Equity outlook and performance
On July 15, shares of Easy Trip Planners closed at Rs 376.75 each after falling 0.89%. The previous close was Rs 380.10 each.
The stock reached the 52-week low level at Rs 261 each on 08 March 2022. The 52-week high level of the stock touched Rs 717.65 each recorded on 17 September 2021.
Investors buying the stock at CMP could expect a potential upside of 20% given the estimated target price of Rs 452 each.
This week the stock is down 3.62% and over the past month the stock is down 0.09. Over the past 3 months, its shares have fallen 7.46%. Over the past year, it has given positive returns of 70.78%.
Easy Trip Planners gross booking revenue depends on domestic air traffic
Easy Trip Planners generates gross booking revenue (GBR) largely from domestic air travel. According to management, prior to the COVID-19 outbreak, domestic flight bookings accounted for approximately 80% of bookings in the consolidated air segment; the proportion increased during the pandemic due to restrictions on air travel. Easy Trip Planners has a strong presence in the B2C segment of the airline industry (~95% of Easy Trip Planners revenue), particularly in the needs-based travel category, supported by its zero fee strategy. convenience.
“We expect Easy Trip Planners to continually grow GBR, growing its market share in the segments it operates in and continuing to be the only profitable business among domestic OTAs,” the brokerage said. .
Domestic air traffic has returned to pre-pandemic levels
According to the brokerage, “Domestic air traffic reached pre-pandemic level in May 2022. Before the pandemic (in 2019), average monthly domestic air traffic was 1.2 cr; in May 2022, air traffic total domestic hit 1.2 cr indicates that air traffic is improving rapidly and the current wave of COVID has had little impact on air travel.We believe this would boost the GBR of OTAs, including including Easy Trip Planners.
Easy Trip Planners partners with international airlines to drive volume
Easy Trip Planners expanded its international presence by incorporating subsidiaries in the United Arab Emirates, Singapore, United Kingdom, Philippines, Thailand, New Zealand and the United States, and launched travel search engines located in each global subsidiary, generating GBR from local carriers, agents, etc. Before COVID, Easy Trip Planners saw over 100% growth in international air travel gross bookings and contributed about 20% to the air segment. International traffic carried by national carriers reached 80% of pre-pandemic levels in April 2022. With improved international air travel, Easy Trip Planners’ GBR is expected to increase further.
Net turnover (in %GBR) must be at the current level
Airline commissions to OTAs have increased during the pandemic as airlines focus on passenger load factors. However, with the normalization of air traffic and the increase in air fares, airlines have reduced the commission (in %GBR). In Q4FY22, all OTAs reported a sequential decline in %GBR net revenue rate.
The brokerage firm said: “We believe Easy Trip Planners’ strong support over the past two years of domestic airlines has helped it build strong relationships that are difficult to replace in the short term.”
Easy Trip Planners net revenue (in %GBR) increased from 6.8% in FY19 to 10.9% in FY22, compared to its MMT peers (from 7 .3% to 8%) and Yatra (from 5.8% to 6%) during the same period. However, in Q4FY22, net income (in %GBR) was reduced to 8.4%/7.1%/7.1% for Easy Trip Planners/MMT/Yatra.
Easy Trip Planners management expects net revenue (in %GBR) to grow 9-10% in the near term, driven by its high share in the domestic B2C market and increased its contributions to international air transport.
Outlook & valuation
According to the brokerage, “The significant recovery in domestic and international air travel should benefit easy travel planners. As a result, the company is expected to see significant volume/transactions as well as gross booking revenue in the current quarter. (Q1FY23) In addition, Easy Trip Planners plans to focus on expanding its non-airline verticals beginning in FY23. The company has strategically achieved inorganic growth by acquiring innovative businesses in various travel segments and evolving into a comprehensive travel ecosystem.Easy Trip Planners recorded 57% growth in the airline booking segment in FY22 and expects to continue to see strong growth in the years to come with consistent profitability. maintain a “BUY” rating with a target price of Rs 452.”
About – Easy Trip Planners Ltd (EaseMyTrip)
Easy Trip Planners Limited (EaseMyTrip) operates as a travel agency. The Company offers ticket reservation, transportation, tour planning and accommodation services. Easy Trip Planners serves customers in India. EaseMyTrip began operations in 2008 focusing on the B2B2C (business-to-business-to-customer) distribution channel and providing travel agents with access to its website to book airline tickets for domestic travel to meet to the offline travel market in India. Subsequently, leveraging its B2B2C channel, the company commenced operations in the B2C (business to customer) distribution channel in 2011 focusing primarily on the growing travel needs of the Indian middle class.