RateGain IPO Review – AI-Driven SaaS provider – How good is this IPO?

RateGain Travel Technologies IPO (RateGain IPO) details and Review, Details, Dates, Review and AnalysisRateGain IPO (RateGain Travel Technologies Limited IPO) Details

Noida based RateGain Travel Technologies Limited is coming up with an IPO that would open for subscription on 7th December 2021. RateGain Travel Technologies is a leading distribution technology companies globally and largest SaaS (Software as a Service) provider in travel and hospitality industry in India. Its revenues are fluctuating and fallen in FY21 compared to previous years. Company is incurring losses in the last 2 years and 5 months. Should you invest in RateGain Travel Technologies IPO? We would have 360 degree review of fundamentals, technical analysis and provide RateGain IPO Details in this article.

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About RateGain Travel Technologies Limited

Company is among the leading distribution technology companies globally and the largest SaaS (Software as a Service) company in the hospitality and travel industry in India.

They offer travel and hospitality solutions across a wide spectrum of verticals including hotels, airlines, online travel agents, meta-search companies, vacation rentals, package providers, car rentals, rail, travel management companies, cruises and ferries.

They are the largest aggregators of data points in the world of the hospitality and travel industry.

They offer a suite of inter-connected products that manage the revenue creation value chain for its customers by leveraging its big-data capabilities and integration with other technology platforms, helping hospitality and travel providers acquire more guests, retain them via personalised guest experiences and see to maximise their margins.

RateGain Travel Technologies IPO details

IPO Opening Date 07-Dec-21
IPO Closing Date 09-Dec-21
Issue Type Book Built Issue IPO
Face Value Rs 1 per equity share
IPO Price band Rs 405 to Rs 425 per equity share
Lot Size 35 Shares
Min Order Quantity 35 Shares
Listing at BSE and NSE
Issue Size Total Rs 1,335.74 Crores
1) OFS – Rs 960.74 Crores
2) Fresh issue – Rs 375 Crores

RateGain Travel Technologies IPO RHP

What are the strengths of RateGain Travel Technologies Limited?

1) Company has marquee global customers with long-term relationships

2) Company has Innovative AI driven industry relevant SaaS solutions

3) Company with strong financial performance with track record of successful acceleration post acquisitions

4) It has global and diverse management team with relevant technology and domain expertise and focus on employee welfare

What are the Objects of the IPO Offer?

RateGain IPO Size is Rs 1,335.74 Crores and has below objects of the IPO:

1) Offer for Sale (OFS) Rs 960.74 Crores:  Under OFS, selling shareholders would sell their shares and company would not get any money from this IPO proceeds.

2) Fresh issue of Rs 375 Crores:  Fresh issue would be done towards the following purposes:

  • Repayment and/or prepayment of indebtedness availed by Rategain UK.
  • Make payment of deferred consideration for acquisition of DHISCO.
  • Strategic investments, acquisition, and inorganic growth.
  • To make an investment in technology innovation, artificial intelligence, and other organic growth initiatives.
  • Purchase capital equipment for the company’s data center, and
  • Meet general corporate purposes

Who is the promoter of RateGain Travel Technologies Limited?

Bhanu Chopra and Megha Chopra are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 5 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 5 months ending Aug-21
Total Assets 2,849.0 3,971.1 4,398.0 4,281.9
Revenues 2,727.0 4,576.1 2,640.9 1,312.2
Profit After Tax 110.3 -201.0 -285.8 -83.4
Profit % 4.05% -4.39% -10.82% -6.35%

Why to invest in RateGain IPO?

Here are the positive factors in this company.

1) Company is the leading distribution technology companies globally and largest software provider of SaaS in the travel and hospitality industry in India.

2) Company has a strong customer base of 1,434 customers + 8 Global Fortune 500 companies by the end of June, 2021. It is also the largest innovative AI driven industry relevant SaaS solution provider.

