Financial benemax ltd

Business
Ixigo, started in 2007, as a flight comparison website enabled travellers to research and compare relevant price information and book their preferred flight in a cost-efficient and informed manner from OTAs. Ixigo later graduated to OTA( Online Travel Agent) in FY20. Ixigo is the 2nd largest OTA( Online Travel Agent) in terms of revenues, with 6% market share.
They operate through 4 different apps Ixigo flights,Ixigo trains, ConfirmTkt and AbhiBus. Ixigo is the largest Indian train ticket distributor in the OTA rail market with largest market share of around 51%, in terms of rail bookings, among OTAs. Their bus-focused app, AbhiBus, was the second largest bus-ticketing OTA in India, with a 11.5% market share in online bus ticket bookings in FY23. They had a market share in India of about 5.2% of the total airline OTA market by volume in H1 FY24. They have the highest app usage among OTAs with 83 million Monthly Active Users cumulatively across our apps. However, within each of their apps, they integrate and cross-sell all services they operate to ensure that users may not necessarily require another app ,like users can book a flight on the ixigo train app or ConfirmTkt and a bus journey on the ixigo flight app, and a train ticket on the AbhiBus app allowing them to discover and buy multiple travel services.
Product segments
1. Airline ticketing
Ixigo commenced operations in 2007 in the flight vertical by launching a travel meta-search website - providing aggregated comparison of deals and accurate travel information. Later in FY20, they transitioned to an OTA.
2. Rail
They launched the ixigo trains app for android in 2013 as a utility app with the objective of improving the experience of Indian train travellers by allowing them to search for train related information and providing utility services. Subsequently, in 2017, Ixigo started selling train tickets through their Ixigo trains app.
3. Bus tickets
Bus accounts for 70% of transport modes in India. Ixigo sells bus tickets by partnering either directly with operators or source inventory from bus ticketing aggregators in the country.They acquired the business of AbhiBus in 2021 to further consolidate their position.
4. Hotels
In December 2023, Ixigo have launched a hotel booking section on their website and apps to allow users the ability to search, compare and book hotels on their own platforms in India and across the world. They offer properties across domestic and international hotels, spanning budget, mid-range and luxury price points.
90% of users of Ixigo are organic users. Ixigo has market share amongst OTAs in terms of volumes - flight 5.3%, rail 53%, bus 13%. In July 2023, Ixigo became the first OTA in India to launch a Generative AI based travel planning tool named PLAN to help travellers plan their trip, get itineraries and real time information and recommendations based on input criteria
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Industry overview
The Indian travel and tourism market for air, road, air and hotels accounts to around 3,80,800cr, expected to grow at a CAGR of 9%. In the overall Indian Travel market, 54% of all travel spends were made online in FY23, expected to reach around 65% in FY28.
Within the overall budget of ₹ 24 billion allocated to the Ministry of Tourism, a significant portion of ₹ 17.4 billion has been earmarked for the enhancement of tourism infrastructure.
Online penetration is 66-68% which is expected to go to 73-75% in FY27.
OTA (Online Travel Agency) industry in terms of net revenues is 11000cr, expected to grow at 14-15%
B2B OTA is at 4500cr(expected CAGR 14-15%).
In FY23 online penetration of the air segment stood at 70% of all air travel, expected to increase to 80% by FY28. Share of online hotel booking is low at 32%.
The Bus segment is highly underpenetrated by OTAs and represents an increasing segment in terms of volume. Long haul intercity bus services have good revenue margins for players like RedBus, AbhiBus (ixigo bus business), PayTM and RailYatri. For middle market OTAs, this represents the next frontier of growth from Tier- II & III cities and provides the bulk of their top line and growth. Bus along with the air is the fastest growing online travel segment, with a forecasted CAGR for Fiscal 2023 to Fiscal 2028 of 18%
Breakup of the travel industry ( by revenues)
Airline ticketing 44%
Hotel booking 26%
Rail ticketing 16% Bus ticketing 14%
Growth drivers
With per capita income growth, discretionary spends on travel to increase, leading to growth in OTA industry, along with further increase in share of online booking will drive the growth. Convenience of booking with OTAs, making luxury destinations affordable to fit into middle-income consumer budget , workation ( working during travelling)- all these are fostering growth of travel industry.
The surge in affordable smartphone users is expected to reach 1 billion users by 2026, according to TRAI. This, coupled with high speed internet connectivity( launch of 4G/ 5G) will drive online bookings.
