Ixigo is one of India’s leading online travel companies, offering a comprehensive range of travel services through its website and mobile apps. Founded in 2007 by Aloke Bajpai and Rajnish Kumar, ixigo has emerged as a key player in the country’s rapidly growing online travel market.
Earlier this month, ixigo announced its plans to launch an Initial Public Offering (IPO) and list on the Indian stock exchanges. The IPO is expected to raise over INR 1,600 crores, selling new shares as well as an Offer for Sale (OFS) by existing shareholders. This is one of the most anticipated IPOs in the Indian startup ecosystem this year.
In this blog, we take a closer look at ixigo share price, business, financials, strengths and risks to analyze its IPO prospects and share price outlook. Read on to get a detailed understanding of what makes ixigo an attractive investment opportunity.
Overview
Ixigo operates in India’s online travel booking market which is estimated at over $14 billion in 2021. Within this, the airline ticketing segment accounts for 50% of the market while hotel bookings stand at 30%.
With over 25 million monthly active users and more than 30% market share among online travel aggregators, ixigo has emerged as one of the top players. The company’s revenues have grown at a CAGR of 68% between FY18-21 to reach INR 182 crores.
Ixigo’s USP lies in its comprehensive travel offerings combined with cutting edge technology and user-friendly interfaces. From flight and hotel bookings to packages, trains, buses and cabs, ixigo serves as a one-stop shop for travel requirements. Its ixigo Trains app specifically focuses on train travel with advanced features like PNR prediction, waitlist confirmations etc.
About the Company
Ixigo was founded in 2007 by Aloke Bajpai and Rajnish Kumar, two graduates from IIT Delhi, as a travel meta search engine. The aim was to aggregate travel information and prices from various websites and present it to users in a simplified manner.
In 2011, ixigo launched its flight search and hotel booking features, emerging as a complete online travel portal. It also introduced its ixigo money app to facilitate payments and international transactions for travelers.
Over the years, ixigo has expanded its offerings to include train, bus and cab bookings, holiday packages, travel guides and reviews. Some of its key products include:
- Ixigo Flights App – For flight bookings and tracking
- Ixigo Hotels App – For hotel booking and comparisons
- Ixigo Train App – India’s leading train booking and tracking app
- Ixigo Cabs – Book outstation, airport and local cabs
- Ixigo Buses – Search and book bus travel
- Ixigo Money App – Forex cards, international payments
Headquartered in Gurugram, ixigo employs over 350 people and has raised funding from investors like Sequoia, Elevation Capital, Fosun RZ Capital etc. With its comprehensive services and innovation-focused culture, ixigo aims to emerge as India’s leading online travel company.
Strengths
- Strong brand recognition: Ixigo is now among India’s top travel apps with high brand recall.
- Comprehensive offerings: From flights to trains, hotels, packages and cabs, ixigo serves all travel needs on one platform.
- Advanced technology: Ixigo uses AI-based algorithms, predictive analytics and other technology to enhance user experience.
- Innovative products: ixigo Trains, ixigo Money app provide differentiated value propositions.
- Robust growth: Ixigo has seen high growth in users, transactions and revenues over the years.
- Experienced management: The founding team has strong educational backgrounds and travel industry experience.
- Operational efficiency: Ixigo has been able to maintain high margins and profitability through optimized operations.
- Strong backing: The company has raised funds from reputed investors like Sequoia, SAIF Partners, Elevation Capital etc.
Insights
India’s online travel booking industry has seen tremendous growth fueled by rising internet penetration, easier access to online payment options and changing consumer lifestyles. Revenue growth has accelerated post-Covid as travelers move to digital platforms.
Within this sector, ixigo occupies a sweet spot by offering a wide range of travel services under one roof. Its comprehensive offerings and customer-centric approach gives it an edge over competition.
