RateGain Travel Technologies IPO GMP, Valuation, Financials, Should you Subscribe?

RateGain Travel Technologies IPO GMP, Valuation, Financials, Should you Subscribe?
© Provided by News18 RateGain Travel Technologies IPO GMP, Valuation, Financials, Should you Subscribe?

RateGain Travel Technologies Limited is the largest Software-as-a-Service company in the hospitality and travel industry in India. The company is all set to launch its initial public offering (IPO) on Tuesday, December 7.  They offer travel and hospitality solutions across a wide spectrum of verticals including hotels, airlines, online travel agents, meta-search companies, vacation rentals, package providers, car rentals, rail, travel management companies, cruises and ferries.

Here are the key things to know about RateGain Travel Technologies IPO before subscribing to the offer

RateGain Travel Technologies IPO Price Band and Date:

RateGain Travel Technologies Limited has fixed a price band of Rs 405-425 per share with a face value of Rs 1 for the IPO. The maiden offer will open for subscription on December 7 and it will continue till December 9. The company plans to raise Rs 1,335.7 crore at the upper price band of the offer.

RateGain Travel Technologies IPO Offer Details:

RateGain Travel Technologies IPO comprises a fresh issuance of shares worth Rs 375 crore, and an offer for sale of up to 2,26,05,530 equity shares by promoters and investors. The promoters Bhanu Chopra, Megha Chopra, and Usha Chopra will offload 54.91 lakh equity shares while investor Wagner will liquidate 1.71 crore equity shares through OFS. Post issue, promoters stake will reduce to 56.6 per cent from pre-issue level of 67.3 per cent.

RateGain Travel Technologies IPO Lot Size:

Investors can bid for a minimum lot size of 35 equity shares and in multiples of 35 shares thereafter. Retail investors can invest a minimum of Rs 14,875 for one lot, and their maximum investment would be Rs 1,93,375 for 13 lots. The company has set aside 75 percent of the issue for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors, and the remaining 10 percent for retail investors. Around Rs 5 crore worth of shares has been reserved for employees who will get the shares at a discount of Rs 40 per share to the final issue price.

RateGain Travel Technologies IPO Offer Objectives:

The company will use the net proceeds from IPO towards the prepayment of subsidiaries and strategic acquisitions. At least Rs 85 crore will go towards repayment pr prepayment of debt availed by one of its subsidiaries, RateGain UK. Another Rs 25 crore towards payment of deferred consideration for acquisition of DHISCO. RateGain Travel Technologies will spend Rs 80 crore for strategic investments, acquisitions, and inorganic growth. A hefty amount of Rs 50 crore will be reserved for investment in technology innovation, AI and other organic growth initiatives. The company will invest Rs 41 crore for purchase of certain capital equipment for their data center.

RateGain Travel Technologies IPO Valuation: 

At the higher price band of Rs 425, the issue is valued at P/S of 18.1x on FY21 sales and 15.1x on FY22E annualized sales. The company has no listed peers but analysts are flagging the pricey valuation.

RateGain Travel Technologies IPO GMP: 

The unlisted shares of RateGain Travel Technologies were fetching a price of Rs 80 in the grey market, according to IPO Watch. The grey market premium of RateGain Travel Technologies was Rs 505 on December 7, over 11 per cent up from the higher end of the price band.

RateGain Travel Technologies: Financials 

The company posted total revenues of Rs 272.7 crore in FY19 with a net profit of Rs 11.0 crore. In FY 20, the company reported total revenues of Rs 457.6 crore and incurred a loss of Rs 20.1 crore. The revenues for FY21 came in at Rs 264.1 crore and the loss was at Rs 28.6 crore. The company posted total revenues of Rs 131.2 crore and a loss of Rs. 8.34 crore till August 31 of FY22. Though the company has been incurring losses since FY20, its gross margins have been above 76 percent during this period.

RateGain Travel Technologies IPO: Should you Subscribe? 

RateGain being a vertical specific platform company stands to benefit from rapidly growing addressable market with key positives being tough to replicate inter-operable products that leverages data. Its revenues are recurring in nature with subscription/hybrid model forming a large part of its revenues. Its growing customer base (from 1,274 in FY19 to 1,337/1,462 in FY21/5MFY22) and stable gross revenue retention during the pandemic not only highlight the importance of digital transformation in T&H industry but also speaks volumes about the ‘business critical’ nature of RateGain’s products. We recommend NEUTRAL as the listing gains might be minimal in the current environment, but long-term prospects are bright for RateGain.

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