The eagerly awaited listing of Yatra Online shares on Dalal Street took an unexpected turn as they made a lackluster debut, opening at a 10.2 percent discount from the issue price of Rs 142. This disappointing start on the stock exchanges raised questions among investors about the future prospects of Yatra Online Limited (YOL) in the market.
Yatra Online’s Rocky Debut
Yatra Online shares began trading at Rs 127.5 per share, significantly lower than their IPO price of Rs 142. The lackluster listing could be attributed to several factors, as pointed out by Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.
Factors Contributing to the Negative Listing
- High Price-to-Earnings (P/E) Valuation: YOL’s valuation, particularly in terms of P/E, might have deterred potential investors. The premium attached to the stock could have raised concerns about its long-term growth potential.
- Reliance on Airline Ticketing: The company’s heavy reliance on the airline ticketing business, which has been severely impacted by the COVID-19 pandemic, might have made investors cautious about its revenue stability.
- Fierce Competition: The online travel industry is known for its fierce competition. YOL faces rivalry from both established players and emerging startups, making it challenging to capture a significant market share.
Investor Recommendations
Considering the negative debut and the aforementioned challenges, Nyati offered her perspective, stating, “Overall, YOL is a risky investment, and investors who receive an allotment of this IPO should consider exiting their position.” This suggests that investors should carefully evaluate their holdings in YOL and make informed decisions about their investment strategy.
Overview of Yatra Online IPO
During its initial public offering (IPO), Yatra Online reserved a substantial portion of shares for different investor categories. Qualified Institutional Buyers (QIBs) received at least 75 percent of the shares, Non-Institutional Investors (NIIs) had access to up to 15 percent, and Retail Investors could acquire a maximum of 10 percent of the shares.
The IPO consisted of a fresh issuance of shares worth Rs 602 crore and an offer for sale (OFS) of up to 12.2 million shares by a promoter and an existing investor. The funds raised through the IPO were earmarked for strategic investments, acquisitions, technology development, customer acquisition, and organic growth initiatives.
Key entities involved in managing the IPO included SBI Capital Markets Ltd, DAM Capital Advisors Ltd, IIFL Securities Ltd as book running lead managers, and Link Intime India Private Ltd as the offer’s registrar.
