RateGain Travel Technologies lists at 15% discount on issue price

“At issue price, RateGrain will trade at 18.1x FY2011 price-to-sales, indicating broad in-line valuations with global SaaS companies with similar growth prospects. RateGain generates steady and recurring revenue with relatively low capital requirements, generating healthy free cash flow. Going forward, tie-ups with large enterprises and a wide range of product offerings will contribute to higher mining and strong growth of existing accounts,” said Aditya Birla Capital.

RateGain Travel Technologies is one of the few global distribution technology companies and the largest software as a service (SaaS) company in the hospitality and travel industry in India. It provides travel and hospitality solutions across a wide spectrum of verticals including hotels, airlines, online travel agents, meta-search companies, cruise and ferries etc.

According to Vikas Jain, analyst at Reliance Securities, RateGain’s profitability has not been encouraging over the years, due to acquisitions of loss-making entities and high depreciation. The company’s EBITDA margin and net loss continue to decline. However, adjusted EBITDA is in the double digits. RateGain is seeing over 20% EBITDA margin in the coming years led by product penetration, cross-sell and innovative launches of new products.

“The IPO is valued at 18.1 times FY21 price-to-sales and 15.1 times FY22 annual price-to-sales, at a discount of 27.3x to PayTM and 31.7x to Zomato. While there is no listed peer available for direct comparison of RateGain in the domestic market, its valuation of 50% discount to unicorns like Zomato and Paytm gives rest on the valuation front. In the new era of Internet and AI-based software services, we believe the company’s premium valuation is likely to remain intact.”

Due to the pandemic, its revenue declined 250 crore in FY 2011, higher than 400 crore in FY10, while the Adjusted Ebitda margin increased to 9.4% in FY2011 from 8% in FY2010. it incurred a net loss of 20.1 crore and 28.6 crore in FY20 and FY21 respectively, as against net profit, mainly on account of higher depreciation on loss of goodwill 11 crore in FY19.

Currently, RateGain has 1,462 customers, including eight global Fortune 500 companies, 23 of the top 30 hotel chains, 25 of the leading 30 online travel agents, and major car and major cruise lines.