Planning a trip ft EasyTrip Planners. A primer on the stock

“Our innovative EaseMyTrip franchise system is disrupting the travel industry by providing convenient access to our services, overcoming the limitations of digital literacy. The inauguration of our latest establishment in Surat signifies a noteworthy achievement in our pursuit of establishing a robust nationwide footprint. “

Mr. Rikant Pittie, Co-Founder

Stock data

Ticker	EASEMYTRIP
Exchange	BSE and NSE
Industry	Travel Agency

Price Performance:

Last 5 days	-4.27%
YTD	-22.6%
Last 1 year	-79.2%

Company description:

Started in 2008, Easy Trip Planners offers a comprehensive range of travel – related products and services under the flagship brand ”Ease My Trip”. It is India’s second largest Online Travel Agencies in terms of booking volume.

It also provides end- to -end travel solutions, including airline tickets, hotels and holiday packages,rail tickets, bus tickets and taxis as well as ancillary value- added services such as travel insurance, visa processing and tickets for activities and attraction.

Successful listing:

The company got listed on the BSE on 19th Mar 2021 with a 10% premium. The company’s 510 crores issue was subscribed more than 160 times. The IPO comprised an offer for sale of 255 crore each by promoters Nishant Pitti & Rikant Pitti who held 49.81% and 49.68% stake respectively.

Acquisitions & Partnerships:

1.  Spree Hospitality acquisition: A 1200-room-keys hospitality management company, Spree has a diversified portfolio of 45 properties including hotels, resorts, clubhouses and guest houses across India with an aim to expand to 200 properties in the next five years.
2. YoloBus acquisition: A next-generation, premium intercity bus mobility platform. Over 3 lakh customers have traveled using its platform across 250-plus routes, connecting major Tier-I to Tier II and III cities.
3. Flybig partnership: Entered into an exclusive partnership with Flybig, India’s newest regional airline, for selling their tickets on our platform.
4. SpiceJet partnership: Exclusive partnership with budget airline SpiceJet for powering their holiday bookings.
5. JustDial partnership: Exclusive service provider for all flight bookings at JustDial.

Its acquisition strategy is aimed at entering newer verticals and to strengthen its brand in existing segments.

Geographical Expansion:

In FY22, the company expanded into Philippines, Thailand, USA & MOU with Saudi Tourism.

Revenue mix:

Airline tickets accounted for 94.0% of revenues (pre-Covid levels) while hotels, other services contributed 5.4%, 0.6% of revenues, respectively.

Growth strategies:

As a part of the company’s second phase of expansion, a localized travel search engine is to be launched in each of its global subsidiaries to enable customers in these regions to enjoy the value-based services.

High Look to Book ratio:

The company’s Look to Book ratio (shows the number of customers who executed a transaction out of the total number of users) stands at ~4% . 

Bonus & Splits:

On Feb 28, the company announced bonus of 1:1 and then again on Nov 21, in ratio of 3:1 and further split from Future Value of Rs 2 to Rs 1

Financials:

What we like:  

1. Leading OTA firm:

Easy Trip Planners is the fastest growing, second largest and only profitable company in the online travel portal in India. The company offers a comprehensive range of travel-related products and services for end-to-end travel solutions, including airline tickets, hotels and holiday packages, rail tickets and bus tickets.

2. Largest Agent Network:

Ease trip has a largest travel agent network of 60,000 across India. The company has three distribution channels B2C,B2E and B2B2C. More than 90% of its business is B2C at present while the rest comprises either travel agent or corporate business

3. Strong Customer connect:

Ease my trip follows a unique pricing model in which the company doesn’t charge any convenient fee if the user doesn’t have any other discount option or promotion coupon and the company also provides customer support through all stages and this has enabled the company to have a high repeat transaction rate of ~86% in the B2C segment.

4. Experienced management team with an established track record: 

ETPL’s Promoters are actively involved in their operations, and have been instrumental in implementing their growth strategies since incorporation. Their senior management team also has significant experience in the internet and information technology sector and has technical expertise that has helped expand their business through various initiatives including broadening their distribution channels and growing their products and services offerings.

Factors to consider:

1. The company has ~66 Crores worth of Litigations which are as follows:

1. AirWorth Travel & Tours Private Limited, one of the ticketing partners of the company, has filed a claim of ~Rs 57Cr against the Group on grounds of claiming wrongful refunds on flown tickets, failed to make payment of cancellation charges, lower ticket charges for higher class tickets, excess refunds claimed.
2. Paytm, has filed a case against the Group for non-payment of cancellation refunds of Rs 5 Cr for the year till May 2017, matter is still pending
3. MakeMyTrip (India) Private Limited has alleged that EaseMyTrip has used terms and phrases in their Google AdWords program which are deceptively similar to their registered trademarks in the word ‘MakeMyTrip’, logos, and websites making it an Infringing Activity and the company has also filed counter cases and the matter is still pending in the court. The case is for Rs 4 Cr.

2.   Higher discounts and promotional activity can drive healthy growth but may lead to fall in margins and profitability. The competitors may adopt aggressive discounts/  promotions to drive their market share. If the company also chooses to pedal on growth through promotions/discounts, the profitability may get affected.

3. The current competitive situation is most benign with the company occupying the

second spot in the domestic air ticketing space. However, entry of new players like

Flipkart/Amazon having larger pool of 12-14 crore online shoppers compared to ~1

crore registered customers of EMT may lead to intense competition

4. Covid like pandemic might again disrupt the sales of the company.