The initial public offering (IPO) of RateGain Travel Technologies was subscribed 34 per cent onTuesday, the first day of bidding.
Investors had bid for 59.19 lakh equity shares against an IPO size of 1.73 crore units. The portion reserved for retail investors had been subscribed 1.87 times and that of employees saw a 7 percent subscription, according to a report published in Moneycontrol.
The travel and hospitality technology services provider's IPO comprises a fresh issue of equity shares aggregating up to 375 crore and an offer for sale (OFS) of up to 2.26 crore equity shares by promoters and existing shareholders.
The offer size was reduced to 1.73 crore equity shares from 3.18 crore after the company mopped up Rs 598.83 crore from anchor investors, the report added.
Non-institutional investors have bought 1 per cent shares, so far, against their reserved portion, while qualified institutional buyers were yet to put in bids for the offer.
Meanwhile, according to market observers, RateGain shares commanded a premium of Rs 55 in the grey market today. The company plans to list its shares on 17 December 17 on the leading stock exchanges NSE and BSE, reported Mint.
Here is what analysts are saying about RateGain’s first day of IPO, as per Moneyntrol and Mint.
KR Choksey Research
Given the price band of Rs 405-425, the issue is priced at price/sales multiple of 17.3x and 18.1x of its FY21 sales, respectively, that we believe is reasonable, keeping in mind the unique nature of its business and almost nil competition in the Indian market. The company has maintained a focus on capital efficiency and has grown conservatively by operating with low debt to remain in a good position during the COVID-19 crisis.
Marwadi Shares and Finance
Considering FY22 annualised EBITDA of Rs 10.89 crore on a post-issue basis, the company is going to list at EV/EBITDA of 421.34 with a market cap of Rs 4,536.7 crore.
There are no listed companies in India whose business is comparable with that of the company’s business. Giving an avoid rating on the IPO as valuation is expensive on an absolute basis, according to a report published in The Economic Times.
RateGain’s profitability has not been encouraging over the years, due to the acquisition of lossmaking entities and higher depreciation (impairment of goodwill). The company continues to record lower EBITDA margin and net loss. However, adjusted EBITDA is in double-digit. RateGain is looking at >20 per cent EBITDA margin in the coming years led by product penetrations, cross-sell and innovative launches of new products