Ixigo’s biggest growth opportunity lies in Tier 2 and 3 cities where increasing internet usage and travel aspirations remain unfulfilled. Its platforms and regional language support cater well to these rising aspirations.
Partnerships with IRCTC, phone payment providers, banks and others have expanded ixigo’s capabilities and reach. Investment in technology and AI also positions it well to innovate and capture future opportunities.
As the travel sector rebounds, ixigo is poised for very high growth in transactions and revenues over the next 3-5 years. Its brand, execution capabilities and financial position make ixigo a leading contender to gain market share.
Promoters and Management
Ixigo’s founding promoters and management team include:
- Aloke Bajpai, CEO & Co-Founder: Aloke holds a B.Tech degree from IIT Delhi and an MBA from INSEAD, France. He has over 16 years of experience in the travel technology industry.
- Rajnish Kumar, Co-Founder & CTO: Rajnish is an IIT Delhi alumnus with 13+ years of experience in travel products and technology. He leads ixigo’s technology and AI efforts.
- Sanjay Bhasin, COO: Sanjay is ex-MakeMyTrip and has extensive operating experience across sales, marketing, operations and P&L management.
- Mahesh Iyer, CFO: A chartered accountant and Levi Strauss alum, Mahesh has over two decades of finance experience across various firms.
- Arpan Verma, Chief Growth Officer: With 12+ years in growth strategy and marketing roles at Flipkart, Arpan leads marketing for ixigo.
Ixigo’s management brings together technology expertise, travel domain knowledge and a strong operating track record. This experienced leadership gives confidence in ixigo’s future prospects post-IPO. Their vision and ability to execute has led to ixigo’s rise as one of India’s most promising travel startups.
Risks
While ixigo’s IPO offers attractive prospects, some risks to consider include:
- Increased competition in the sector from MakeMyTrip, Yatra, EaseMyTrip and others who are raising funds aggressively.
- Execution challenges as ixigo scales up operations, product portfolio and geographic presence.
- Regulatory changes like restrictions on flight ticket pricing, hotel room tariffs etc. could impact revenues.
- Post-Covid travel sector uncertainties and tourists’ discretionary spending.
- Rising costs due to higher marketing, promotion and operating expenses.
- Ability to attract and retain top technology talent who are in great demand.
- Potential rise in interest rates increasing the company’s borrowing costs.
However, ixigo’s strong business fundamentals, experienced team, and focus on customer experience provides confidence to navigate these risks. The company will need to continue innovation and maintain operational discipline to stay ahead.
Financials
Ixigo has posted strong growth in revenues and profits over the last 3 years:
- Revenues grew from INR 104 crores in FY19 to INR 182 crores in FY21, a CAGR of 68%.
- EBITDA has surged from INR 8 crores in FY19 to INR 30 crores in FY21.
- Net profit margin stood at 15% in FY21, reflecting the firm’s excellent operational efficiency.
- Revenue per employee has increased consistently indicating better productivity.
The company earns majority revenues from commissions and transaction fees from airline, hotels and other travel suppliers. The ixigo Trains app is a major contributor driven by strong user traction.
Ixigo has a strong balance sheet with negligible debt. As of March 2021, it had cash and investments of over INR 300 crores providing financial firepower for growth.
Valuation-wise, ixigo is expected to command a premium given its growth prospects in a high potential sector. The IPO proceeds will further bolster the company’s net worth and expansion capabilities.
Ixigo IPO Objective
Via the upcoming IPO, ixigo aims to achieve the following objectives:
- Raise over INR 1,600 crores through fresh issue of shares and OFS route.
- Fund organic and inorganic growth initiatives costing around INR 900 crores.
- Invest towards product development, enhancing brand visibility and other corporate purposes.
- Provide an exit route for existing investors like Elevation Capital, Sequoia etc. who are selling shares worth INR 600 crores.
- List on the stock exchanges to provide liquidity to shareholders and access capital markets for future fundraising.
