Extending its bull run, shares of Easy Trip Planners have reached a new 52-week high of ₹73.5. apiece on the NSE during Thursday's intra-day trade. The stock has soared from ₹47.75 to its current level of ₹68.30 over the course of the last four trading sessions, generating astounding returns of nearly 43%.
The stock began rallying on Monday, November 21, after it turned ex-date for a 3:1 bonus issue and a 1:1 stock split.
The company's board of directors on Wednesday approved the allotment of equity shares under the bonus issue, EMT said in a regulatory filing.
Easy Trip Planners is a small-cap online travel platform stock with a market capitalization of over ₹11,855.3 crore. The company offers a comprehensive range of travel-related products and services catering to the needs of passengers travelling domestically as well as travelling to and from international destinations.
The stock has been performing well on Dalal Street for quite some time now, owing to a sharp rebound in their tourism segment following the economy's unlocking. In the past one year, the stock price of Easy Trip Planners has risen 106.78 percent, as against a 1.65 percent rise in the benchmark Sensex.
The management expects that the best time for travel and tourism in India is ahead, as the pent-up demand is extremely strong. Despite the rise in fares, flights and hotels are running at full capacity.
The management also believes that COVID has positively impacted OTAs (online travel agents), with the pandemic forcing people to book online rather than approach travel agents offline.
Domestic brokerage firm ICICI Securities has a "buy" call on the stock with a target price of Rs. 63 per share. The brokerage expects the company's gross booking revenue (GBR) to grow at 41.2% CAGR during FY22–25E on the back of EMT's aggressive advertising campaign to gain market share.
It also anticipates that international expansion into countries like the UAE, Philippines, Thailand, and the US will help the company boost revenues.
Further benefits would accrue from high-margin segments like hotels (Traviate, a B2B technology platform; Spree Hospitality, a hospitality management company); and the bus booking segment (Yolo, an intercity mobility platform), the brokerage added.
According to ICICI, the company is consistently gaining market share, led by its two strong growth pillars, and is now well-placed to withstand any competition that may come up in the future given the strong liquidity and its improving brand visibility in the domestic air ticketing segment.
"We believe EMT remains the best proxy vs. airline or hotel companies to play on travel recovery given its low cost and negative working capital characteristics along with strong balance sheet," said ICICI securities.
However, the brokerage stated that higher discounts and promotional activity can drive healthy growth but may lead to a fall in margins and profitability. The competitors may adopt aggressive discounts and promotions to drive their market share. If the company also chooses to pedal on growth through promotions and discounts, the profitability may be affected.
The brokerage also said that the current competitive situation is most benign, with the company occupying the second spot in the domestic air ticketing space. However, the brokerage raised concern that the entry of new players like Flipkart and Amazon, which have a larger pool of 12–14 crore online shoppers compared to the 1 crore registered customers of EMT, may lead to intense competition.
An average of three analysts polled by MintGenie have a 'hold' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