Risk Factors of investing in RateGain IPO

1) Company revenues are fluctuating and fallen in FY2021 compared to FY19 and FY20. Its revenues were at Rs 272.7 Crores in FY2019 Vs. Rs 264 Crores in FY2021. One can majorly attribute such down trend is due to covid pandemic.

2) Company was making profits in FY19, however, started incurring losses later-on, for FY20 and FY21 and even for 5 months ending Aug-21. Company indicated that at gross level, it is making margins, however after amortization of the cost of acquisitions and depreciation, it is incurring losses. Like I indicated earlier, investors should always invest in profit making companies (after depreciation, interest and taxes).

3) The cost of acquisition of the Equity Shares by Avatar and Wagner, the Investor Selling Shareholder, pursuant to the conversion of the Series A CCCPS and Series B CCCPS held by them may be below the Offer Price.

4) All of its revenues are derived from the worldwide hospitality and travel industry and factors that negatively impact that industry could have a material adverse effect on its business, prospects, financial condition and results of operations.

5) The COVID-19 pandemic has had a significant adverse effect on its business and operations, and its future impact on our business, operations and financial performance are uncertain.

6) They have issued Equity Shares during the preceding twelve months at a price which may be below the Offer Price.

7) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.

Frequently Asked Questions (FAQs)

Should I Buy RateGain IPO?

Investors should always invest in fundamentally strong companies along with reasonable IPO price. RateGain Travel revenues are fluctuating, reduced in FY21 compared to previous years. It moved from profit making to loss making company in FY20 and FY21.

What are RateGain IPO Dates?

The IPO opens on 7th December and closes on 9th December, 2021.

What is the minimum amount to subscribe to this IPO?

Investors need to apply for 35 shares at minimum lower price band of Rs 405 per share. Minimum amount in such case would be 35 x 405 = Rs 14,175. Similarly minimum amount to be applied on upper price band would be Rs 35 x 405 = Rs 14,875.

What is RateGain IPO GMP today?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market.

RateGain Travel IPO GMP today (Source: Chittorgarh) is at Rs 160 as of the date of writing the article.

GMP as per IPOWatch is zero.

Rategain IPO GMP Chanakya – Rs 100.

RateGain Travel IPO Valuation

The RateGain IPO price band is Rs 405 to Rs 425 per share.

Company do not have any listed peers for comparison.

Company is incurring losses and the EPS is negative in the last 3 years (weighted average) and in FY21, hence we cannot compute the P/E and cannot ascertain whether the issue price is underpriced or overpriced.

How to apply RateGain IPO online on Zerodha?

If you have demat account with Zerodha, you can apply this IPO online using the UPI as a payment gateway. Zerodha customers can apply in RateGain Travel Technologies Limited IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘RateGain Travel Technologies Limited IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Quantity, and Price.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

RateGain IPO dates for subscription, Allotment and Listing

Offer Open 07-Dec-21
Offer close 09-Dec-21
Finalization of Allotment 14-Dec-21
Initiation of Refunds 15-Dec-21
Credit to Demat Account 16-Dec-21
IPO Shares Listing Date 17-Dec-21

Also Read: Anand Rathi IPO opens on 2nd December – Should you invest?

RateGain Travel Technologies IPO Review and Analysis

You might be wondering this IPO is good or bad for investment?

RateGain Travel is one of the leading distribution technology company globally as well as the largest Software As Is Service (SaaS) provider in the travel and hospitality industry in India.

Company revenues are fluctuating and has fallen in FY21 compared to FY19 and FY20. This is due to covid pandemic where travel and hospitality industries are badly affected. It has turned to loss making company in FY20 and in FY21.

Since it generated losses, we cannot compute P/E and cannot ascertain whether the RateGain IPO Price is underpriced or overpriced.

Hospitality and Travel industry is under severe stress due to covid pandemic and due to travel restrictions across the world. No one knows when we would come out from this situation and when these industries would revive.

Market veteran Dilip Dawda say negative earnings are concern, but keeping future prospects, risk investors can subscribe to RateGain IPO for long term.

