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Buy This Leading Travel Company Stock For 47.5% Upside For Long Term: Edelweiss
After yesterday's bloodbath, markets have fallen again in trade on November 23, 2021 but have recovered early losses at the time of writing this report, with Nifty still below 17,400 mark, having falling over 6 percent from record high level. Meanwhile, broader markets are outperforming with Nifty Midcap 100 quoting higher by over 0.9 percent.
Now as it can be good time to buy in stocks at the dip, brokerage firm Edelweiss is bullish on the stock of Easy Trip Planners and suggest a target price of Rs. 733. This implies a potential upside of 47.5 percent from the last traded price of Rs. 496.9.
| Stock | Recommendation | Target price | Upside from LTP of Rs. 496.9 |
|---|---|---|---|
| Easy Trip Planners | Buy | Rs. 733 | 47.5% |
About Easy Trip Planners:
The company is the second leading online travel agency or OTA in the country. Incorporated in the year 2008, the company started off with focus on the business to business to customer (B2B2C) distribution channel and even to promote offline travel market provided travel agents with access to the company's website for booking domestic flight tickets. Also, the company began catering to the B2C and B2E segment, thereby having at command a diversified customer base as well as broad-based distribution network.
No convenience fee strategy-
This has proved to be a big tailwind for the company- which led it to become the dominant player in the domestic air ticketing segment. The USP of Easy Trip with no convenience fee has stood as a game changer for the company and it is the only profitable company among major OTAs in the country. "While EASEMYTR has the largest agent network in the Indian OTA industry, it also ranks second in terms of air ticket volume and third in terms of gross booking revenue (GBR) and number of registered customers", says the report.
Key takeaways
- Over Fy18-20, the online travel agency logged highest growth in air ticketing booking volume as well as air ticket gross booking revenue among leading OTAs in the country.
- In the B2C distribution network, the company has logged repeat transaction rate of 85.95%.
- The company during the review period delivered strong net
revenue/EBITDA/PAT CAGR of 19%/87%/91%.
- The company focuses on both inorganic route as well as acquisitions ((Traviate & Spree Hospitality) for foraying into newer segments.
Outlook and Valuation:
With no external funding since launch, Easy Trip built its business the traditional way - pay-as-you-go, by generating revenue and managing costs diligently."With the recent post-IPO run up in the stock price, the stock trades at 41x/1.1x FY23E earnings and EV/GBR FY23E. For fast-growing companies whose earnings trajectory has not stabilised, we consider DCF-based valuation. Thus, we have valued EASEMYTR on DCF calculations and initiate coverage on it with a 'BUY' rating and target price of INR 733", adds the brokerage.
Disclaimer:
The stocks has been picked from the brokerage report of Edelweiss. 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.
