh equity shares, while investor Wagner will offload 1.71 crore equity shares through OFS.
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Rategain Travel Technologies IPO Details:
| Issue Opens | Tuesday, 7th December, 2021 |
| Issue Closes | Thursday, 9th December, 2021 |
| Issue Details | Fresh Issue of Equity Shares uoto ₹ 375 Cr |
| + Offer for Sale of 22,605,530 Equity Shares | |
| Face Value | ₹ 1/- |
| Issue Size (₹ Cr) | ₹ 1,291 – 1,336 Cr |
| Bid Lot | 35 shares |
| Price Band | ₹ 405 – 425 |
| QIB | 75% of the net offer |
| NIB | 15% of the net offer |
| Retail | 10% of offer ( ~ 3,131,141 Shares,₹ 133 Cr) |
Updates :
- ANCHOR ISSUE: RateGain Travel Technologies garnered Rs 598 crore from 34 anchor investors
Investors include the Government of Singapore, Monetary Authority of Singapore, Nomura, Golman Sachs, Pinebridge Global Funds, HSBC, Kuber India Fund, Jupiter South Asia Investment Company, Segantii India Mauritius, BNP Paribas, and Tantallon India Fund. ICICI Prudential, Nippon Life India Trustee, Aditya Birla Sun Life Trustee, Sundaram Mutual Fund, SBI Life Insurance, and Axis Mutual Fund participated in the anchor book
Rategain Travel Technologies IPO Review: Video Presentation
About Rategain Travel Technologies (India)
- The company offers travel and hospitality solutions across a wide spectrum of verticals including hotels, airlines, online travel agents (OTAs), meta-search companies, vacation rentals, package providers, car rentals, rail, travel management companies, cruises and ferries.
- The company serves 1,462 customers as on Aug 21.
- The total clients base include 1,220 large and mid-size hotel chains, 110 travel partners including airlines, car rental companies and large cruise companies and over 132 distribution partners including OTAs in over 110 countries.
It’s revenues come from 3 major segments
Distribution: This is the largest revenue contributor (49% in FY21) to RateGain.
Data as a Service (DaaS): It contributes 37% of the revenue.
Marketing Technology (MarTech) – contributes 14%. enhances brand experience to drive guest satisfaction, increase bookings and ensure guest loyalty.
Rategain Travel Technologies IPO: Financials
Salient Points
- 70% of IPO is offer for sale
- (OFS) by TA Associates/Wagner (trimming 23% holding to 5%) and by promoters (67% stake to drop to 57%)
- Rs. 375 cr fresh issue for Rs. 85 cr debt repayment, Rs.41 cr data centre capex, Rs. 80 cr future acquisition, Rs. 50 cr organic growth, Rs. 25 cr payment for past acquisition
- Debt to equity:0.45
- RTTL completed the acquisition of Myhotelshop (on Sept 10th 2021), a company that offers reporting, bid management and campaign intelligence platform for metasearch publishers and other travel products that enables hotel suppliers, OTAs, and agency clients to reach more customers at higher returns.
Cons
- Despite high repeat business EBITDA margins have been low.
- Threat from new virus strains may derail or delay margin recovery.
- Company raised Rs. 111 cr from PE Avataar at Rs. 145 per share in Aug and Oct 2020.
- Now 3x IPO price is quite stretched.
- Steep pricing despite negative earnings.
Rategain Travel Technologies IPO: Assessment
- RateGain serves a large and rapidly growing total addressable market.
- 3rd party travel and hospitality technology sector is estimated to grow at a CAGR of 18%.
- 65% of Rs. 300 cr revenue comes from North America.
- Enjoys high customer stickiness; gross revenue retention rate of 90%+.
- Growth through acquisitions & cross-sells: acquired 3 companies in past 4 yrs.
- Cash rich balance sheet with cash surplus of Rs. 80 cr pre-IPO; further boosted by IPO.
- Low taxes for overseas businesses
- shift in business practices by hospitality and travel companies from an in-house solution model to third party software and services mode
- As per a HotelTech Report, RTTL is the topmost Social Media Management provider for hotels globally as of Sept 30th 2021
- Covid-19 has accelerated digitization process in hospitality and travel sector.
- Innovative AI driven industry relevant SaaS solutions
- Marquee global customers with long standing relationships
- RateGain looking at >20% EBITDA margin in the coming years
- Diversified revenue stream from offerings, geographies and customers.
- subscription business forms a large part of customer engagement
- The IPO is valued at 18.1x FY21 price-to-sales
- 15x FY22 annualized price-to-sales
- Rategain Travel Technologies IPO Valuation stretched. Even if all +ve factored, still FY23 PE likely to be > 200
- I may apply for the Rategain Travel Technologies IPO from long term perspective considering it is a unique play even as issue is over valued & deluge of IPO’s likely to put downward pressure
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.