No doubt, company has bright prospects, however company would be under performing for few more quarters due to covid pandemic. Considering these factors, investors can give miss to this IPO as of now. If such shares are available at discounted price post listing, one can invest considering the valuations during that time.

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Suresh KP

12 comments

  • Vinay

    RateGain’s revenue has recovered 30% even though the world has still not completely opened and most of Europe and South East Asia has been shut including China. This ofcourse is because of their heavy reliance on United states for revenue which is also the biggest generator of tourism receipts according to the industry section. There five months revenue from the US is already trending towards 180-200 crores compared to 160 crore in last two fiscals. This growth is primarily driven from their Martech business which has grown by over 170% in first five months in a marketwhere they have 4-5% penetration right now.

    This is what makes the stock very interesting to me – a very clear path of growth and also that growth visible on paper in a COVID year.

    • 5th comment in the span of 5 minutes (“People who want to promote this IPO”). Our analysis consists both pros and cons and at end investors can still take a call whether to buy or not.

  • Kurmiyt

    RateGain has proven track record of successful M&As. It acquired DHISCO with operations in North America and Europe in 2018, integrated it with RateGain’s proprietary technology, expanded it to hotels and OTAs in Asia, maintained and grew its existing customer base. It also recently acquired Myhotelshop, a German company which offers reporting, bid management and campaign intelligence platform for metasearch publishers and other travel products that enables hotel suppliers, OTAs, and agency clients to reach more customers at higher returns. Myhotelshop will boost both RateGain’s revenue and profitability as it posted revenue of INR 503.3 mn (20% of RateGain’s revenue) and PAT margin of 21% in FY21.
    Rategain has been busy acquiring and improving its product portfolio, retaining customers and improving profit margin. There are many so called analysts who don’t go in depth and like to focus on negative. You have to see both positives and negative and take a call accordingly.

    • 3rd comment in the span of 5 minutes. Analysts should not just focus on positives. Our analysis consists both pros and cons and at end investors can still take a call whether to buy or not.

  • Varun Kumar

    Day 1 is not yet over and already retail portion is completely subscribed. Ahead of IPO it has managed to raise Rs.599 CR from anchor investors. What more indicators you want? This is a good sign.

  • Aravindkumar

    This is a market leader and that too in tech space of travel and hospitality sector. Everyone is moving to digital and this company is clearly there to service all client’s needs and requirements like a one stop shop – retaining customers and increasing profit margins. In fact, it was acquiring new tech and software to improve product portfolio and serve customers better. This is a completely growth hungry company and as it grows so will our returns.
    Happy investing!

  • Jaswinder singh

    Fresh issue of Rs 960.74 Crores wrongly mentioned, it’s 375..please check

    • Thanks Jaswinder ji. I just corrected it.

    • Juhi rajput

      Understand the difference between loss making and loss incurring first.
      The losses seen in the case of RateGain are due to the impact of impairment. The numbers changed to unfavorable Rs. 28.57 crore for FY21 and unfavorable Rs. 8.33 crore for 5 months ended August 21. The firm reported revenues of Rs. 264 crore for FY2021 and a PAT before the goodwill impairment of Rs. 7.5 crore. The revenues for 5 months ended August 2021 were Rs. 131.22 crore and a PAT of Rs 4.57 crore before impairment. The losses seen in the recent financials of RateGain are on account of the acquisition done by the company in the course of the last two years and the impairment of goodwill on the same.
      Company is cash positive, EBITDA Positive and has improved margin even in a COVID year as well as increased customer count year over year and has 99% revenue retention rate. In RateGain’s case – it is INCURRING LOSS from Depreciation which is clearly visible and on the analyst call the CFO suggested that this loss is due to their acquisitions done two years back and that they are getting TAX benefit in the US

      • 4th comment in the span of 5 minutes (“People who want to promote this IPO”). Our analysis consists both pros and cons and at end investors can still take a call whether to buy or not.

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