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

Q2FY22 results of EaseMyTrip

According to the research report of ICICI Securities, the company's "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.

Key triggers for future price performance of Easy Trip Planners according to ICICI Securities

• 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 company's 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.

Buy Easy Trip Planners with a target price of Rs 670 says ICICI Securities

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)."

Disclaimer

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.