Yatra Thinks an Early 2023 India IPO Could Spur New Alliances

Buoyed by the strong recovery in India’s domestic travel demand, online travel company Yatra.com plans to launch its Indian initial public offering by March next year.

Aside from strengthening the company’s balance sheet, Yatra expects the offering to allow it to pursue new corporate business more aggressively.

The company, which is publicly listed on the Nasdaq in New York since December 2016, said the Indian listing would allow it to explore alliances with partners, who earlier might not have been comfortable with an overseas structure.

Yatra filed a draft red herring prospectus in March with the Indian regulatory body Securities and Exchange Board of India for a potential initial public offering with a goal of raising up to $100 million.

The Indian regulatory body issued the final observation letter this month to the company. This means Yatra could launch the IPO at any point within a 12-month window.

The company has also earmarked some capital for mergers and acquisitions as part of the initial public offering, said Yatra co-founder and CEO Dhruv Shringi during an earnings call on Tuesday.

In an interview earlier with Skift, Shringi had said, “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 also spoke of how the market in India recently touched a 52-week high, compared to more developed markets around the world.

Elaborating on the buoyant domestic travel market in India, Shringi spoke of the unprecedented demand that he has witnessed for the first time ever in his 15 years in the Indian travel industry.

He said this travel boom would be the new norm and wouldn’t merely reflect pent-up demand, which could taper off.

“Demand still continues to be at extremely elevated levels, especially for leisure travel,” he said speaking of the strong forward booking numbers that Yatra has been witnessing for the December holiday season.

Shringi further mentioned that as India witnesses a wage inflation hovering in the early double digits — between 10 percent and 15 percent — that provides enough and more capital in the hands of consumers to continue to spend.

A point that had also been noted during the MakeMyTrip earnings call earlier this month, where it spoke of how the travel rebound had been fueled by India’s growing middle class.

“We’ve seen savings rates also come down. Historically, saving rates in India were in the mid to high 30s, we are seeing them taper off to as low as 28 percent to 30 percent. Overall, in the economy, we are continuing to see enough headroom from a consumption standpoint,” Shringi said.

Fuelled by this demand, Yatra said that it has delivered strong year over year growth, reaching $18.6 million in adjusted revenue for the quarter ending September 30, compared to $9.7 million in the same quarter last year, in what the company said was typically its weakest quarter due to seasonality.

As India’s domestic passenger traffic in September reached 90 percent of pre-Covid levels, business travel gross bookings for Yatra reached 100 percent of pre-Covid levels in the second quarter.

The company also reported a $1 million adjusted earnings before interest, taxes, depreciation and amortization for the quarter compared to $300,000 in the three months ending September 30, 2021.

Shringi believes that a successful listing in the Indian bourses would leave Yatra well-positioned to pursue higher take rates in the air business and to accelerate growth in freight.