Anand Rathi IPO
RateGain Travel Technologies Ltd. is one of the leading distribution technology companies in the world and the largest Software-as-a-Service (“SaaS”) company in the hospitality and travel industry in India. The company whose mission is to be the leading revenue maximization platform for the hospitality and travel industry, will be launching its first public offering on December 7.
Here are 10 key things to know before subscribing to the public issue:
1. IPO Dates
The offer will open for subscription on Tuesday, December 07 and the last date for subscribing to the offer is set for Thursday, December 09.
2. Price Band
The company has fixed a price band of Rs 405-425 per share having face value of Rs 1.
3. Offer Details
The company hopes to garner Rs 1,335.7 crore at the upper price band of the offer.
The public comprises a fresh issuance of shares worth Rs 375.0 crore, and an offer for sale of up to 2,26,05,530 equity shares by promoters and investors.
The promoters Bhanu Chopra, Megha Chopra, and Usha Chopra will liquidate 54.91 lakh equity shares while investor Wagner will offload 1.71 crore equity shares through OFS.
Rs 5 crore worth of shares in the offer are reserved for the employees of the company who will get the shares at a discount of Rs 40 per share to the final issue price.
Current shareholding of promoters stand at 65.4 percent which will come down to 55.0 percent after the issue.
4. Objectives of the Issue
The company will be using the proceeds from the issue to part finance its plans for repayment/prepayment of the debt of its UK subsidiary (Rs 85.3 crore), payment for deferred consideration for acquisition of DHISCO (Rs 25.2 crore), strategic investment for inorganic growth (Rs 80.0 crore), investment in technology innovation – artificial intelligence etc. (Rs 50.0 crore), purchases of capital equipment for Data Center (Rs 40.8 crore) and general corporate purposes,
5. Lot Size & Investor’s Reserved Portion
Investors can bid for a minimum lot size of 35 equity shares and in multiples of 35 shares thereafter. Retail investors can invest a minimum of Rs 14,875 for one lot, and their maximum investment would be Rs 1,93,375 for 13 lots.
Up to 75 percent of the issue is reserved for qualified institutional buyers (QIBs), 15 percent for non-institutional investors, and the remaining 10 percent for retail investors.
6. Company Profile & Industry
The company started its operations in 2004 with the introduction of a competitive intelligence price comparison product for hotels. Since then, it has significantly expanded its product portfolio to include AI and machine learning capabilities that leverage an in-house data lake to offer products in rate intelligence, cognitive revenue management, smart distribution and brand engagement. The products are offered across a wide range of verticals including hotels, airlines, online travel agents (“OTAs”), meta-search companies, vacation rentals, package providers, car rentals, rail, travel management companies, cruises and ferries.
It is one of the largest aggregators of data points in the world for the hospitality and travel industry.
As of the first half of the current fiscal, the company’s customer base was constituted of 1,462 customers including 8 Global Fortune 500 companies. Its customers include 25 out of the top 30 OTAs, several of the world’s fastest-growing airlines, 23 of the top 30 hotel chains, 7 leading car rental companies, large cruise lines companies, and the largest travel management companies. The company added 272 active customers from 110 countries during the three year period from FY19 to FY21.
7 of the top 10 customers (by revenue) have been associated with the company for more than 10 years.
SaaS products are classified under three business units— (1) DaaS (Data as a Service), (2) Distribution and (3) MarTech (Marketing Technology).
Third party travel and hospitality technology is estimated to be a $5.91 billion market in 2021, growing to an estimated $11.47 billion in 2025 at a CAGR of 18 percent.
During the last three financial years, the company had posted total revenues of Rs 272.7 crore in FY19 with a net profit of Rs 11.0 crore. In FY 20, the company registered total revenues of Rs 457.6 crore and incurred a loss of Rs 20.1 crore. The revenues for FY21 came in at Rs 264.1 crore and the loss was at Rs 28.6 crore.
For the first five months ended on August 31, 2021 of FY22, the company has posted total revenues of Rs 131.2 crore and a loss of Rs. 8.34 crore. Though the company has been incurring losses since FY20, its gross margins have been above 76 percent during this period.
The management has clarified that at the gross level, the company has healthy positive margins, the amortization of the cost of acquisitions and depreciation provisioning has resulted in a loss at net level.
8. Key Risks
Its business is dependent on the hospitality and travel industry which is extremely sensitive to economic conditions and was severely impacted by the pandemic. Any further spike in pandemic will ruin the health of the company.
Company’s top 10 customers contributed close to 40 percent of its revenues during the previous 3 financial years. Losing a few of these top clients may significantly impact the financials of the company.
It relies on third-party data centers and cloud computing providers. Any technical issue or other problems with these facilities could jeopardize the delivery of the platform and adversely impact the operations of the company.
It has a history of losses and any losses in future periods could severely affect the business.
9. Promoters & Management
Bhanu Chopra has been associated with the company since inception and is the Chairman and Managing Director of the company.
Megha Chopra has also been associated with the company since incorporation and is the Executive Director of the company.
ishant Konaru Rao is the Non-Executive Nominee Director while Girish Paman Vanvari, Aditi Gupta and EC Rajkumar Konduru are the Independent Directors of the company.
Key Managerial Personnel
Harmeet Singh is the Group Chief Executive Officer of the company since October 2019. Tanmaya Das is the Chief Financial Officer, Sahil Sharma is the Global Human Resources Head and Sachin Sharma is the Company Secretary and Compliance Officer.
10. GMP, Listing & Allotment Date
The grey market premium for the IPO is currently at Rs 120 per share as per IPO watch.
The share allotment will get finalized by December 14 and the unsuccessful investors will get refunds in their bank accounts by December 15 while successful investors will get shares in their demat accounts by December 16.The trading in equity shares on the BSE and NSE will commence with effect from December 17.