Yatra Online shares rise after disappointing debut; should you hold the stock or exit?

After a disappointing debut at Dalal Street on Thursday, shares of Yatra Online found some buyers at the discount price. The stock rose sharply, after a discounted listing at Dalal Street, during its maiden trading session. However, even after a sharp rise, it could not hit its issue price.

On Thursday, shares of Yatra Online were listed at a discount of 10 per cent at Rs 127.50 on the National Stock Exchange (NSE), compared to its issue price of Rs 142. Similarly, the stock kicked-off trading with a discount of more than 8 per cent over its given issue price at Rs 130 on BSE.
 

However, the stock rose about 9 per cent to Rs 138.55 during its maiden session before giving up its gain partially. However, the stock hovered around Rs 135-138 as the session progressed. The sharp buying interest after listing has left investors wondering if they should book losses or hold the stock for a longer term.

Analysts have a mixed view on Yatra Online shares after listing. A select expert suggests investors exit the counter after a muted listing, while others see a strong growth potential in the company even after a tepid listing. They see increasing market share of online travel agencies in the travel and tourism market.

The primary offering of Yatra Online had received subdued response from investors although the issue got subscribed 1.61 times but the enthusiasm seen in other issues was missing, Narendra Solanki, Head Fundamental Research - Investment Services at Anand Rathi Shares and Stock Brokers
 

The stock listed at discount to issue price due to decent profitability and weaker sentiments in market, he added. "However, investors who got the allotment for Yatra online could hold their shares for a long term due to brand visibility, robust track record and various marketing strategies. Also, growth in tourism will act as a tailwind which will enable to increase the market share."

The Rs 775 crore-initial public offering (IPO) of Yatra Online could be subscribed between September 15-20. The company had offered its shares in the fixed price band of Rs 135-142 per equity share with a lot size of a minimum 105 shares and its multiples thereafter. The IPO of Yatra Online received a muted response at Dalal Street as the issue was overall subscribed 1.66 times.

Yatra Online made its debut at a discount due to the company's high P/E valuation, its reliance on the airline ticketing business, and the competitive nature of the travel industry, said Shivani Nyati, Head of Wealth at Swastika Investmart. "Overall, Yatra is a risky investment, and investors who receive an allotment of this IPO should consider exiting their position," she advised.

Yatra Online, which was incorporated in 2005, provides travel and tourism services such as information, pricing, availability, and booking facilities for domestic and international customers. The company provides air ticketing for domestic and international airlines, along with bus ticketing, rail ticketing, cab bookings, and other services.

"As expected, the Yatra Online IPO saw a tepid listing. We believe that the strong growth in the tourism industry will help the share of online travel market to increase at a faster pace than captive players, aided by ease of doing bookings, larger range of offerings, and a one-stop solution for all the travelling needs," said Prathamesh Masdekar, Research Analyst at StoxBox.

 

With a technology-driven business, it would see benefits of operating leverage coming into play with a larger volume of business, with an improvement in the company's profitability going forward. The company posted profits in FY23 along with strong revenue growth, he added, remaining positive on the company and recommending investors to hold shares for a medium to long term.

 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

Also read: Top 7 stocks to watch on September 28, 2023: Tata Power, YES Bank, Aurobindo Pharma, Dixon Tech & more

Also read: Hot stocks on September 28, 2023: Tata Investment, MCX, Federal Bank, Nazara Technologies and more