Yatra Online makes weak debut; stock lists 10% below issue price

The stock listed at Rs 127.5, 10 per cent below its issue price of Rs 142 per share, on the National Stock Exchange.

Yatra Online made a weak market debut on Thursday, with its shares getting listed at Rs 127.5 on the National Stock Exchange (NSE), 10 per cent below its issue price of Rs 142 per share. On the BSE, the stock of the tour and travel related services company opened at Rs 130 per share.

At 10:01 AM, Yatra Online was quoting at Rs 134.60, 5 per cent below its issue price on the BSE. The stock hit a high of Rs 135.75, and a low of Rs 127.40 in the intraday trade so far.

"Yatra Online's negative listing is likely due to the company's high P/E valuation, its reliance on the airline ticketing business, and the competitive nature of the travel industry. Overall, YOL is a risky investment, and investors who receive an allotment of this IPO should consider exiting their position," said Shivani Nyati, Head of Wealth, Swastika Investmart.

The Rs 775-crore initial public offering (IPO) was subscribed 1.66 times. The portion for qualified institutional buyers (QIB) was subscribed 2.1 times, and the category for retail individual investors (RIIs) got 2.19 times subscription, Non-institutional investors portion was subscribed 43 per cent.

Yatra Online is a corporate travel services provider in terms of number of corporate clients, and the third largest online travel company in the country among key online travel players in terms of gross booking revenue and operating revenue.

Proceeds from the fresh issue worth up to Rs 150 crore will be utilised towards strategic investments, acquisitions and inorganic growth, and up to Rs 392 crore towards investment in customer acquisition and retention, technology, and other organic growth initiatives.

Analysts at Religare Broking believes Yatra will continue to invest in its common technology platform and introduce new product offerings in an efficient and timely manner, and deliver on its vision of being a ‘one-stop-shop’. Further, with the improvement in internet penetration, coupled with rising disposable incomes, and 346 growing business travel in tier 2 and 3 cities, it intends to leverage its existing travel agent network for growth opportunities, the brokerage firm said.

However, according to Axis Capital, Yatra's success depends upon their ability to compete effectively against numerous established and emerging competitors, including other online travel agencies, or OTAs, traditional offline travel companies, travel research companies, payment wallets, search engines and meta search companies, both in India and abroad, such as Cleartrip Pvt Ltd, Easy Trip Planners Ltd, Thomas Cook India Ltd, FCM Travel Solutions (India) Pvt Ltd, GBT India Pvt Ltd, CWT India Pvt Ltd, MakeMyTrip (India) Pvt Ltd, and Le Travenues Technology Ltd.

"Factors affecting their competitive success include price, availability of travel products, ability to package travel products across multiple suppliers, brand recognition, customer service and customer care, fees charged to customers, ease of use, accessibility, reliability and innovation," the brokerage firm had said in IPO note.