SaaS RateGain’s IPO Opens Tomorrow – Should You Invest?

  • The software as a service (SaaS) platform RateGain intends to increase ₹ 1,335 crore with this IPO.
  • RateGain is looking for a valuation of 4,537 crore (roughly $ 600 million) at the higher end of the price range.
  • RateGain’s Gray Market Premium (GMP) was 85 on December 6.

RateGain Travel Technologies’ initial public offering (IPO) will launch tomorrow, December 7, and it’s something retail investors can get, several brokerage firms have suggested.

The software-as-a-service (SaaS) platform, which focuses solely on the travel and hospitality segment, intends to increase ₹ 1,335 crore through the offer for sale ( OFS). The price range has been set at ₹ 405-₹ 425.

The lot size has been set at 35 shares, which means that a retail investor will have to shell out 14,175 to buy the shares. RateGain’s gray market premium (GMP), the premium investors are comfortable with buying the shares before they are listed on the stock exchange, was 85 on December 6.

RateGain is looking for a valuation of 4,537 crore (roughly $ 600 million) at the higher end of the price range.

Brokerages, which have previously raised concerns about the valuation of digital companies like Paytm and Zomato, also appear to be comfortable with the valuation given to RateGain.

“While there are no listed counterparts available for direct comparison to RateGain in the domestic market, its ~ 50% off ratings on unicorns like Zomato and Paytm are reassuring on the valuation front. In the new age of the Internet and AI [artificial intelligence]Based on software services, we believe the company’s premium valuation is likely to hold up, ”Reliance Securities said in its latest report. A unicorn, in startup parlance, is a business valued at or over a billion dollars.

The brokerage also recommended that retail investors subscribe to RateGain’s IPO because there is “high growth potential, a unique business proposition with minimal competition and valuation comfort.” Society, however, is still at risk from COVID-19 as well as any situation that could disrupt the global travel scenario.

Similar views have also been expressed by other brokerages in India.

Brokerage houses Recommendations
Trusted Securities Subscribe with a long-term perspective
Prabhudas Lilladher Subscribe for long term gains
Arihant capital Subscribe for SEO gains
Aditya Birla Capital Subscribe for long term gains
Swastika Subscribe for moderate and long term SEO gain

Aditya Birla Capital pointed out that RateGain generates stable and recurring income with relatively low capital requirements, which leads to healthy generation of free cash flow.

“Relationships with large companies and a wide range of product offerings would contribute to greater exploitation of existing accounts and robust growth,” the brokerage added, suggesting that this IPO may bring a gain to long term.

Arihant Capital noted that the company has been at a loss since fiscal 2019, and aggressive investors can subscribe to the IPO for listing gains. The brokerage also pointed out that the industry’s growth trajectory looks promising.

BI India

Founded in 2004 by Bhanu Chopra, RateGain provides travel and hospitality software solutions. Its software covers a full set of data points including pricing, rating, rating, availability, room description, cancellation policy, discounts and packages, among others. The company has more than 1,434 customers in 110 countries.

The company’s customers include Lemon Tree, OYO, InterContinental Hotels Group, Kessler Collection, and several other hotels and online travel aggregators (OTAs). It also works with online ticketing platforms like GroupOn and distribution companies like Saber GLBL Inc.

“RateGain’s profitability has not been encouraging over the years, due to the acquisition of loss-making entities and higher impairment (goodwill impairment),” added Reliance Securities. The business was profitable until fiscal 2019.


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