The ability of OTAs to offer value added services that offer additional protection and refund guarantees such as zero cancellation fee programmes, fully refundable and flexible ticket types, price protection, travel insurance etc. and their ability to bundle in multiple types of services in one transaction.
A shift in demographics of overall travellers to the age group of 18–35 years who are dominating the Indian travel scene, comprising almost 66% of the overall trips.
Market leader is MakeMyTrip with 24% market share, and other players are Ixigo, Easemytrip, Cleartrip. Ixigo’s market share of the overall OTA market (flights, trains, hotels and buses) by GTV stood at 6% in FY23
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Operating metrics
Gross booking revenues is Rs 7450cr (Makemytrip Rs 53790cr). Gross booking revenues is total ticketing values. Revenues for FY23 is 500cr. Contribution margin was 220cr, at 44% in FY23. Though highly fragmented, contribution margin for bus segment is highest at 61.9% Gross take rate is 8.15%.
Comparison of metrics vs FY22, FY21 will not yield correct picture as travel was highly reduced due to covid during those years.
Segment wise revenues (Total revenues 500cr)
Airline ticketing 100cr (20%) Rail 300cr (60%) Bus 100cr (20%)
With the overall improvement of travel and internet infrastructure in India, it is expected that increased travel from / to non-Tier I cities to drive growth in trains, flights, buses and hotel bookings. Transactions booked through Ixigo's OTA platforms involving either origin or destination as non-Tier I cities were 94%.
To gather more tier II customers. Ixigo has run Hindi language outdoor media campaigns at non-Tier I railway stations and target audience in such regions through multilingual digital ads. Their mobile apps are available in multiple regional languages, and have several voice-based features. In FY23, 97.7% transactions are done through the Ixigo apps , rest website. Ixigo's brand presence and loyalty amongst users is evident from the growth in Monthly Active Users, which has increased from 21.59 million in March 2021 to 62.83 million in March 2023. They had a repeat transaction rate of 85% in FY23. Ixigo took 9 hrs to process a complaint, a total of 191576 complaints received in FY23.
90% traffic to Ixigo is organic. Ixigo operates through house of brands approach like Makemytrip. Ads & sales promotion expenses stand at 18.6% of revenues.
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Financials
Annual revenues of Ixigo is 500cr. PAT 23cr.Revenues for 9M FY24 is 490cr and PAT for 9M FY24 is 65cr.
Take rates ( Operating revenues/ Gross booking revenues) of Ixigo is 8.15% (Yatra Online 5.7%, Makemytrip 9.1%, Easemytrip 6%)
EBITDA margins 8.7% (Yatra 17.6%, Makemytrip 10.2%) PAT margins 4.6% (Yatra 2%, Makemytrip is loss making Rs 90cr loss)
Balance sheet as on Dec '23
Borrowing at 43cr ( short term)Current debt/ equity ratio at 0.01
Trade receivables 33 cr.Cash equivalent of 52 cr.Cashflow from operations 30cr for FY23.
Points to consider
Market leader Makemytrip is still loss making, despite having 24% market share and 10 times revenues of Ixigo, indicating there is significant cash burn involved in terms of customer inducement/ customer acquisition cost which is 39% of revenues for Makemytrip.
Hotel & package booking is higher margin business, but Ixigo has just entered the segment in Dec '23.
Ixigo has a good hold in bus segment , which is still underpenetrated, and has higher take rates and contribution margin.
Transactions booked through Ixigo's OTA platforms involving either origin or destination as non-Tier I cities were 94%. Most of the future growth will come from non- Tier I cities, which places Ixigo in favourable spot. Given the growth drivers discussed , OTA industry is expected to grow at 14-15% CAGR.
IPO size /Promoter holding/ Market cap
Total offer ~ 720cr Fresh issue 120cr OFS 600 cr OFS sellers are SAIF Partners India IV Ltd , Peak XV Partners Investments V, others.
QIB- 75% NII 15% Retail 10% Funds raised from anchor investors is 333cr.
Price band- 88-93 Market cap post listing ~ 3635cr
Purpose of IPO
to fund working capital 45cr Technology & data science 26cr rest amount to fund inorganic growth
Valuation
Ixigo is valued at P/E of 56 and P/S of 7x. Yatra online is valued at P/E of 267, and P/S of 4.8x, whereas similar sized listed peer Easemytrip is at P/E of 48, P/S of 12.5x.

Can't find anything related to this on Google other than Decimus Financial Ltd being an NBFC registered with RBI.