Easy Trip Planners shares jump nearly 40% in 2 days – what’s fueling rally? Brokerage recommend this

Easy Trip Planners (EaseMyTrip) share price has zoomed nearly 40 per cent in the last two sessions and touched a new 52-week high for the second day in a row today. The counter gained another 20 per cent to Rs 68.3 apiece on the BSE intraday during Tuesday’s trading session. It closed around 17 per cent higher to Rs 66.85 apiece.

The stock is reacting to the record date of the bonus issue and stock split, which is today, November 22, 2022. The tours and travel services related company announced both these corporate actions on October 10, 2022. 

Easy Trip Planners Bonus Share Ratio 

The company had announced to issue bonus shares in the ratio of 3:1. It means that the company will give 3 bonus shares or additional shares for every 1 share held on the record date.   

Easy Trip Planners Split Share Ratio 

It had declared stock split in a 1:2 ratio. It means that one additional share will be issued for every two shares. After the split, the face value of the stock will become Re 1 per share. 

What Is Bonus & Split Of Shares 

When a bonus share is issued, the stock price is adjusted in the ratio of the bonus. Similarly, on the announcement of a stock split, the share price is adjusted in the same ratio, while its face value splits.  

The number of outstanding shares, in both cases, increases and the stock becomes cheaper in the secondary market. 

Brokerage Recommendations 

On the back of strong second-quarter performance and improving market share with a healthy outlook, domestic brokerage firm ICICI Securities maintain a BUY rating on the stock. 

The brokerage believes Easy Trip Planners remains a best proxy against airline or hotel companies to play on travel recovery given its low cost and negative working capital characteristics along with strong balance-sheet.

Easy Trip Planners Key Triggers  

Gross booking revenue (GBR) for the first half of the current fiscal 2022-23 was at Rs 3,641 crore, equivalent to GBR for the full year FY22. With full resumption along with the company’s aggressive ad campaign to gain market share, the brokerage expects GBR to grow at 41.2% CAGR during FY22-25E.

The lean cost model and no convenience fee strategy remain key pillars supporting such rapid, profitable growth. This has also led to stickiness by customers with a healthy repeat transaction rate of around 86% in the B2C (Business to Consumer) channel. 

Further benefits would accrue from high-margin segments like hotels (Traviate – B2B technology platform, Spree Hospitality – hospitality management company and bus booking segment (Yolo - intercity mobility platform). 

Easy Trip Planners Q2FY23 performance 

The gross revenues of the company grew by 28.6 per cent Quarter-on-Quarter to Rs 169.1 crore. However, EBITDA margins declined 993 basis points (bps) QoQ to 21.7 per cent. This led to PAT de-growth of 15 per cent QoQ to Rs 28.2 crore.  

The key reason behind the fall in the margins was higher marketing spend, which increased sharply, up 258 per cent Year-on-Year (YoY) or 1.5 per cent of GBR. 

However, this has helped the company to grow its market share, which is visible from GBR growth that saw a sequential jump of 19% to Rs 1978 crore. In terms of volume, its passenger volume grew 26.6 per cent QoQ to 28.3 lakh while industry air passenger reported de-growth of 7.9 per cent QoQ to 2.99 crore.