Muscle and resilience: Inside ixigo's journey to the stock market

Second time’s the charm for Ixigo, as it has set out again to list on the Indian bourses. 

The Gurugram-based online travel aggregator (OTA)—whose train ticketing business is its major revenue source—saw its shares subscribed 1.95 times on Monday, day 1, of its IPO offer. 

According to data from the BSE, investors placed bids for 85.5 million shares compared to 43.7 million shares available. The retail investors' portion was subscribed 6.21 times, while the non-institutional investor segment was subscribed 2.78 times. Qualified institutional buyers bid for 0.12 times the shares on offer.

In 2021, ixigo had filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise Rs 1,600 crore in an initial public offering (IPO). Although it got SEBI approval in late December 2021, ixigo had to shelve its plans owing to unfavourable macroeconomic conditions.

“In 2022, the market—especially for the tech-listed companies—wasn't looking like the best time to go. So, we decided to take a pause in that process and work on growing our business,” Aloke Bajpai, Chairman, Managing Director, and Group CEO of ixigo, tells YourStory.

The company focused on scaling the business and becoming more profitable.

“In FY23 and nine months in FY24, our revenue and profits have grown. We also managed to demonstrate more operating leverage. Revenue per employee has also improved,” he says.

Le Travenues Technology Ltd, ixigo’s parent, refiled its DRHP in February this year and got approval in May. It plans to raise Rs 740 crore through the IPO, which will be through a combination of an offer for sale (OFS) and a fresh issue of shares.

The IPO—which opened for bidding on June 10 and will close on June 12—comprises a fresh issue of equity shares worth Rs 120 crore and an OFS of 6.67 crore shares worth Rs 620 crore. It has set a price band of Rs 88-93 per equity share for its public issue. 

At the upper end of the price band, ixigo is expected to raise a total of Rs 740 crore. Of this, the company has raised over Rs 333 crore from 23 anchor investors at a price of Rs 93 per equity share.

Its key anchor investors include State Bank of India, HDFC, Morgan Stanley, Nomura Fund, 3P India, Motilal Oswal, Malabar, Bajaj Allianz, and Tata Investments.

For the nine months ended December 2023, ixigo's revenue from operations rose 34.9% to Rs 491 crore from Rs 364.3 crore a year ago. Net profit climbed to Rs 65.7 crore from Rs 18.7 crore, according to its RHP filings.

“The best time for a company to go public is when it is delivering sustainable growth and profits and has reached a scale where it makes a lot more sense for it to be a public company. Also, all the corporate governance and hygiene, in terms of how to run the company, is already in place,” says Bajpai.

In 2021, ixigo became a public limited company. The co-founder says, “A lot of those compliances that apply to listed players have already applied to us for the last three years. We've had our independent board for a while, so we've been ready. We were just waiting for the scale and profits to reach a point of time where it's even more exciting to get listed.”

Investment strategy

The OTA will use the fresh proceeds to fund its working capital requirements, technology, and inorganic growth via acquisitions.

“We've always been an early investor in technology and artificial intelligence (AI). Some of these investments will also go into scaling our cloud infrastructure because we're seeing massive growth in user base,” says Rajnish Kumar, Director and Group Co-CEO of ixigo.

As of FY23, the company has an annual active user count of 429 million.

Further, its last two acquisitions—AbhiBus, a bus ticketing and aggregation platform, and Bengaluru-based Comfirmtkt, an online train discovery and booking platform—have worked out well for the company. 

Kumar says, “As of now, we don't have any target in mind, but we're always on the lookout for great teams, building things in a profitable, sustainable manner, and with a similar cultural DNA.” 

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Journey since inception

The last 18 years have been very eventful for ixigo.

“It was a roller coaster ride, but in the end, it built a lot of muscle for us, a lot of resilience,” says Bajpai. 

“For any company that wants to have strong fundamentals, it needs to go through pain. And we went through a lot of pain in our early years—right from the time we started and faced a lot of difficulty in raising our first institutional round,” he recalls.

The co-founders did not have any savings when they started the company. Instead, they had some loans to pay off. In 2008, the global financial crisis began just as ixigo raised its seed funding round. 

“So, we had another year and a half of pain. But we came out of that, rebuilt ourselves, and found trains as a great opportunity. If you want to build an OTA for Bharat, you will have to think about putting trains and buses at the core,” says Bajpai. 

For an average Indian, the travel journey begins with trains and, to some extent, buses, to reach the harder-to-reach places in India. 

“The insight we had back in 2013 was we have to build something with trains at the core. We started as a utility app for trains, which later became a transactional app in 2017,” he says.

According to the co-founder, ixigo became the most downloaded travel app in the country, and it reached a point where “we had enough users that gave us the confidence to say we are doing something to make their lives better.”

Speaking of its USP, Kumar said ixigo stands out from the crowded travel tech market in India by finding a core customer problem and solving it using tech and AI.

“We never started by selling train tickets or flight tickets or bus tickets,” he says.

According to a Frost & Sullivan report, ixigo is the leading OTA for the ‘next billion users’, with a focus on localised content and app features, which aim to solve the problems of travellers from Tier II and III Indian cities. In fact, the company was the second-largest OTA in India in terms of consolidated revenue from operations in FY23.

In September 2023, ixigo flights, ixigo trains, ConfirmTkt, and AbhiBus have collectively seen the highest usage and engagement among all key OTA players and standalone transactional train mobile apps in India in terms of monthly active users.

The report said that, as of March 31, 2023, the company is the largest Indian train ticket distributor in the OTA rail market and has the largest market share of around 51% in terms of rail bookings. 

India’s travel tech ecosystem is expected to receive a favourable boost on the back of AI-led tools and products. According to Allied Market Research, the global travel tech market will reach $21 billion by 2032, growing at a CAGR of 8.6%.

ixigo’s competitor, EaseMyTrip, which went public in March 2021, was valued at Rs 2,040 crore during the IPO. EaseMyTrip was earlier set for an IPO in 2020. 

The travel booking platform saw a 9.5% year-on-year growth in profit after tax to Rs 45.6 crore in the third quarter of FY24.

On the other hand, online travel and hotel booking firm, MakeMyTrip, successfully completed a $70-million IPO back in 2010 when it listed on NASDAQ. The company reported a profit of $216.7 million in FY24 against a loss of $11.2 million posted a year ago.

(The copy was updated to correct the co-founders' names in the image.)