Buy Easy Trip Planners For A Potential Upside of 33% Says ICICI Securities

ICICI Securities Limited has placed a buy call on Easy Trip Planners stock with a target price of Rs 670 from the current market price of Rs 505, implying a gain of 33% in the next 12 to 18 months. Easy Trip Planners is a travel services company that ranks third among Indias major online travel providers. In 2018-19, EaseMyTrip was named a Vistara Gold Partner, and due to its massive number of bookings for Vistara Airlines and resulting in the same airlines tickets services provided for 94.0 percent of revenues (pre-Covid levels), while hotels and other services provided 5.4 percent and 0.6 percent of revenues, respectively. According to the research report of ICICI Securities, the companys revenue increased 339% YoY, 134% QoQ to Rs 43.7 crore. A sharp rebound in the domestic air traffic post easing of restrictions and low base effect led to such robust growth. Whereas gross bookings revenue (GBR) for Q2FY22 was at Rs 895 crore vs. Rs 339 crore in Q2FY21, up 164% YoY, Rs 357 crore in Q1FY22, up 151% QoQ.Further, the cost control measures adopted during Covid times led to an EBITDA margin of 47.6% (vs. 27.7% in Q1) while Q2FY22 profit of Rs 27.2 crore surpassed full-year profit of Rs 24 crore for FY19. The board has declared an interim dividend of Rs 1/share says ICICI Securities.Advertisement The online travel market in India is set to double over the next five years to $31 billion in FY25E, growing at 14% CAGR from FY20 levels.Lean cost model and no convenience fee strategy remain key pillars supporting such rapid, profitable growth. This has also led to stickiness by customers with a healthy repeat transaction rate of ~86% in the B2C channel.Now, with airlines allowed to operate at their full capacity, we expect further traction in the companys revenues and profitability, going ahead.Further benefits would accrue from segments like international air, hotels and bus booking over the next three to four years, which are high margin business but currently have online penetration below 20% levels.Gross booking revenue (GBR) for H1FY22 was at Rs 1,251 crore. With better traction, we raise GBR estimates to Rs 3300 crore for FY22E vs. Rs 2700 crore projected earlier. The brokerage has said in its research report that We like EMT for its user friendly platform, unique travel offerings, low cost model, and healthy financial position. The company is consistently gaining market share led by its two strong growth pillars and is now well placed to withstand any competition which may come up in the future given the strong liquidity and its improving brand visibility in the domestic air ticketing segment. The brokerage has reported that Further benefit is expected to accrue from segments like international air and hotel booking space over the next three to four years, which currently have online penetration below 20%. ICICI Securities has claimed in its research report that We believe EMT remains the best proxy vs. airline or hotel companies to play on travel recovery given its low cost and negative w/cap characteristics along with strong balance-sheet. We maintain BUY rating and raise our target price to Rs 670/share vs. Rs 600/share earlier (implying 0.9x FY24E MCap to GBR, ~10.2x FY24E MCap/sales, 40x FY24E EPS). The above stock has been picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.