India’s Yatra Awaits Stronger Investor Confidence Before IPO Launch

Having missed its deadline of launching an Indian initial public offering (IPO) by this month, India-based online travel company Yatra.com has now said that it is “hopeful and confident of getting the IPO done in the near term.”

Yatra began its India investor outreach for its Indian initial public offering at the beginning of the March quarter. However, given the overall macro environment and the global market sentiment, the investor feedback process has taken longer than expected, said co-founder and CEO Dhruv Shringi.

With sentiments subdued in the Indian stock market, companies wanting to launch their initial public offerings are said to be in a “wait-and-watch” mode.

Recent reports also suggest that Indian hospitality aggregator Oyo is ready to slash its IPO size even further.

Yatra’s Investor Outreach Program

As part of its investor outreach program, Yatra has visited a number of marquee investors, including large domestic mutual funds, family offices and hedge funds focused on the Indian market.

“Our story has been well received, given the strong recovery in both consumer and corporate travel in India.” Shringi said at an earnings call on Tuesday.

Shringi added that favorable macro trends for sustained long-term growth in India have been supported by the government prioritizing infrastructure spending in the aviation sector.

The company, which is publicly listed on the Nasdaq in New York since December 2016, 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 in November to the company, which means Yatra India’s proposed initial public offering can open for subscription within 12 months of November 17, 2022.

“Aside from strengthening our balance sheet, we expect this offering to allow us to pursue new corporate business more aggressively and explore strategic alliances with partners that might not have been comfortable with an overseas structure,” Shringi said.

Yatra’s December Financials

Announcing its financial and operating results for the three months ending December 31, Yatra noted an adjusted revenue of $18 million, compared to an adjusted revenue of $18.6 million for the quarter ending September 30.

Yatra attributed the marginal decline of 1.7 percent in adjusted revenue to seasonality in its corporate business with lower number of working days in the quarter on account of year-end holidays and festive season in India.

The company also reported a $400,00 adjusted earnings before interest, taxes, depreciation and amortization for the quarter compared to an adjusted earnings before interest, taxes, depreciation and amortization of $1 million in the previous quarter.

On the liquidity front, as of December 31, the balance of cash and cash equivalents and term deposits on Yatra’s balance sheet was $13 million, an increase of $4.6 million compared to the September quarter.

The decline in adjusted earnings before interest, taxes, depreciation and amortization is due to higher legal and professional services costs, mainly relating to increased compliance costs year-over-year, said Shringi.

Domestic travel in the December quarter ended surpassing pre-Covid numbers for Yatra, while international travel reached approximately 88 percent of pre-Covid levels.

New Corporate Signings

In terms of new corporate customers, Yatra signed 72 new customers in the first 9 months, Shringi said.

“While we are servicing close to about 770-plus customers, the market itself is about 13,000 large corporate customers. There is enough and more headroom for growth,” Shringi said.

In addition, during the March quarter, Yatra Online Limited, also set up its wholly owned subsidiary in Dubai.

“The objective of the subsidiary is to focus on expanding our software platform for corporate travel to customers in the Middle East and Africa,” said Shringi. While it might take a bit of time for these markets to become meaningful contributors to Yatra’s business, Shringi said in the long run this can be a highly accretive business as the operating margins are extremely high.