Please refer to important disclosures at the end of this report
1
RateGain Travel Technologies Limited (RateGain) is among the leading distribution
technology companies globally and is the largest Software as a Service (SaaS)
company in the travel & hospitality (T&H) industry in India. RateGain offers suite of
inter-connected products which enable its clients to drive efficiencies in guest
acquisition, retention and maximize their margins by leveraging on RateGain’s A.I
powered products and its large data lake. It offers its solutions through its SaaS
platform and its products are classified into Data as a Service (DaaS, 37% of FY21
revenue), Distribution (49% of revenue) and, Marketing Technology (MarTech). Its
business. RateGain’s customer base has grown over the years and stood at 1,462
customers which include eight Global Fortune 500 companies, 25 out of the top 30
online travel agents (OTAs), 23 of the top 30 hotel chains among others (Sep’21).
Positives: (a) One of the largest aggregators of data points in the world for the T&H
industry with diverse and comprehensive portfolio of revenue maximization and
business critical solutions. (b) Marquee global customers with long-term
relationships. (c) Strong balance sheet and cash generation. (d) Successful track
record of growth through strategic acquisitions and strong management.
Investment concerns: (a) High concentration of revenue from contracts in relation to
distribution products and high dependence on single industry (~50% of overall
revenues for distribution products and almost entire revenue is derived from Travel
& Hospitality Industry). (b) High client concentration can pose as a risk as Gross
Retention Rate is averaging ~93%. (c) There are contingent liabilities of `68 Cr. (d)
Continuing impact of the COVID-19 on the Travel & Hospitality industry.
Outlook & Valuation: RateGain being a vertical specific platform company stands
to benefit from rapidly growing addressable market with key positives being tough
to replicate inter-operable products that leverages data. Its revenues are recurring
in nature with subscription/hybrid model forming a large part of its revenues. Its
growing customer base (from 1,274 in FY19 to 1,337/1,462 in FY21/5MFY22)
and stable gross revenue retention during the pandemic not only highlight the
importance of digital transformation in T&H industry but also speaks volumes
about the “business critical” nature of RateGain’s products. At `425 per share,
RateGain is commanding FY21/TTM Price/Sales multiple of 18.1x/16.3x
respectively. We recommend NEUTRAL as the listing gains might be minimal in the
current environment, but long-term prospects are bright for RateGain.
Key Financials
Y/E March (` cr)
FY2019
FY2020
FY2021
FY2021
Q1FY22
Net Sales
262
399
251
98
125
% chg
--
52.4
(37.1)
--
28.0
Reported Net Profit
11
(20)
(29)
(8)
(4)
% chg
--
(282.2)
(42.1)
--
54.1
EBITDA (%)
8.3
7.2
2.5
9.4
3.6
EPS (`)
1.0
(1.9)
(2.7)
(0.7)
(0.8)
P/E (x)
411.2
(225.7)
(158.8)
--
--
P/BV (x)
31.7
32.9
18.5
--
--
ROE (%)
15.4
(14.3)
(14.9)
--
--
ROCE (%)
8.3
12.2
(3.3)
--
--
EV/Sales
411.2
(225.7)
(158.8)
--
--
Source: Company, Angel Research; Note: Ratios calc. at upper price band & on post money basis
NEUTRAL
Issue Open: Dec 07, 2021
Issue Close: Dec 09, 2021
Offer for Sale: `961 cr
QIBs 75% of issue
Non-Institutional 15% of issue
Retail 10% of issue
Promoters 56.6%
Others 43.4%
Fresh issue: `375
Issue Details
Face Value: `1
Present Eq. Paid up Capital: `9.79 cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `10.67cr
Issue size (amount): `1,336 cr
Price Band: `405-425
Lot Size: 35 shares and in multiple thereafter
Post-issue mkt. cap: * `4,341 cr - ** `4,537 cr
Promoters holding Pre-Issue: 67.29%
Promoters holding Post-Issue: 56.58%
*Calculated on lower price band
** Calculated on upper price band
Book Building
RATEGAIN TRAVEL TECHNOLOGIES LIMITED
IPO NOTE | RATEGAIN TRAVEL
TECHNOLOGIES LTD.
December 6, 2021
Dec 06, 2021
2
RateGain Travel Technologies Ltd | IPO Note
Company background
RateGain Travel Technologies Limited (RateGain) is among the leading distribution
technology companies globally and is the largest Software as a Service (SaaS)
company in the travel & hospitality (T&H) industry in India. It offers solutions to
hotels, airlines, online travel agents (OTAs), meta-search companies, vacation
rentals, package providers, car rentals, rail, travel management companies,
cruises, and ferries. RateGain’s solutions help T&H companies find the right guest,
decide the right price, distribute it to the preferred channel of the guest and once
converted, helps them have an exceptional experience by leveraging on
RateGain’s A.I powered products and its large data lake. It offers its solutions
through its SaaS platform and its products are classified into Data as a Service
(DaaS, 37% of FY21 revenue), Distribution (49% of revenue) and, Marketing
Technology (MarTech). Its business. RateGain’s customer base has grown over the
years and stood at 1,462 customers which include eight Global Fortune 500
companies, 25 out of the top 30 OTAs, 23 of the top 30 hotel chains among
others as on Sep’21. The Gross retention revenue as on Aug’21 was 95-99%
across the three above mentioned business units and revenues from top 10
customers were ~40%. Seven of the top 10 customers have been with the
company for over 10 years.
Issue details
The IPO is made up of offer for sale of 2.26Cr Equity Shares and fresh issue of
`375 Cr aggregating to `1,336 Cr at the upper end of the price band.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
6,58,92,480
67.29
6,04,01,440
56.58
Public
3,20,29,880
32.71
4,63,44,449
43.42
Total
9,79,22,360
100.00
10,67,45,889
100.00
Source: Company, Angel Research & RHP.
Objectives of the Offer
1) ~`85 Cr towards repayment/prepayment of indebtedness availed by one of
its subsidiaries, RateGain UK. 2) ~`25 Cr towards payment of deferred
consideration for acquisition of DHISCO. 3) `80 Cr for strategic investments,
acquisitions, and inorganic growth. 4) `50 Cr for investment in technology
innovation, A.I. and other organic growth initiatives. 5) ~`41Cr for purchase
of certain capital equipment for their Data Center.
Key Management Personnel
Bhanu Chopra is the Chairman and Managing Director and one of the Promoters
and co-founders. He is an entrepreneur with experience of over 15 years and
holds a bachelor’s degree of science in business from Indiana University
Harmeet Singh is the group CEO and he holds bachelor’s degree in science from
California State University, Northridge. Prior to joining RateGain he served as the
President - J2 Cloud Services.
Tanmaya Das is the CFO and has been associated with RateGain since August 20,
2015. He holds a bachelor’s degree in commerce from Utkal University,
Bhubaneswar and is a member of the Institute of Chartered Accountants of India.
Dec 06, 2021
3
RateGain Travel Technologies Ltd | IPO Note
Exhibit 1: Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020
FY2021
5MFY21
5MFY22
Total operating income
262
399
251
98
125
% chg
--
52.4
(37.1)
--
28.0
Total Expenditure
240
370
245
89
121
Employee benefits expense
121
206
151
49
76
Other expenses
119
164
93
39
45
EBITDA
22
29
6
9
5
% chg
--
31.9
(78.5)
--
(50.6)
(% of Net Sales)
8.3
7.2
2.5
9.4
3.6
Depreciation& Amortization
20
43
36
19
13
EBIT
2
(14)
(30)
(10)
(8)
% chg
--
(1,011.0)
(112.4)
--
13.7
(% of Net Sales)
0.6
(3.5)
(11.9)
(10.0)
(6.7)
Finance costs
3
9
8
4
2
Other income
11
59
13
8
6
(% of Sales)
4.3
14.8
5.3
8.2
4.8
Recurring PBT
(2)
(23)
(38)
(14)
(11)
% chg
--
(1,298.4)
(65.5)
--
25.4
Exceptional item
-
54
-
-
-
Tax
(2)
2
4
2
(1)
PAT (reported)
11
(20)
(29)
(8)
(4)
% chg
--
(282.2)
(42.1)
--
54.1
(% of Net Sales)
4.2
(5.0)
(11.4)
(8.0)
(2.9)
Basic & Fully Diluted EPS (`)
1.0
(1.9)
(2.7)
(0.7)
(0.8)
Source: Company, Angel Research
Dec 06, 2021
4
RateGain Travel Technologies Ltd | IPO Note
Exhibit 2: Balance Sheet
Y/E March (` Cr)
FY2019
FY2020
FY2021
5MFY21
5MFY22
SOURCES OF FUNDS
Equity Share Capital
1
1
1
1
8
Other equity
143
137
244
189
236
Shareholders’ Funds
143
138
245
190
244
Total Loans
54
144
117
120
112
Other liabilities
(0)
20
0
(0)
(1)
Total Liabilities