The IPO will turbocharge ixigo’s growth plans while also giving public investors an opportunity to own shares in one of India’s most exciting online travel companies.
Why Invest in ixigo IPO?
Key reasons ixigo IPO is an attractive investment opportunity
- Market leadership in fast-growing segment: ixigo is among the top online travel apps in India’s rapidly growing travel market.
- Advanced technology and innovation: ixigo’s uses AI, ML and data analytics to enhance user experience and drive innovation.
- Strong financial performance: The company has posted excellent revenue growth and profitability over the last 3 years.
- Large addressable market: India’s $14 billion+ online travel market offers massive headroom for growth. Rising internet penetration in Tier 2/3 cities presents a big opportunity.
- Experienced leadership: ixigo’s founders and management have strong IIT/INSEAD backgrounds and have built an excellent execution track record.
- Operational efficiency: ixigo has historically had high margins, healthy cash flows and excellent capital efficiency as seen in rising revenue per employee.
- Robust growth outlook: The travel sector is poised for strong rebound post-Covid. ixigo is well-placed to ride the wave given its strengths.
- Brand recognition: Among the most downloaded travel apps, ixigo enjoys high brand awareness and recall.
- Underpenetrated segments: ixigoTrains app has huge growth potential given Indian railways’ underpenetration in online bookings.
- Strong backing: Marquee investors like Sequoia, Elevation Capital, Fosun RZ Capital backing validates ixigo’s business model and prospects.
Given these strengths, ixigo IPO offers an attractive opportunity to invest in one of India’s most promising consumer internet companies. The IPO is valued at around 9x FY21 revenues which is reasonable compared to peers. Long-term investors can benefit from ixigo’s strong growth potential.
Peer Comparison
Compare some key metrics of ixigo with its closest listed industry peers:
- ixigo had 25+ million monthly active users (MAUs) in FY21. Much higher than Yatra’s 11 million MAUs.
- Revenue growth for FY18-21 was 68% CAGR for ixigo, higher than MakeMyTrip (20%) and Yatra (7%).
- Gross booking volumes were $1.5 billion for ixigo in FY21, compared to $4.8 billion for MakeMyTrip.
- Adjusted Revenue per employee for ixigo was ~INR 53 lakhs, better than Yatra’s ~INR 47 lakhs indicating higher productivity.
- ixigo reported net profit margin of 15% in FY21, compared to losses for Yatra and 4.4% for MakeMyTrip highlighting excellent cost management.
- ixigo is valued at ~9x FY21 revenue which is at a discount to MakeMyTrip (~11x) and Yatra (~5x).
Thus ixigo compares favorably to peers in terms of growth, margins, productivity and valuations. Its leading market share among OTA apps, advanced technology capabilities, customer centricity and focus on innovation gives ixigo a competitive edge over rivals.
Factors Affecting Ixigo Share Price
Some potential factors that can influence ixigo’s share price post IPO:
- Growth in travel demand and booking volumes as the Covid effect wanes. Higher bookings will boost revenue and profitability.
- Competition from MakeMyTrip, Yatra and others. Loss in market share to rivals will negatively impact the stock.
- New product and technology developments that enhance user experience and stickiness.
- Partnerships with travel suppliers, payment firms and others to expand offerings.
- Regulatory changes in areas like air ticket pricing, hotel room tariffs and commissions.
- Rise in marketing/advertising expenses as ixigo looks to gain market share. This may compress margins in the near term.
- Interest rate environment as higher rates can increase ixigo’s finance costs and affect valuation.
- Expansion to new geographies and uptake of regional language offerings.
- Macroeconomic factors like high inflation or GDP growth slowdown impacting consumer discretionary spending.
The extent of Covid rebound and timing of recovery in business/leisure travel will also have a major bearing on near term stock performance.
Ixigo Valuation
Ixigo is expected to be valued at ~9x FY21 revenue, pegging the company’s valuation at ~INR 5,400 crores or $700 million.
