Opening Statement:
Do you intend to invest in the ixigo initial public offering? Before making any decisions, it is critical to understand the potential risks. Le Travenues Technology Ltd. is developing Ixigo, the travel booking platform. The business is launching an IPO of ₹740 crore. Equity shares in the first public offering are priced between ₹88 and ₹93. Despite Ixigo’s impressive development, investors should be aware of the significant risks connected with this product.
Company Overview:
What is Le Travenues Technology Ltd., and what services do they offer? Ixigo, an online travel agency (OTA), was founded in 2006. It is a site that allows you to order train, plane, and bus tickets, as well as hotel reservations. The company’s main products include ixigo Trains, Confirmtkt, ixigo Flights, and Abhibus. ixigo’s profits per share (EPS) remain much lower than Re 1 despite the company’s return to profitability in March 2023.
Details and timeline for the initial public offering.
What is the particular date when the ixigo IPO became available for subscription, and what are the details? The initial public offering (IPO) began on June 10 and is expected to end on June 12. Before ixigo’s IPO, anchor investors invested ₹333 crore. The offer includes a new equity sale of ₹120 crore and an offer for sale (OFS) of up to 6.67 crore shares. The IPO is priced between ₹88 and ₹93 per equity share.
Allocation and Subscriptions
What is the market’s reaction to the ixigo IPO thus far? The IPO had a positive reaction on its first day, with a subscription rate 1.38 times the offer size. Retail investors dominated the subscriptions, bidding 4.78 times the authorized quota. Non-institutional investors (NIIs) followed suit, buying 1.71 times their allocation. Qualified institutional buyers (QIBs) purchased their allotted shares at a pace of 0.11 times. A minimum offer of 161 shares requires an investment of ₹14,973.
The Most Important Risks to Consider
- Low Earnings Per Share (EPS): Despite reaching profitability, Ixigo’s EPS remains extremely low, making the company look costly when compared to its rivals.
- Competitive Market: Ixigo faces severe competition from large players such as Cleartrip, Yatra, and MakeMyTrip. This has the potential to damage its profitability and market share.
- Reliance on the Travel Industry: The company’s income is heavily dependent on the travel industry, which is vulnerable to economic downturns, pandemics, and other unanticipated catastrophes.
- Regulatory Risks: Changes in government legislation affecting travel and tourism may have a detrimental impact on Ixigo’s financial performance and operations.
- Technological Risks: Ixigo, being a technology-driven platform, is vulnerable to data security breaches, cyber-attacks, and technological interruptions.
- Customer Acquisition Costs: Given the possible impact of high customer acquisition costs on profitability, it may be vital to maintain a balance between revenue generation and marketing expenses.
- Seasonality: The travel sector is subject to seasonal changes, which result in uneven income and profitability.
- Macroeconomic factors: Inflation, currency volatility, and shifts in consumer spending might all have an influence on Ixigo’s financial stability.
- Execution Risks: The company’s growth strategy requires significant expenditures in technology and possible acquisitions, both of which are susceptible to execution risks.
- Operational Risks: Relying on third-party service providers for travel reservations creates operational risks that may have an influence on client satisfaction and service quality.
To conclude,
What should investors consider before subscribing to the ixigo initial public offering? Although there has been a lot of interest in the initial public offering (IPO), potential investors must carefully consider the dangers involved. The company’s competitive market, poor EPS, and reliance on the travel sector are all big problems. Investors must do a thorough analysis of these issues before making an investment choice, since ixigo aims to use the revenues from the IPO for technology expenditures, operating capital, and potential acquisitions.
