RateGain Travel Technologies Rs 1,336 crore IPO opened for subscription today as the IPO rush-hour continues on Dalal Street. The technology distribution company that caters to the travel and hospitality industry globally is offering shares in a fixed price band of Rs 405-425 per share through the IPO. Through the IPO, RateGain Travel will sell around 31,441,282 equity shares of face value Re 1. In the grey market markets, shares of RateGain were trading at a premium of Rs 100 per share, down from Rs 120 earlier this week. The issue will open today for subscription and close on December 9.
The IPO is a mix of a fresh issue of equity shares and an offer for sale (OFS) by existing shareholders of the company. The fresh issue size of the IPO is Rs 375 crore while the OFS will be worth Rs 961 crore. Investors can bid for the IPO in the fixed price band of Rs 405-425 per share, in a bid lot of 35 equity shares. 75% of the issue is reserved for institutional investors while 15% is for high net worth investors and the remaining 10% for retail investors. Post issue, promoter & Promotergroup shareholding will decrease to 56.6% from the current 67.3% while public shareholding in the company will jump to 43.4% from 32.7%.
RateGain offers travel and hospitality solutions across a wide spectrum of verticals including hotels, airlines, OTAs, car rentals, and cruises. RateGain Travel has access to a marquee global customer base which opens more cross-selling opportunities, said analysts at Prabhudas Lilladher. Among the company’s clients are 7 global car rental companies, major cruise lines, 23 of the top 30 hotel chains, 25 of the top 30 OTAs and several of the world’s fastest-growing airlines. “This reflects in its high gross revenue retention rate of 95.5%/89.2% in FY20/FY21, respectively & also seven of its top ten clients have been customers for 10+ years,” analysts said. Prabhudas Lilladher has a ‘Subscribe’ rating on the issue.
In the age of data, RateGain has a strong backbone to aid its growth. “RateGain is one of the largest aggregators of travel-related data in the world. The company intends to leverage its data assets across the travel & hospitality industry to introduce novel and cross-vertical product offerings such as Demand.AI,” said analysts at Aditya Birla Capital while pinning a ‘Subscribe’ rating on the issue with eyes on long-term gains. Aditya Birla values the company at 18.1x FY21 P/S, indicating a valuation broadly in line with global SaaS companies with similar growth prospects.
Omicron to dampen spirits?
Although the world is emerging out of the covid-19 pandemic, the new threat posed by the Omicron variant could play a spoilsport for RateGain Travel’s IPO. “With the emergence of new Covid variant namely Omicron, countries across the world started announcing restrictions like travelling curbs. We think current evolving pandemic situation does not bode well for global travel and hospitality industry future outlook,” said Choice Broking. At the higher price band of Rs 425, Choice Broking said the issue is valued at P/S of 18.1x on FY21 sales and 15.1x on FY22E annualized sales, which they have termed as expensive while advising investors to Subscribe to the IPO with caution.