Easy Trip planners is a small-cap online travel platform stock with a market capitalisation of over ₹8,761.1 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.
Shares of this New Delhi-based company have soared 100.29 per cent from its 52-week low of ₹201.6. to ₹403.20. The rally in stock price came on the back of a sharp rebound in their tourism segment post-unlocking of the economy.
During Monday's intraday, the share price opened positively and touched a high of ₹404.7 on the NSE. It then closed nearly 7.02% higher at Rs. 403.20 and it recorded a volume of 1.8 million on the same day.
The stock gained 39.93% in the last six months to ₹403.20, from ₹285.60. In the last one year, the stock has returned 85.65 per cent to shareholders.
On the technical charts, the stock is trading 25% higher than its 200-DMA. The Relative Strength Index (RSI) of the stock stands at 58.3.
The management believes 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. Furthermore, the management believes that COVID has positively impacted OTAs (online travel agents), with the pandemic forcing people to book online rather than approach travel agents offline.
The management expects ETP to become the leader in the air travel bookings segment in India in the next three-four years.
The company generates gross booking revenue (GBR) largely from domestic air travel. As per the management, before the outbreak of COVID-19, domestic air bookings accounted for 80% of bookings in the consolidated air segment; the proportion increased during the pandemic due to air travel restrictions.
Edelweiss in a report said that Easy Trip planners have a strong presence in the air travel industry’s B2C segment (95% ETP revenue), specifically in the need-based travel category, supported by its 'No Convenience fee' strategy. It expects ETP to continuously grow GBR with an increase in market share in segments where it operates and continue to be the only profitable company among domestic OTAs.
ETP expanded its international presence by incorporating subsidiaries in the UAE, Singapore, the UK, the Philippines, Thailand, New Zealand and the US, and launched localised travel search engines in each global subsidiary, generating GBR from local carriers and agents, according to Edelweiss.
Meanwhile, commissions from airlines to OTAs increased during the pandemic, with airlines focusing on passenger load factors. However, with normalisation in air traffic and an increase in air fares, airlines have been reducing the commission (as %GBR), Edelweiss said in its report.
However, Edelweiss believes that ETP’s strong support in the past two years for domestic airlines has helped it to form strong relations, which are difficult to replace in the near term. ETP’s net revenue (as %GBR) increased from 6.8% in FY19 to 10.9% in FY22, compared to peers MMT (from 7.3% to 8%) and Yatra (from 5.8% to 6%) during the same period. But ETP reported an over 23 per cent drop in net profit for the quarter ending March 31, 2022, to ₹23 crore, as against the ₹30 crore it had reported in the year-ago period. Air segment bookings grew by 13 per cent to 20.5 lakh in the fourth quarter as compared to 18.2 lakh in the year-ago period.
For the full fiscal, the consolidated net profit stood at ₹106 crore, up by over 72 per cent as against the ₹61 crore it had reported in the year-ago period. Consolidated revenue from operations stood at ₹235.37 crore as against ₹138.5 crore in FY21
Edelweiss has maintained a 'BUY' rating on Easy My Trip with a target price of ₹452/share. This equates to a potential 12% upside from the current level.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.