Why is Yatra Online Ltd falling/rising?

Recent Price Movement and Market Context

Yatra Online Ltd’s stock has been under pressure for the past three consecutive days, accumulating a loss of 6.76% during this period. The intraday low on 19-Jan touched ₹152.6, marking a 5.13% decline from previous levels. This underperformance is more pronounced when compared to the broader travel services sector, which itself declined by 2.4% on the same day. The stock’s performance also lagged behind the sector by 2.43% today, signalling that investors are more cautious about Yatra’s near-term prospects relative to its peers.

Trading volumes have increased notably, with delivery volumes on 16-Jan rising by 53.63% compared to the five-day average, indicating heightened investor participation. However, the weighted average price suggests that more shares were traded closer to the day’s low, pointing to selling pressure dominating the session. The stock remains above its 200-day moving average, a long-term positive indicator, but is currently trading below its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short-term weakness and potential resistance levels.

Comparative Performance and Benchmark Analysis

Over the past week, Yatra’s stock has declined by 5.87%, significantly underperforming the Sensex, which fell by only 0.75%. The one-month and year-to-date returns also reflect a similar trend, with Yatra falling 12.31% and 11.73% respectively, compared to the Sensex’s more modest declines of 1.98% and 2.32%. Despite this recent weakness, the stock has delivered an impressive 44.16% return over the last year, substantially outperforming the Sensex’s 8.65% gain. This divergence highlights that while the company’s long-term growth story remains intact, short-term market dynamics and sector pressures are weighing on the share price.

Fundamental Strengths Supporting the Stock

Yatra Online Ltd continues to demonstrate robust fundamental performance. The company boasts a zero debt-to-equity ratio on average, indicating a strong balance sheet with minimal leverage risk. Its net sales have grown at an annual rate of 56.74%, while operating profit has surged by 101.05%, underscoring efficient operational management. The company’s latest quarterly results, declared on 25-Sep, were very positive, with net sales increasing by 67.23%. Profit after tax for the nine-month period reached ₹45.50 crores, reflecting a remarkable growth of 168.91%. Additionally, net sales for the same period stood at ₹779.65 crores, up 75.25%, signalling sustained demand and business expansion.

Return on equity (ROE) is at a fair 6.8%, and the stock trades at a price-to-book value of 3, which is considered reasonable given its growth trajectory. The company’s PEG ratio of 0.2 further suggests that the stock is undervalued relative to its earnings growth potential. These factors collectively support a positive long-term outlook for Yatra Online Ltd, despite the recent price softness.

Sectoral and Market Influences

The travel services sector, to which Yatra belongs, has experienced a downturn, falling by 2.4% on the day of the stock’s decline. This sector-wide weakness is likely a contributing factor to Yatra’s underperformance. Given the sector’s sensitivity to broader economic conditions, travel demand fluctuations, and regulatory changes, investors may be adopting a cautious stance. The increased liquidity and trading volumes in Yatra’s shares suggest that some investors are exiting positions, possibly to reallocate capital or reduce exposure amid uncertain near-term prospects.

Despite these short-term headwinds, Yatra’s market-beating performance over the past year, driven by strong profit growth of over 200%, indicates that the company remains well-positioned for recovery and future gains once sector conditions improve.

Conclusion

In summary, Yatra Online Ltd’s recent share price decline on 19-Jan is primarily attributable to short-term selling pressure, sectoral weakness in travel services, and technical factors such as trading below key moving averages. However, the company’s solid fundamentals, including strong sales growth, profitability, and a clean balance sheet, underpin a favourable long-term investment case. Investors should weigh these factors carefully, recognising that the current dip may present an opportunity for those with a longer investment horizon.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →