RateGain makes weak market debut, trading 15% below issue price

RateGain Travel Technologies (RTTL) has made a weak stock market debut, with its shares listed at Rs 360, a 15 percent discount off the issue price of Rs 425 per share on the National Stock Exchange (NSE). The stock opened at Rs 364.80, 14 percent lower than the issue price on the BSE.

at 10:02 am; the share traded at Rs 372, a discount of 12 percent compared to the issue price. The stock had hit a high of Rs 375.05 and a low of Rs 342.30 so far in intra-day trading on the BSE. On the NSE, the stock has hit a high of Rs 378.90 and a low of Rs 340.25 so far. A combined approximately 5 million shares changed hands on the NSE and BSE.

RTTL’s initial public offer of Rs 1,336 crore (IPO) had received a good response from the investors. The issue was subscribed 17.4 times. Qualified institutional buyers (QIBs) issuances were subscribed 8.42 times, non-institutional investors 42.04 and private individual investors (RIIs) 8.08 shares, according to the data.

RTTL is one of the leading global distribution technology companies and is the largest Software as a Service (“SaaS”) company in the hospitality and travel industry in India, expected to benefit from the momentum in technology spending in the space. It operates through three business units of DaaS, Distribution and MarTech. Clients include some of the leading global airlines, hotel chains, cruises, car rental companies, etc.

The company serves a large and fast-growing fully addressable market. Third-party travel and hospitality technology is estimated to have a market of $5.91 billion in 2021, growing to $11.47 billion in 2025 at a CAGR of 18 percent. Enterprise applications aimed at recruiting, distributing guests, maximizing revenue and expanding wallet share in the hospitality and travel industries have a usable addressable market size of $4.34 billion by 2021, and are growing to an estimated US$8.45 billion by 2025.

This is a great and fast growing addressable market opportunity for a vertical specific platform company like RateGain. The travel technology segment is further favored by the tailwind of digitalization in the post-COVID times, ICICI Securities said in an IPO note.

As the largest SaaS provider in the travel and hospitality industry in India, RateGain Travel Technologies has a promising future. However, the company has suffered losses from COVID for the past two years, and the rising number of cases remains a cause for concern, said Aayush Agrawal, senior analyst at Swastika Investmart.

The cost of acquiring the shares by Avataar and Wagner, the investor’s selling shareholder, following the conversion of the Series A CCCPS and Series B CCCPS held by them may be less than the offer price.

Virtually all revenue comes from the global hospitality and travel industries and factors adversely affecting that industry could have a material adverse effect on its business, prospects, financial condition and results of operations. The COVID-19 pandemic has had a significant negative impact on the company and its operations, and its future impact on the company, operations and financial performance is uncertain, one of the key concerns, HDFC Securities said in IPO note. .

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