With the election dust settling and the market gaining traction, a new player is entering the IPO ring – Le Travenues Technology, better known by its brand name, Ixigo. This online travel agency (OTA) wants to raise ₹740 crore through its initial public offering. So, should you consider investing in ixigo? Let’s break down the critical details of the IPO and take a closer look at the company itself.
Ixigo IPO Details
| Offer Price | ₹88 – ₹93 per share |
| Face Value | ₹1 per share |
| Opening Date | 10 June 2024 |
| Closing Date | 12 June 2024 |
| Total Issue Size (in Shares) | 79,580,900 |
| Total Issue Size (in ₹) | ₹740.10 Cr |
| Issue Type | Book Built Issue IPO |
| Lot Size | 161 Shares |
Allocation:
Ixigo’s share allocation is divided strategically across different investor categories. The largest portion (75%) is reserved for Qualified Institutional Buyers (QIBs) such as mutual funds and insurance companies. High-net-worth individuals (HNIs) and Non-Institutional Investors (NIIs) can access 15% of the offering. Retail investors can participate by applying for a minimum of 161 shares and multiples thereof, though this represents only 10% of the total shares available.
| Category of Investors | Allocation of shares under IPO |
| QIB Shares Offered | 5,96,85,675 shares (75.%) |
| NII (HNI) Shares Offered | 1,19,37,135 shares (15%) |
| Retail Shares Offered | 79,58,090 shares (10%) |
| Total Shares Offered | 7,95,80,900 shares (100.%) |
Objectives of the ixigo IPO
The funds raised through the IPO will be used for:
- Working Capital: ixigo needs resources to keep its day-to-day operations running smoothly.
- Tech Investments: The company plans to invest in cloud infrastructure and upgrade its technology to stay ahead of the curve.
- Growth Strategy: ixigo aims to fuel its expansion through strategic acquisitions and other initiatives.
Company Overview
Founded in 2006, ixigo has become a dominant player in the online travel agency (OTA) space. They have the highest app usage among OTAs in India, with a staggering 83 million monthly active users. This immense user base translates into significant brand recognition and market reach. Moreover, the company is at a tipping point where its network effect, where a platform becomes more valuable as more users join, is starting to kick in. This could lead to significant profit growth in the future.
Financial Performance: A Look at the Numbers
Ixigo’s financial performance offers insights into its recent growth trajectory:
- Revenue Rise: Sales revenue has shown significant growth, tripling over the past two years. However, the previous year’s data is excluded due to the impact of the pandemic.
- Profitability Shift: The company has transitioned from losses to positive net profits in the latest fiscal year (FY23). Additionally, net profit has increased threefold compared to FY21.
- Potential for Increased Returns: While Return on Equity (ROE) and Return on Assets (ROA) are currently modest, this is common for companies like ixigo in their growth stage. As their user base expands and the network effect strengthens, profitability could improve due to the lower costs associated with serving a larger audience.
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SWOT Analysis of Ixigo
| STRENGTHS | WEAKNESSES |
| Strong Brand Recognition: ixigo is a well-established brand with high user loyalty. Network Effect: A growing user base increases the platform value and attracts new users. Mobile-First Approach: Their focus on mobile apps caters to the evolving travel booking trends. Technology Focus: Investment in technology ensures a smooth user experience and operational efficiency. | Limited Revenue Streams: Primarily reliant on commissions from travel bookings, making them vulnerable to market fluctuations. Competition: The online travel market is fiercely competitive with established players. Profitability: While positive, profitability ratios are still modest and require further improvement. |
| OPPORTUNITIES | THREATS |
| Expansion into New Markets: ixigo can tap into new markets like travel insurance or holiday packages. Technological Advancements: New technologies like AI can personalize user experiences and drive sales. Consolidation: Potential mergers or acquisitions can strengthen ixigo’s market position. | Economic Downturn: Decreased consumer spending can impact travel bookings. Regulatory Changes: Government regulations in the travel sector could affect operations. Technological Disruption: New entrants with innovative technologies could disrupt the market. |
The final word
Ixigo’s IPO offers potential access to the growing Indian travel market. The company boasts brand recognition, a loyal user base, and the possibility of substantial future growth. However, key considerations remain, including intense competition and the ever-present risk of economic fluctuations.
A crucial step before investing is thoroughly evaluating your financial goals and risk tolerance. ixigo’s IPO might align with your portfolio if you have a mid to long-term investment timeframe and hold a positive outlook on the travel industry’s future trajectory. Remember, comprehensive research is essential before participating in any IPO.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.