The public issue of Yatra Online has been subscribed 1.61 times on September 20, the final day of bidding, with bids for 4.98 crore equity shares against an offer size of 3.09 crore shares, according to subscription data available with exchanges.
Retail investors have provided decent support to the issue, buying 2.11 times the allotted quota, which is 10 percent of the offer size.
The portion set aside for qualified institutional buyers (QIB) and high net-worth individuals, which is 75 percent and 15 percent of the IPO size, was subscribed 2.05 times and 42 percent.
For any issue to sail through, it has to get at least 90 percent subscription in the QIB category.
In previous two days since the start of bidding, the offer was subscribed 31 percent.
The aggressive pricing of the issue could be one of the reasons for tepid response to the issue, though the company looks good with a longer-time horizon, analysts said.
At the upper price band, on post-issue basis, Yatra Online is valued at 288.2x FY23 P/E (price-to-earnings) and 5.9x FY23 P/S (price-to-sales). Yatra is priced aggressively, Indsec Research said.
The brokerage believes Yatra in the long run will expand its business through innovative travel offerings and will leverage its deep relationships with customers and technology innovations to further strengthen the Yatra brand. Thus, it recommended ‘subscribe’ to the issue.
With the growth in tourism industry, Stoxbox expects the online travel market share (OTA) to increase faster than captive players, improving the company’s profitability.
With the company posting profits in FY23 and strong revenue growth in the past, the brokerage remains positive on the company from a medium-to-long-term perspective and, therefore, recommended a ‘subscribe’ rating for the issue.
The largest corporate travel services company intends to raise Rs 775 crore from the public issue at the higher price band. The IPO comprises fresh shares worth Rs 602 crore, and an offer-for-sale (OFS) of shares worth Rs 173 crore by selling shareholders.
The price band for the offer, which opened on September 18, is Rs 135-142 per share.
The online travel agency has mobilised Rs 348.75 crore from anchor investors ahead of the issue opening on September 14, including BNP Paribas Arbitrage, Societe Generale, Goldman Sachs, Morgan Stanley, ICICI Prudential Mutual Fund, Elara India Opportunities Fund, Bandhan Mutual Fund, and Tata Mutual Fund.
The company will make use of the net fresh issue proceeds mainly for strategic investments, acquisitions and inorganic growth at a cost of Rs 150 crore, and will invest Rs 392 crore for investment in customer acquisition and retention, technology and other organic growth initiatives. The remaining fresh issue money will be used for general corporate purposes.
Yatra Online has turned into the black in the past financial year with profit at Rs 7.6 crore in FY23 against a loss of Rs 30.78 crore and revenue at Rs 380.16 crore against Rs 198 crore a year back.
The company is going to finalise the basis of allotment of IPO shares by the end of September 25 and will credit shares to the demat accounts of eligible investors by September 27, while the refunds will be transferred to unsuccessful investors or ASBA account will be unblocked by September 26, as per IPO schedule.
Trading in its equity shares will commence on the BSE and NSE from September 29.