Before subscribing to the ₹740-crore ixigo IPO, investors should evaluate the following ten significant risks:

Opening Statement

Are you contemplating investing in the ixigo initial public offering? It is imperative to comprehend the potential hazards prior to making a decision. Ixigo, the travel booking platform, is being developed by Le Travenues Technology Ltd. The company is conducting an initial public offering (IPO) valued at ₹740 crore. The price range for equity shares in the initial public offering is ₹88 to ₹93. Investors must be cognizant of the substantial risks associated with this offering, despite the fact that Ixigo has demonstrated remarkable growth.

Company Overview

What is Le Travenues Technology Ltd., and what services does it provide? Ixigo, an online travel agency (OTA), was established in 2006. It is a platform that enables the ordering of rail, air, and bus tickets, as well as hotel reservations. The company’s primary applications include ixigo Trains, Confirmtkt, ixigo Flights, and Abhibus. ixigo’s earnings per share (EPS) remain significantly below Re 1 despite the company’s transition to profitability in March 2023.

Initial Public Offering Details and Timeline

What is the specific date on which the ixigo IPO opened for subscription, and what are the details? The initial public offering (IPO) was initiated on June 10 and is scheduled to conclude on June 12. Anchor investors contributed ₹333 crore to ixigo prior to its initial public offering. The offer comprises a fresh equity sale of ₹120 crore and an offer for sale (OFS) of up to 6.67 crore shares. The IPO is priced at a range of ₹88 to ₹93 per equity share.

Allocation and Subscription

What has been the market’s reaction to the ixigo IPO thus far? The IPO received a favorable response on its inaugural day, with a subscription rate that was 1.38 times the offer size. The subscriptions were led by retail investors, who bid 4.78 times the allotted quota. Non-institutional investors (NIIs) followed, subscribing 1.71 times their allotment. Qualified institutional buyers (QIBs) subscribed to their allocated shares at a rate of 0.11 times. The minimum offer is 161 shares, necessitating an investment of ₹14,973.

The Most Important Risks to Think About

1. Low Earnings Per Share (EPS): Despite achieving profitability, Ixigo’s EPS remains significantly low, which renders the stock appear expensive in comparison to its peers.

2. Competitive Market: Ixigo is exposed to a fiercely competitive market, which includes major competitors such as Cleartrip, Yatra, and MakeMyTrip. This could potentially affect its profitability and market share.

3. Dependence on the Travel Industry: The company’s revenue is significantly reliant on the travel sector, which is susceptible to economic downturns, pandemics, and other unforeseen events.

4. Regulatory Risks: Ixigo’s financial performance and operations may be negatively impacted by changes in government regulations regarding travel and tourism.

5. Technological Risks: Ixigo, a technology-driven platform, is susceptible to risks associated with data security, cyber-attacks, and technological disruptions.

6. Customer Acquisition Costs: The requirement to maintain a balance between revenue generation and marketing expenses may be necessary due to the potential impact of high customer acquisition costs on profitability..

7. Seasonality: The travel industry is characterized by seasonal fluctuations, which result in inconsistent revenue and profitability.

8. Macroeconomic Factors: Ixigo’s financial stability may be influenced by economic conditions such as inflation, currency fluctuations, and changes in consumer expenditure.

9. Execution Risks: The company’s growth strategy entails substantial investments in technology and potential acquisitions, which are subject to execution risks.

10. Operational Risks: The reliance on third-party service providers for travel arrangements introduces operational risks that could impact customer satisfaction and service quality.

In conclusion,

Before subscribing to the ixigo IPO, what factors should investors take into account? Although there has been substantial interest in the initial public offering (IPO), prospective investors must meticulously evaluate the risks that are associated with it. The company’s competitive market, low EPS, and dependence on the travel industry are significant concerns. It is imperative that investors conduct a comprehensive assessment of these factors prior to making an investment decision, as ixigo intends to allocate the proceeds from the IPO to technology investments, working capital, and prospective acquisitions.