197
301
362
309
355
APPLICATION OF FUNDS
Property, Plant and Equipment
17
13
8
10
6
Right-of-use assets
22
20
5
6
2
Intangible assets
67
183
155
169
145
Non-Current Investments
-
-
-
-
-
Other Non-Current Asset
8
7
2
3
2
Current Assets
168
171
267
198
269
Investments
41
45
129
21
131
Trade receivables
63
78
67
69
64
Cash and Cash equivalents
45
24
57
92
59
Loans & Other Financial Asssets
1
0
0
0
0
Other current assets
18
24
14
16
14
Current Liability
84
92
74
76
69
Net Current Assets
84
79
193
122
200
Total Assets
197
301
362
309
355
Source: Company, Angel Research
Dec 06, 2021
5
RateGain Travel Technologies Ltd | IPO Note
Exhibit 3: Cash flows
Y/E March (`cr)
FY2019
FY2020
FY2021
5MFY21
5MFY22
Operating profit
9
(18)
(25)
(6)
(9)
Net changes in working capital
10
(26)
(6)
(4)
(7)
Cash generated from operations
19
66
54
23
24
Direct taxes paid (net of refunds)
(2)
(4)
(2)
(0)
(1)
Net cash flow from operating activities
36
19
21
13
7
Purchase of Assets
(77)
(113)
(1)
(0)
(0)
Interest received
0
0
0
0
0
Others
74
0
(81)
25
0
Cash Flow from Investing
(3)
(112)
(82)
25
(0)
Repayment/Proceeds (borrowings)
-
86
(2)
(1)
(2)
Issue of Preference share Capital
-
-
111
35
-
Share issue expenses
-
-
(7)
-
-
Interest paid
(2)
(6)
(7)
(5)
(2)
Interest/Principal Payment on Lease liab.
(4)
(7)
(2)
(0)
(1)
Cash Flow from Financing
(6)
73
93
29
(5)
Inc./(Dec.) in Cash
27
(20)
32
67
2
Acquisition
-
-
-
-
-
Opening Cash balances
13
40
21
21
54
Closing Cash balances
40
21
54
88
55
Source: Company, Angel Research
Dec 06, 2021
6
RateGain Travel Technologies Ltd | IPO Note
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/Sales
17.3
11.4
18.1
P/E (on FDEPS)
411.2
(225.7)
(158.8)
P/CEPS
145.1
59.4
621.0
P/BV
31.7
32.9
18.5
EV/Sales
17.2
11.6
17.8
Per Share Data (Rs)
EPS (Basic)
1.0
(1.9)
(2.7)
EPS (fully diluted)
1.0
(1.9)
(2.7)
Cash EPS
2.9
7.2
0.7
Book Value
13.4
12.9
22.9
Returns (%)
ROE
15.4
(14.3)
(14.9)
ROCE
8.3
12.2
(3.3)
Turnover ratios (x)
Receivables (days)
88
71
97
Payables (days)
29
38
36
Working capital cycle (days)
59
33
61
Source: Company, Angel Research
Dec 06, 2021
7
RateGain Travel Technologies Ltd | IPO Note
Research Team Tel: 022 - 40003600 E-mail: [email protected] Website: www.angelone.in
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager and investment advisor with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking
Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration
number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for
accessing /dealing in securities Market.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel or its associates or research analyst or his relative may have actual/beneficial ownership of 1% or more in the securities of the
subject company at the end of the month immediately preceding the date of publication of the research report. Neither Angel or its
associates nor Research Analysts or his relative has any material conflict of interest at the time of publication of research report.
Angel or its associates might have received any compensation from the companies mentioned in the report during the period preceding
twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance,
investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal
course of business. Angel or its associates did not receive any compensation or other benefits from the companies mentioned in the
report or third party in connection with the research report. Neither Angel nor its research analyst entity has been engaged in market
making activity for the subject company.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources
believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for
general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or
damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has
not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any
representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking
Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or
other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information. Angel or its associates or Research Analyst or his relative might have financial interest in the
subject company. Research analyst has not served as an officer, director or employee of the subject company.
