Improving Take rates

• The company has been increasing its take rate across all three modes of transport: flights, trains, and buses. The take rate for flights rose from 7.50% in FY2021 to 8.25% in the first nine months of FY2024. For trains, the take rate increased from 5.47% in FY2021 to 6.57% in the same period. Meanwhile, the take rate for buses improved significantly from 6.95% in FY2021 to 10.99% in the first nine months of FY2024.

Refund programs helping garner market share

• The company offers an assured refund program that allows customers to cancel airline, train, and bus tickets for a full refund at a nominal cost. These refund programs have helped the company garner market share in all 3 segments. For the first half of FY2024, the company has improved its market share to 52.4% in the OTA rail market (from 46.15% in FY2023), 12.5% in online bus ticket booking market (from 11.5% in FY2023) and 5.2% in the airline OTA market (from 3.3% in FY2023).​

Higher Customer Acquisition Cost (CAC)

• For 9MFY2024, the company allocated 24% of its revenues to advertising its three brands, an increase from 19% of the revenues in FY2023. The company has intensified its advertising and marketing efforts post-COVID to attract and retain customers. Consequently, the customer acquisition cost rose from Rs 44.3 per customer in FY2021 to Rs 198.5 per customer in the first nine months of FY2024.

Valuations

• Based on TTM financials, the company is asking for a PE of 51x and a market cap-to-sales of 5.7x. It’s closest listed peer in India, Easy Trip Planners is trading at a PE of 48.7x and market cap-to-sales of 12.5x. Upon attaining a good scale, the company has the potential to operate at better margins. Therefore, being available at a valuation reasonable to its peer, we recommend subscribing to the issue.