Easy Trip Planners Ltd - IPO Review - ICICI Direct

Easy Trip Planners (ETP), an online travel agency, was founded in 2008. The company offers a comprehensive range of travel-related products and services for end-to-end travel solutions, including airline tickets, hotels and holiday packages, rail tickets, bus tickets and taxis as well as ancillary value added services such as travel insurance, visa processing and tickets for activities and attractions. The company's products and services are organised primarily in the following segments: (i) airline tickets (94% of revenues); (ii) hotels & holiday packages (5% of revenues) and (iii) other services (0.6% of revenue).

Investment Rationale

Huge opportunity in hotel, corporate, Tier II, Tier III cities

Online penetration of hotels is expected to increase from 21-26% in FY20 to 29-31% in FY23E. Further, margins in the hotel & holiday packages business are higher compared to airline ticketing. Hence, in order to capture this, the company intends to focus on direct tie-ups with hotels & hotel suppliers and expand its presence in hotels outside India. Further, ETP aims to utilise the services of traditional travel agents to tap corporates and Tier II & Tier III cities that are still utilising offline booking channels. Further, we believe the company's strategy of providing an option of no-convenience fees to customers will further drive repeat customers and, in turn, revenues.

Lean, cost efficient operations

The company has developed a streamlined, efficient and lean organisation structure relative to the size of its business operations. ETP's advanced technology infrastructure and operating systems focused on optimal human resource allocation, minimising operational & systemic errors and enhancing customer satisfaction have resulted in reducing person/personnel and administration costs while increasing employee productivity and improving operating efficiencies. The company had the lowest number of employees among the key online travel agencies in India as of March 31, 2020. We believe this has enabled ETP to maintain healthy profitability in the past few years.

Priced at P/E of 61.5x FY20 PAT on upper band

Taking cognisance of the huge growth opportunities for EaseMyTrip and a lean cost of operations that would aid flow of profitability to the bottomline, we recommend SUBSCRIBE rating to the issue. The company is available at a P/E of 61.5x on FY20 PAT.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_EasyTripPlanners_IPOReview.pdf

Source : Equity Bulls

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