Travel service provider Yatra Online had a disappointing start on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on Thursday, with shares listing at a discount to the issue price. The stock began trading at ₹127.5 on the NSE, marking a 10.2% discount to the issue price of ₹142. On the BSE, it opened at ₹130, an 8.45% markdown.
The ₹775 crore ($104 million) Initial Public Offering (IPO) was available for subscription from September 15 to September 20, with a price band between ₹135-142 per share. The offering was subscribed 1.66 times overall, receiving bids for 5.45 crore (54.5 million) equity shares against an offer of 4.98 crore shares. The retail investors' segment saw the highest demand, with subscriptions 2.19 times over, while qualified institutional bidders (QIBs) subscribed 2.10 times their quota.
However, interest from non-institutional investors was lukewarm during the three-day bidding process, with subscriptions reaching just 51% of their category.
The IPO consisted of a fresh issuance of 4.23 crore shares totaling up to ₹602 crore and an offer for sale (OFS) of up to 1.22 crore shares by promoter THCL Travel Holding and existing investor Pandara Trust worth ₹173 crore.
Yatra Online plans to use the net proceeds from the offering to fund strategic investments, acquisitions, and inorganic expansion, as well as general corporate purposes, investments in customer acquisition and retention, technology, and other organic growth activities.
For the fiscal year ended March 2023, Yatra Online reported an 81% increase in revenue to ₹397 crore ($53 million), up from ₹198 crore ($26 million) in the previous year. The company also posted a profit of ₹7.6 crore ($1 million), a significant turnaround from a loss of ₹30.7 crore ($4 million) a year prior.
Despite the weak debut, several brokerages remain bullish on the stock due to potential business improvement, industry tailwinds, brand recognition, and EBITDA margin expansion. However, some analysts have expressed concerns over Yatra's negative cash flow and the IPO's high price-to-earnings multiple of 205x.
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