RateGain IPO Review – AI-Driven SaaS provider – How good is this IPO?
RateGain 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.
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
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|
|Profit After Tax||110.3||-201.0||-285.8||-83.4|
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
|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|
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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