YTRA: Leisure Travel Leads the Way as India Returns to Pre-Pandemic Travel Levels for Yatra Online

By Lisa Thompson

NASDAQ:YTRA

READ THE FULL YTRA RESEARCH REPORT

With the abating of COVID and the full reopening of international travel in India, Yatra Online YTRA has seen its business rapidly approaching pre-pandemic levels. The leisure traveler is leading the way with much pent-up demand for vacations and visiting family both domestically and abroad. Domestic travel was at 100% of pre-pandemic levels by the end of the quarter. The corporate traveler is lagging but also on his way back, exiting the June quarter at approximately 90% of pre-COVID levels. In Q2 Yatra had record customer signings adding 27 large to medium enterprises. At adjusted revenues of $15.9 million (up 141% year over year), Yatra returned to pretax profits in the quarter, and should also have positive net income going forward. Not only do we expect Yatra to return to pre-pandemic revenue levels, but it should surpass them as it has picked up market share in the interim and learned to do more with less. Due to automation and self-serve, it can now provide the same service with 60% of the staff as before. The work from home environment has made consumers more comfortable booking online rather than using in person travel agents and this has also aided Yatra's success. The company's IPO in India is still on track for the December quarter with timing dependent on regulatory approval. After it gets approval, the IPO should follow in about six weeks.

Yatra stock price is still way below its peers. If we value it using a peer comparables valuation of 3.5 times EV to estimated 2022 revenues, and use calendar year sales for Yatra in 2022 of US$67 million, we calculate an enterprise value of $235 million, a market value of $250 million, and a stock price of $3.60 per share using 62.6 million shares outstanding and putting a 10% discount for microcap size, single country risk and corporate governance.

FYQ1 Ending June 30, 2022

The June quarter was a full quarter of opened travel and Yatra showed it in its Q2 results with reported revenues up 176% year over year. Adjusted revenues were $15.9 million versus $6.6 million a year ago. Air passenger travel increased 211% for Yatra in the quarter and hotel room nights increased 736%. Holiday packages increased from 1,000 last year to 5,000 this year. The company had a pretax profit for the first time since 2020. It had adjusted EBITDA of $1.6 million for the quarter compared to a negative $139,000 last year. Yatra was also cash flow positive and free cash flow positive all of which have been steadily increasing for the last three quarters.

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