Easy Trip IPO: Easy Trip listing worst among IPOs with 100x subscription!

NEW DELHI: Easy Trip Planners’ 13.5 per cent listing gain on Friday was substandard for an IPO that was subscribed a whopping 159 times. Going by past data, it was the worst IPO listing for an issue with over 100-times subscription at least in recent times.

Blame it on the market fall that entered the sixth day or investors who simply ignored the fact that prospects for the travel sector dimmed even for FY22 — the muted listing gains on Friday mocked solid premiums that the stock was enjoying in the grey market.

Analysts said it would have repercussions on listing expectations from future IPOs.

The travel stock got listed at Rs 212.25 on NSE, a 13.5 per cent premium to its issue price of Rs 187. On BSE, the scrip got listed at Rs 206.00, up 10.16 per cent.

Indigo Paints, which got listed on February 2, saw a 75 per cent listing pop after getting 117-times strong subscription to the IPO. Mrs Bectors, whose issue had been subscribed 198 times, logged 74 per cent listing gain on December 24, 2020.

Chemcon Speciality Chemicals (up 114 per cent), Happiest Minds Technologies (up 111 per cent), Burger King India (92 per cent) and Mazagon Dock Shipbuilders IPO (up 49 per cent) also fared pretty well. These IPOs got listed during September-December 2020.

Easy Trip’s listing was the worst among all the 28 IPOs that have seen over 100 times subscription since 2007.

“A good IPO listing to an extent ignores the broader market trend, if it gets subscribed hugely. But for Easy Trip, the listing came on a day when Maharashtra had its highest-ever daily Covid cases. Since the IPO concluded last week, the daily all-India Covid trend has picked up to alarming levels,” said Astha Jain of Hem Securities.

Jain, who is in Jaipur these days, said the flight ticket back to Mumbai for today evening is available at the same price as three days ago. “This give you an idea of how bad the sentiment has been for the sector,” she said.

To be sure, Easy Trip is strong on fundamentals. It has reported steady improvement in financials over the years, with revenues rising 19 per cent annually during FY18-FY20, Ebitda rising 105 per cent and net profit growing 129 per cent annually during the same period. Despite high working capital, its balance sheet looks strong with zero debt, said analysts.

But what seems to have gone against the stock was the aggressive valuation. The IPO was valued at 58.7 times and 49 times EPS for FY20 and annualised FY21, respectively, which analysts said were aggressive.

Reliance Securities’ Senior Research Analyst Vikas Jain, who penned the IPO note for Easy Trip, was among those who complained about the IPO valuations.

“Even when an issue is not priced reasonably, it can still see high subscription and a strong listing pop. But those gains do not last. Indigo Paints is one example, where the listing pop was solid, but the scrip today trades far below the listing price. In the case of Easy Trip, the company does not have significant market share, at just 5 per cent. There are a lot of players in the unorganised space and, thus, the stock should not command such lofty valuations. We think the stock should either hold or fall below the issue price in the coming days,” Jain said.

Astha Jain of Hem Securities said the poorer-than-expected listing could impact the IPO euphoria in the market, but said good and reasonably-valued IPOs may still continue to see strong listing gains.



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