Online travel agents may see sharp recovery in bookings on multiple triggers – know what brokerage says on sector
The growth seen in OTA bookings by the domestic brokerage house is mainly on the basis of pent-up travel demand; rising online penetration; recovery in international flight and budget hotels and OTAs adding new products and services.
On the back of multiple triggers, the bookings on Indian online travel agents (OTA) are in for a sharp recovery at 46 per cent CAGR (Compound Annual Growth Rate) over FY22-25E to Rs 1.5 trillion, within this 80/ 37 per cent YoY in FY23/ FY24E, Axis Capital said in its report on Indian Travel Tech.
The growth seen in OTA bookings by the domestic brokerage house is mainly on the basis of pent-up travel demand; rising online penetration; recovery in international flight and budget hotels and OTAs adding new products and services.
Like their global OTA peers, Indian OTAs can generate healthy returns given moderate competitive intensity, cost optimization, and improving scale, the brokerage said.
The brokerage initiate coverage on Make My Trip (MMYT) with Buy rating on dominant position and improving returns with around 10 per cent RoE by FY25E). And, initiate Ease My Trip (EMT) with Reduce rating due to valuation concerns though we like its lean cost structure and elevated returns.
Amid recovery in travel post Covid, Make My Trip (MMYT) has been a major winner in the OTA space maintaining its market leadership position, Axis Capital said.
The company’s net revenue to grow at 49 per cent CAGR over FY22-FY25E given better position to drive innovations led by large technology team; impressive customer engagement metrices and continuous addition of new revenue streams, the brokerage said in its report about MMYT.
While Ease My Trip has a resilient lean business model that can adapt to changing environment. This has helped it stay profitable during Covid pandemic and gain market share.
We like EMT’s low-cost business model, strong growth potential both organic and inorganic, healthy financial position with elevated returns and improving brand visibility post IPO, the brokerage said, adding that it remains wary of its elevated valuation as the stock is up ~31%/ 72% in 6/ 12 months.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Power of Compounding: How many years will it take to reach Rs 3 crore corpus if your monthly SIP is Rs 4,000, Rs 5,000, or Rs 6,000
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
Reduce Home Loan EMI vs Reduce Tenure: Rs 75 lakh, 25-year loan; which option can save Rs 25 lakh and 64 months and how? Know here
Top 7 Large and Mid Cap Mutual Funds with Best SIP Returns in 5 Years: No. 1 fund has turned Rs 15,000 monthly SIP investment into Rs 20,54,384; know about others
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
12:00 PM IST