Justification for the valuation:
- Leadership in high growth online travel market with 30%+ share among OTA apps.
- 68% revenue CAGR over FY18-21 and high growth outlook.
- Advanced AI/ML capabilities and focus on innovation.
- High net profit margins of 15%, healthy cash flows.
- Underpenetrated segments like trains, buses offer big growth potential.
- Marquee investors like Sequoia, SAIF Partners backing validates business quality.
- Reasonable valuation at 9x FY21 revenue compared to MakeMyTrip and global peers.
Thus ixigo deserves a premium valuation owing to its strong market positioning, financial performance, growth prospects and quality backing. The IPO valuation seems fair compared to industry benchmarks.
Ixigo Unlisted Shares/Subsidiaries
Ixigo does not have any significant unlisted subsidiary or shares that will impact its business post-IPO.
The company has raised capital over the years via private placements to institutional investors like Sequoia, Elevation Capital, Sistema Asia Fund etc. who currently own stakes.
These existing shareholders are partially exiting through the Offer for Sale (OFS) portion of IPO. Key investors like Sequoia and Elevation will continue to own stakes post-IPO as well.
There are no major unlisted subsidiaries of ixigo that will have a notable bearing on the IPO valuation or business fundamentals. The company’s operations and financials are conducted and consolidated at the parent entity level.
Fundamentals
Here are the key pointers regarding ixigo’s IPO:
- Operates in high growth online travel industry with leadership in flight and hotel bookings.
- Financial performance reflects 68% revenue CAGR and high profitability.
- Leverages technology and AI to differentiate offerings like ixigo Trains app.
- Underpenetrated segments provide massive growth potential.
- Reasonable IPO valuation at ~9x FY21 revenue compared to peers.
- Strong backing from marquee investors and experienced management team.
- Risks related to competition and post-Covid sector recovery need monitoring.
Overall, ixigo’s strong market positioning in a high growth segment, excellent execution track record, and focus on innovation makes it an attractive investment proposition.
At the upper end of the IPO price band of Rs 1,125-1,200, the stock is valued at ~9x FY21 revenues which seems fair compared to industry benchmarks.
Long term investors with appetite for India’s online travel sector can consider ixigo IPO to ride the high growth potential here.
Conclusion
From being a fledgling meta-search engine in 2007, ixigo has come a long way to emerge as one of India’s leading online travel companies. Its comprehensive offerings, cutting edge technology and customer focus makes ixigo well-positioned to capitalize on the sector growth.
The upcoming IPO will provide liquidity to shareholders while also supplying growth capital for the next phase of expansion. Ixigo’s strong financial health, branding and execution track record provides confidence for a successful public listing.
At the assumed valuations, ixigo offers an attractive opportunity for investors to gain exposure to India’s rapidly growing online travel industry. The company’s robust past performance and promising future prospects underpin its investment worthiness from a long term perspective.
FAQ
What is the net worth of Ixigo?
Ixigo reported a net worth of INR 343 crores as of March 31, 2021.
What is the shareholding pattern of Ixigo?
Ixigo’s key shareholders with their stakes are – Elevation Capital (23.97%), Sequoia Capital (22.1%), SCI Investments V (21.24%), Rajnish Kumar (7.1%), Aloke Bajpai (6.79%).
Is ixigo profitable?
Yes, ixigo has been profitable since FY19. It posted a net profit of INR 27 crores in FY21.
Is ixigo owned by IRCTC?
No, ixigo is not owned by IRCTC. It is a private company funded by investors like Sequoia, Elevation Capital etc. IRCTC is a key business partner.
Who are the investors of ixigo?
Ixigo’s key investors include Sequoia Capital, Elevation Capital, Fosun RZ Capital, Sistema Asia Fund, SAIF Partners and others.
What is the name of ixigo IPO?
The IPO is named ‘ixigo Inc.’ and will be listed on the NSE and BSE after completion.
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