The travel and tourism industry is booming and the desire to travel has reached new heights across the world, especially in India.
The travel and tourism industry is booming and the desire to travel has reached new heights across the world, especially in India.
The Indian travel industry is expected to grow at a compound annual growth rate (CAGR) of 9% over the next five years, driven by growing interest in travel, government initiatives to strengthen infrastructure and transport, and rising disposable income.
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The Indian travel industry is expected to grow at a compound annual growth rate (CAGR) of 9% over the next five years, driven by growing interest in travel, government initiatives to strengthen infrastructure and transport, and rising disposable income.
This boom has intensified competition among travel companies, who are vying to become customers' one-stop travel partners by offering custom-made adventures, cutting-edge technological tools, and great deals.
Overview of the project
# Ixigo
Founded in 2006, Le Travenues Technology is an online travel agency that allows users to book train, plane and bus tickets through its platform Ixigo, as well as hotel and holiday package reservations.
Recently, Ixigo developed an AI-based platform to help travelers plan detailed itineraries and also launched a value-added service called Ixigo Assured Flex, which allows travelers to flexibly book air and rail tickets.
# EasyMyTrip
Easy Trip Planners Ltd is India's second largest online travel platform offering travel related products and services through its brand EaseMyTrip.
The company sells air, rail and bus tickets, hotel reservations, holiday packages and other value-added services. It also offers hospitality services through Spree Hospitality, which owns properties across 45 locations.
EaseMyTrip has recently entered into charter solutions through its subsidiary Nutana Aviation Capital and has also forayed into the insurance space through its subsidiary EaseMyTrip Insurance Broker Pvt Ltd.
EaseMyTrip is a bigger player, with a market capitalisation of Rs 75.9 billion compared to Ixigo's Rs 65.3 billion. In terms of reach, EaseMyTrip has the largest agent network in India with over 60,000 agents across B2E (Business to Employee), B2C (Business to Consumer) and B2B2C (Business to Business to Consumer).
The company also has offices overseas in Singapore, the UK, the UAE, Thailand, New Zealand and the US and has served over 20 million customers to date.
Meanwhile, Ixigo has the most monthly active users (around 83 million) and is also one of the fastest growing online travel agencies in terms of app downloads and users.
It's difficult to compare the stock market performance of the two companies, given that Ixigo shares were listed only on June 18. Within two days of listing, the company's shares soared by over 112%, more than doubling investors' money in a blink of an eye. Meanwhile, EaseMyTrip's shares have fallen 1.3% over the past year, while the Nifty 50 has risen 24.6% in that same period.
# Revenue
Travel companies make their revenue primarily from commission, and analyzing revenue patterns can help you determine if the company was able to do more business than it did the previous year.
In terms of revenue growth, Ixigo outperforms EaseMyTrip. Over the past five years, the company's revenue has grown at a CAGR of 65.5%, while EaseMyTrip's revenue has grown at a CAGR of 34.7%. This is mainly because the company has a diversified business model and also leverages AI.
EaseMyTrip has been steadily growing its revenue despite the pandemic lockdown due to strategic acquisitions and partnerships with hotels, airlines, technology providers and various travel service providers in other countries. These partnerships and acquisitions have enabled the company to diversify its revenue across multiple revenue streams including ticket bookings, hotel reservations, vacation packages and insurance.
# Profitability
EaseMyTrip leads Ixigo in profitability. Over the past five years, its earnings before interest, tax, depreciation and amortization (EBITDA) has grown at a CAGR of 258.3% driven by a focus on growing revenue and reducing discounts. Net profit has grown at a CAGR of 35.6% over the same period. The company's gross and net profit margins are also higher than Ixigo.
In Ixigo's case, EBITDA and net income have been positive for the past five years, indicating strong margin growth driven by strong revenue growth and cost-efficient services. However, margins are modest compared to competitors, but margins are expected to improve given the company's growth trajectory.
# Debt Management
Both EaseMyTrip and Ixigo are debt-free companies.
EaseMyTrip has acquired several travel and hospitality businesses over the past five years and plans to continue making acquisitions in the future. No major capital expenditures are planned at this time, but the company has sufficient cash flow to support any large investments that may be made.
Meanwhile, Ixigo plans to pay off all of its debt and make significant capital expenditures using the IPO proceeds in FY22. The company plans to invest in cloud infrastructure and technology to better serve its customers and also plans to grow through acquisitions.
# Return rate
In terms of profitability, EaseMyTrip is leading the way. Its return on invested capital (RoCE) and return on equity (RoE) over the past five years have averaged 59.5% and 38.9%, respectively. These are lower than pre-COVID but higher than Ixigo, which had negative profitability until March 2023. These ratios are expected to improve along with the company's profit margins.
# Dividends
Ixigo does not pay dividends to shareholders. EaseMytrip pays dividends, but not regularly. In the past five years, the company has paid dividends only twice. The average dividend and dividend yield over the past three years are 9.4% and 0.2%, respectively.
# evaluation
EaseMyTrip's price-to-earnings (PER) and price-to-book (PBR) ratios are 73.5x and 12.6x respectively. Ixigo's price-to-earnings (PE) ratio is 215x, but PB multiples are not available as the shares were listed only last week.
Ixigo's share price is overvalued when compared to EaseMyTrip's share price. When compared to the 5-year average and the industry, EaseMyTrip's share price is overvalued.
So which is the better travel stock?
In terms of profit growth, profit margins and financial efficiency, Easy Trip Planners outperforms Ixigo. The company has grown primarily through acquisitions over the last few years, during which it has expanded into hotels, vacation packages, train tickets, bus tickets, insurance, etc.
The company was the first of its kind to charge a commission, helping to reduce discount costs. The company has no major capital expenditure plans but is constantly looking to expand its business through acquisitions.
Meanwhile, Ixigo has been in the travel industry for over 18 years and is one of the leading online travel agency apps with high average monthly users and downloads. It is also the largest train ticket seller with 51% market share and the second largest bus ticket OTA with 12.5% ​​market share.
The company offers PNR visibility and forecasts, train seat availability notifications, personalized recommendations, instant fare notifications, and automated customer support using AI. The company has recently ventured into the insurance sector to expand its services.
Ixigo plans to use the IPO proceeds to invest in cloud infrastructure and technology to better serve its customers, as well as to invest in acquisitions.
Both companies are well-established and have good growth plans that will help them capitalize on growing tourism demand.
Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.
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