Yatra CEO Says an India IPO Will Help Finance Future Acquisitions

Buoyed by a travel recovery that has pushed online travel firm Yatra towards its best quarter yet since the onset of Covid, co-founder and CEO Dhruv Shringi is hopeful of launching the company’s initial public offering by the end of this year.

Even as Yatra looks at an October-December time frame for it go public, the company is largely dependent on the regulatory processes. “If the regulatory clearance comes in the near term it will just expedite the process for us,” Shringi said while talking to Skift.

The money from the listing would be used primarily for expansion, Shringi said, adding “the company would also be investing in technology and in increasing its workforce on the sales side for customer acquisition.”

Yatra has also earmarked some of the proceeds for acquisitions — the company last acquired the corporate travel business of PL Worldways (PLW), an India-based company, in 2019. Yatra had also acquired Air Travel Bureau — one of India’s largest independent corporate travel services provider — in 2017.

“We have a good track record of making acquisitions and integrating them within Yatra. So that’s something that we will continue to look out for,” Shringi said, remaining tightlipped about the next company that he may have set his eyes on.

Yatra, which is listed on the Nasdaq since 2016, filed a draft red herring prospectus in March with the Securities and Exchange Board of India, the country’s main stock market regulatory body, for a potential initial public offering aggregating up to $100 million.

Yatra is working closely with its lead bankers and the regulator to obtain the necessary clearances for the draft red herring prospectus while trying to address the questions and queries that may be raised by the regulator, Shringi said. “We hope that it would now be a relatively quick process in terms of getting the approval.”

Why an Indian IPO?

Six years after its Nasdaq listing, Yatra is now now looking to get itself listed in a market, which according to Shringi, is “more familiar with the business, more familiar with the brand, and is the natural home market of the company.”

In 2016, when Yatra got listed in the U.S., the Internet ecosystem in India was still evolving, Shringi said. “Back then, Nasdaq provided the opportunity for tech companies to go public. However, over the subsequent years, the Indian market has witnessed a much better appreciation of internet companies.”

Besides the home advantage, Shringi mentioned that Yatra would be able to grab a wider share in the India market. “Yatra is one of the key travel technology companies in India, whereas in the US, investors have a wider choice, as it’s a much larger exchange featuring much bigger companies.”

One of the largest Indian online travel portal — MakeMyTrip is also listed on Nasdaq, EaseMyTrip, another travel portal, got listed in India last year and Ixigo received a regulatory nod in December last year for its proposed $200 million initial public offering.

Shringi called this a good sign as it reflects a strong travel ecosystem, thanks to the underlying recovery happening in the industry.

Demand for Travel Is Only Going Up in India

While he mentioned that Covid had been extremely hard time for the industry, he noted that the bounce back has been stronger. “The entire environment is moving in a very positive direction, it should lead to all boats rising.”

The Indian travel market, mainly domiated by domestic travel, has shown great resilience over the course of the last few years and Shringi hoped that this would bode well for a successful initial public offering.

One of the most significant changes in traveller preferences that Shringi has noted in the post-Covid era is what he calls a prevalence of the “do-it-yourself” mode.

Explaining it he said, “Customers are doing a large part of the research, bookings, as well as refunds and cancellations, on their own and we’ve seen that both for our consumer business as well as the corporate travel arm.”

As Covid forced almost everyone to adopt technology — be it for ordering groceries, food or clothes — Yatra has also witnessed a significant uptick in online bookings among consumers in smaller cities, which were historically markets where people were more dependent on the offline agency model.

“Mobile tech-savvy Indians are migrating from the offline to online model and that’s a big shift in terms of technology adoption by customers,” Shringi said, something which MakeMyTrip had highlighted in its latest earnings report.

And while inflation may be a concern for many countries, Shringi said Yatra isn’t seeing much of an impact in India in terms of demand. “The international markets may have had to face the brunt of inflation, but in the Indian context, we don’t see that as a challenge.”