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RateGain Travel IPO: Retail portion oversubscribed within hours of opening – Livemint

The three-day initial public offering (IPO) of RateGain Travel Technologies is set to open for public subscription today which will conclude on December 9. The software-as-a-service (SaaS) company has fixed a price band of 405-425 a share. The company it has raised 599 crore from anchor investors ahead of its share sale.

As of 11:35 am on day 1 of the bidding, RateGain Travel IPO has been subscribed 0.20 times with retail investors’ category overbooked 1.13 times, BSE data showed.

The travel and hospitality technology services provider’s IPO comprises fresh issue of equity shares aggregating up to 375 crore and an offer for sale (OFS) of up to 2.26 crore equity shares by promoters and existing shareholders.

According to market observers, RateGain shares are commanding a premium of 55 in the grey market today. The company plans to list its shares on 17 December on the leading stock exchanges NSE and BSE.

Prabhudas Lilladher has recommended to subscribe for long term gains as the brokerage believes “In highly fragmented market, the company is well positioned to capture wallet share given its comprehensive, inter-operable, innovative industry specific solutions and marquee client base. Rising adoption of technology in T&H industry and increasing demand for third-party technology vendors due to Covid is likely to double serviceable market to $8.45 bn in CY25E for RateGain.”

RateGain is among the leading distribution technology companies globally and the largest Software as a Service (SaaS) company in the hospitality and travel industry in India. 

Proceeds from the fresh issue will be used for payment of debt availed by RateGain UK, one of the subsidiaries, from Silicon Valley Bank as well as payment of deferred consideration for acquisition of DHISCO and strategic investments, acquisitions and inorganic growth.

In view of the high growth potential, unique business propositions with minimal competition and valuation comfort, those at Reliance Securities have also recommended Subscribe with a long-term perspective.

“RateGain’s profitability has not been encouraging over the years, due to the acquisition of lossmaking entities and higher depreciation (impairment of goodwill). The company continues to record lower EBITDA margin and net loss. However, adjusted EBITDA is in double-digit. RateGain is looking at >20% EBITDA margin in the coming years led by product penetrations, cross-sell and innovative launches of new products,” Reliance Securities note added.

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