RateGain Travel hits all-time low; plunges 43% from IPO issue price

The stock has plunged 43 per cent from its issue price of Rs 425 per share, and 54 per cent from its record high-level of Rs 525

Shares of RateGain Travel Technologies (RTTL) hit an all-time low of Rs 240.25, slipping 3 per cent on the BSE in Thursday’s intra-day trade. The stock has fallen 9 per cent in the past two days on concerns of weak earnings in the June quarter (Q1FY23).

The stock of the global provider of SaaS solutions for the hospitality and travel industry has plunged 43 per cent from its issue price of Rs 425 per share, and 54 per cent from its record high level of Rs 525 touched on January 18, 2022.

RTTL had made its stock market debut on December 17, 2021. The company had raised Rs 1,336 crore through an initial public offer (IPO), which had received a good response from the investors, getting subscribed 17.4 times.

RTTL is among the leading distribution technology companies globally and is the largest Software as a Service (“SaaS”) company in the hospitality and travel industry in India, which is expected to benefit from the thrust on technology spending in the space.

It operates through three business units of DaaS, Distribution and MarTech. The clients include some of the leading global airlines, hotel chains, cruises, car rental companies etc.

For the quarter ended March 2022 (Q4FY22), the company had registered a 50.6 per cent year on year (YoY) growth in revenue at Rs 107.88 crore and strong growth in adjusted profit after tax at Rs 17.78 crore, and adjusted EBITDA at Rs 12.62 crore.

The company said the earnings were driven by the reopening of international travel in major travel markets and a surge in travel demand across the world. RateGain registered broad-based growth across all its businesses due to increasing demand for technology-enabled solutions in its key markets, building upon its strong performance previous quarter, it said.

For FY23, the management expects revenue to grow by around 30 per cent YoY organically. “In terms of EBITDA margins, we expect to improve our margins to around 12.5 per cent for FY23 as against 10.3 per cent in FY22,” it said in the last quarter's earnings conference call.

Q4 is the company's strongest quarter, whereas Q1 is the weakest quarter, both from revenue and profitability perspective. EBITDA will gradually grow from around 10 per cent in Q1 to around 14 per cent in Q4, which is an increase of 200 basis points each quarter when compared to annual basis, the company said.

The Covid-19 pandemic has had a significant adverse effect on the business and operations, and its future impact on the business, operations and financial performance is uncertain, according to analysts.

The company’s substantial revenues are derived from the worldwide hospitality and travel industry and factors that negatively impact that industry could have a material adverse effect on the business, prospects, financial condition and results of operations.

"Business depends on customers renewing their contracts and on RTTL expanding its sales to existing customers. Any decline in its customer contract renewals or expansion or any impairment of its long-term relationships with its customers would adversely affect the business operations and financial performance. If RTTL is unable to attract new customers in a manner that is cost-effective and assures customer success, then its business, results of operations and financial condition would be adversely affected are key concerns", HDFC Securities had said in its IPO note.