Inside the Ixigo IPO: What investors need to know about this travel giant

The online travel agency industry has evolved significantly with the internet, smartphones, and mobile apps. Ixigo, a tech-driven platform for Indian travellers, focuses on serving the ‘Next Billion Users’ (NBU) from non-Tier I cities. In this piece, we’ll go over the key details and implications of the upcoming Ixigo IPO.

The Ixigo story

Ixigo is a tech startup focused on Indian travellers. It provides booking, planning, and management capabilities for travel on a variety of transportation modes, such as buses, trains, aeroplanes, and hotels.

Founded on June 3, 2006, as Le Travenues Technology Private Limited, the parent company became a public limited entity on August 3, 2021, renamed Le Travenues Technology Limited.

The aim of the business is to become the most customer-focused travel agency. Ixigo focuses on travel utility and enhancing customer experiences for the ‘next billion users’ or NBU, driven by technology and cost-efficiency. 

New internet users from non-Tier I cities and rural areas are referred to as NBUs. In 2023, these users accounted for roughly 60%–65% of the travel market.

Ixigo’s platforms allow users to book tickets for trains, flights, buses, and hotels. The company provides utility tools like PNR (Passenger Name Record) status, confirmation predictions, and travel updates, utilising proprietary algorithms and crowd-sourced data.

Le Travenues also operates online platforms Confirmtkt, and Abhibus, offering real-time information and booking services for airlines, trains, hotels, buses, and cabs. Additionally, it runs Fresh Bus for tech-powered electric bus travel and provides software development and maintenance services to customers.

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Ixigo today

In the online travel agency (OTA) space, Ixigo leads for the NBU, emphasising localised content and app features. By September 2023, Ixigo’s apps recorded the highest usage among OTAs in India. The group holds a 51% market share in rail bookings and ranks second in online bus ticketing with a 12.5% market share.

Ixigo’s apps have 83 million monthly active users, with 4.9 million monthly downloads as of September 2023. 42 million transactions took place in the nine months that concluded in December, 2023, out of 49.07 million total.

Ixigo also introduced Ixigo Plan, an AI-powered travel planner that offers comprehensive itineraries and up-to-date destination details. A generative AI plugin is included in this service for conversational interactions. 

In addition, Ixigo unveiled Ixigo Assured Flex, a value-added service that provides flexible tickets for both air and rail that come with no additional costs for rebooking or cancellation other than the difference in price.

Below is the table listing the shareholders holding more than 1% of Ixigo’s equity shares pre-IPO:

Source: Ixigo RHP

Also read: Economics of the tourism and hospitality industry in India

Financial footprint

Ixigo is India’s fastest-growing Online Travel Agency, with operations revenue increasing at a CAGR of 92.29% from Fiscal 2021 to 2023. With respect to revenue in Fiscal 2023, it was the second-biggest OTA in India. The revenue for the nine months that ended on December 31, 2023, was ₹491 crore.

Here is the financial snapshot of the company in the last three years.

Source: Ixigo RHP

All about Ixigo IPO

The Securities and Exchange Board of India (SEBI) approved Ixigo’s draft red herring prospectus (DRHP) in May after it was submitted to them in February. Everything you need to know about the impending IPO is provided here.

Key facts and figures

Source: Ixigo RHP

75% of the issue size has been set aside by the business for qualified institutional buyers (QIBs). Non-institutional investors will have 15% of the allocation, and the remaining 10% is reserved for retail investors.

Important dates for Ixigo’s IPO

The above schedule is tentative and subject to change. For 50% of the shares, the anchor lock-in period expires 30 days after the actual allotment date, and for the remaining 50%, it ends 90 days later. By June 14, 2024, both the exchange’s and registrar’s websites will have the allotment status accessible.

How Ixigo intends to use the raised capital?

Ixigo would use the ₹45 crore proceeds from the new offering to cover its working capital needs. This will assist the business in continuing its regular operations and efficiently handling its immediate cash needs.

Ixigo intends to spend ₹26 crore on data science and technology. This includes investments in consumer engagement programmes, artificial intelligence, and cloud and server hosting. The company’s technological capabilities and user experience are intended to be improved by these expenditures.

A portion of the money will also be used to finance acquisitions that will promote inorganic growth. Ixigo wants to increase its market share by acquiring other companies. The residual funds will be allocated towards overarching corporate goals, guaranteeing comprehensive expansion and durability.

Potential pitfalls

Ixigo faces several potential pitfalls that investors should consider. 

• A general decline or disruption in the travel industry could negatively impact Ixigo’s business. Factors such as economic downturns, pandemics, or geopolitical issues can significantly affect travel demand and, consequently, the company’s revenue.
• Security breaches of personal data and compliance with privacy regulations are critical risks. Ixigo handles large volumes of sensitive customer information, and any security lapses could damage its reputation and lead to legal repercussions.
• Dependence on IRCTC for train ticketing services is another significant risk. If the agreement with IRCTC is terminated, it could materially affect Ixigo’s operations, cash flows, and financial condition.
• The sector is also highly incentive-based. Reductions or eliminations of commissions, incentives, and other compensations by travel suppliers could adversely affect Ixigo’s business, cash flows, and overall results of operations.

Also read: Understanding Travel Loans: A Comprehensive Guide

Bottomline

Investing in Ixigo’s IPO offers potential growth opportunities but comes with notable risks. The company plans to expand and improve its technology with the money it has raised. But before making an investment, investors should think about the industry-specific difficulties and the competitive environment.