Le Travenues Technology Limited, better known as ixigo, has garnered a lot of attention with its IPO (Initial Public Offering). As the parent company of the popular travel aggregator app ixigo, it has tapped into the rapidly growing Indian travel and tourism industry. This move to go public, in the form of an IPO, has raised curiosity not just among retail investors but also institutional players. One crucial aspect of this IPO that potential investors are closely monitoring is the GMP (Grey Market Premium). Understanding the GMP, the company’s financials, and its overall business model is essential for anyone looking to invest in this IPO.
Overview of Le Travenues Technology Limited (ixigo)
Le Travenues Technology Ltd, founded in 2007, operates ixigo, one of India’s leading travel booking platforms. The company has evolved from a basic travel search engine to a full-service travel aggregator, offering bookings for flights, trains, buses, and hotels. Ixigo differentiates itself through a user-friendly platform powered by AI-driven features like price predictions, delay forecasts, and more. With over 250 million users, ixigo has become a staple in the Indian travel market.
The IPO Details
Le Travenues Technology Ltd filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), signaling its intent to raise approximately ₹1,600 crore through its IPO. This IPO consists of both a fresh issue of ₹750 crore and an offer for sale (OFS) worth ₹850 crore from existing investors, including Micromax and Elevation Capital. For Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for retail investors
Grey Market Premium (GMP) Explained
One of the most talked-about factors in any IPO is the Grey Market Premium (GMP). The grey market is an unofficial market where shares of a company are traded before being officially listed on a stock exchange. The GMP is the price at which the shares are traded over and above their issue price. For example, if the issue price of an IPO is ₹93 and the shares are being traded at ₹115 in the grey market, the GMP is ₹22.
Why Does GMP Matter?
GMP gives investors a sense of the market sentiment towards a company. A higher GMP indicates strong demand for the IPO, while a lower or negative GMP signals weak interest. While the grey market is unofficial and not regulated by SEBI, it remains an influential indicator. It helps investors gauge whether to subscribe to an IPO or not.
ixigo’s IPO GMP Analysis
As of the second day of the IPO, ixigo’s shares were trading at a premium of ₹24 in the grey market. This means that if you had acquired shares at the upper price band of ₹93, the grey market was valuing them at ₹117 (₹93 + ₹24). A GMP of ₹24 indicates solid demand and interest among retail and institutional investors alike.
The GMP has been fluctuating as the IPO progresses. On the first day of the subscription, the GMP was slightly lower, but the strong subscription numbers, especially from retail investors, pushed the premium up on the second day. By June 11, 2024, the IPO had already been subscribed over nine times, showing strong interest across investor categories.
Financial Performance of Le Travenues Technology Ltd
Investors looking to analyze the ixigo IPO should also consider the company’s financial performance. According to its DRHP, the company has shown robust growth over the years.
For the fiscal year ending March 31, 2023:
Revenue: Grew by 34.46%.
Profit After Tax (PAT): Grew by a whopping 210.91%.
This exponential growth in profitability is impressive, especially given the challenges faced by the travel industry during the COVID-19 pandemic. The company has also significantly improved its operational efficiencies, which has translated into better profit margins.
Key Strengths and Opportunities for ixigo
AI-Powered Platform: ixigo has invested in machine learning and artificial intelligence to improve its service offerings. This includes features like fare predictions, personalized recommendations, and real-time alerts.
Market Position: With over 250 million users, ixigo holds a strong position in India’s online travel market. Its focus on the middle and lower-income segments has allowed it to capture a unique demographic that is underserved by larger players like MakeMyTrip.
Growth in the Travel Industry: Post-pandemic recovery in the travel sector presents a major growth opportunity for ixigo. As travel demand rebounds, ixigo is poised to benefit from increased bookings.
Risks and Challenges
Despite its strong growth and market position, ixigo faces several challenges:
Competition: The online travel booking industry is fiercely competitive, with players like MakeMyTrip, Cleartrip, and Yatra offering similar services. ixigo will need to continuously innovate to maintain its market share.
Dependence on the Travel Sector: ixigo’s fortunes are closely tied to the travel and tourism industry. Any downturn in this sector, whether due to economic conditions or unforeseen events like the COVID-19 pandemic, could severely impact its revenues.
Profitability: While ixigo has shown rapid growth in profitability, it remains to be seen whether it can sustain this momentum in the long term. The company operates in a low-margin business, and profitability could be impacted by increased competition or rising operational costs.
Should You Invest in ixigo’s IPO?
Investing in any IPO carries risks, and it’s essential to consider both the potential rewards and pitfalls. The strong demand, as indicated by the GMP and the subscription numbers, reflects investor confidence in ixigo’s growth potential. The company’s focus on AI-driven services, its unique market position, and the broader recovery in the travel sector are compelling reasons to consider investing. However, the competitive nature of the travel industry and Ixigo’s dependency on external market factors should also be weighed carefully.
Conclusion
Le Travenues Technology Limited’s IPO has been one of the most talked-about public offerings in 2024. With a reasonable price band of ₹88 to ₹93 per share and strong grey market sentiment, ixigo’s IPO presents an interesting opportunity for both retail and institutional investors. Its success will largely depend on its ability to continue delivering strong financial results and maintaining its competitive edge in an increasingly crowded market.
