RateGain Travel Technologies shares listed on the stock exchanges today at a discount to IPO price amid weak market sentiment. Stocks opened for trade at Rs 364.8 per share, down Rs 60 or 14% from the IPO price of 425 per share. RateGain Travel Technologies was oversubscribed by investors earlier this month as the company raised Rs 1,336 crore through the IPO, which was a mix of a fresh issue of equity shares and an offer for sale by existing shareholders of the company. RateGain Travel Technologies had a market capitalization of Rs 3,894 crore on listing.
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RateGain Travel Technologies IPO was subscribed 17.41 times by investors with Non-Institutional Investors (NII) subscribing to the issue 42.02 times. Qualified Institutional Buyers (QIB) had subscribed to their portion 8.42 times while retail quota was bid for 8 times. According to analysts at Religare Broking, RateGain Travel Technologies Ltd is among the leading distribution technology companies globally and is the largest Software as a Service (SaaS) company in the hospitality and travel industry in India.
In terms of valuations, analysts at Aditya Birla Capital said that at the issue price, RateGain will trade at 18.1x FY21 P/S, indicating a valuation broadly in line with global SaaS companies with similar growth prospects. “RateGain generates stable and recurring revenues with relatively low capital requirements, leading to healthy free cash flow generation,” they added while pinning a Subscribe rating on the issue. On the other hand, Pradhuas Lilladher analyst said that the valuations were at a premium to peers. “Price band of Rs. 405-425 implies P/S of 18x on FY21 sales (of Rs2.5bn). Global vertical SaaS peers are trading at average P/S of ~14x FY21 sales,” they said. However, analysts justified the premium valuations superior product portfolio and highly predictable, scalable and profitable business model.
RateGain Travel Technologies has been registering losses for the last two financial years. The company revenue took a hit during the pandemic, falling to Rs 251 crore in the financial year 2020-21, from Rs 399 crore in the year-ago period.