RateGain IPO, Should you hold or sell RateGain tech stock after Listing

 What you should do in Rategain tech stock after IPO listing?

RateGain travel technologies  Company is SAAS company i.e Software as a service. Most of the people do not understand the business model of the company.  Let us understand the company business. For example if you will start a Grocery business then you will have two options.

1) Whether you will buy your own shop to start grocery business

2) You will take shop on rent to start a grocery business

Similarly, In “Rate gain travel technologies company” business, in simple world you have to understand that company do not own any software but take it on rent.  But We have to understand in detail that what does “Rate Gain” Company does work?

Business Model of “Rate Gain travel” Company:

Company is running its business mainly into three different products selling segments. Company is into distribution of Technology Company & one of the largest company software as a service company (SaaS) in the industries like travel, Tourism & Hospitality. Further company products are classified into three different businesses:

1) Data as a service (DaaS): Offers Competitive intelligence

2) Distribution: offering distribution like availability, rates, inventory & Content Connectivity between demanding partners.

3) Mar Tech: Offers active management, enhance awareness, engagement & sales for helping personalization of guest experience.

Question:

What are the Positive points for Rategain travel Company:

Tourism & Travel Industry growth:

First of all, we have to understand the growth of tourism & Travel industry size in which company mainly focusing. Since FY15 the size of travel & tourism Industry was nearly $1205 billion US dollars. From FY15 to FY19, Tourism & travel Industry had shown growth with 4.3% CAGR but in the financial year of FY20, we had seen huge drop in the size of travel & Tourism industry which had slipped to $555 US Dollar i.e YOY (-61%) CAGR. But Tourism sector experts are expecting CAGR of nearly 23% till FY 24 & this spike in of CAGR has taken from FY20. It means that this industry will see huge recovery from lower levels of FY20.

Hospitality Sector Growth:

Now we have to understand the growth of world Hospitality sector because “Rate Gains” Company is secondly operating is business into this sector. Since FY 15 Global Hospitality Industry had size nearly $442 billion US dollars. In FY19 it had reached at $520 billion US dollar. It means that hospitality industry had shown nearly 4% CAGR in five years but again we had seen sudden drop in FY 20, it had slipped nearly - 55% YOY basis. Hospitality sector experts are expecting  nearly 19% CAGR till FY24. Again we can say that major recover is expected from FY20 to FY24 in hospitality industry. It is also good sign for “Rate gain travel” company if management will take benefit of this expected recovery.

Revenues of Rategain travel company:

If we will skip the FY21 revenues where, it was a dip of nearly 38% revenues of the company then this company will look good on cards because in the Fiscal 2019 total revenues was nearly 2600 million & in the Fiscal 2020. Total revenues of the company were nearly 3985 million. Company may come back on right track in the coming years once demand into the tourism & travel industry will increase in the world.

Recent development into Rate gain travel Technologies Company:

Recently Company has acquired “myhotelshop”, this company offers services like bid management & reporting, campaign intelligence for the metasearch publishers & some more travel products which includes hotel suppliers , OTA’s & more agency clients which helps to reach customers to higher returns. The revenues which will be generated from this new acquisition, it will reflect into the next financial years. It is help the company to reach more customers & to generate more revenues.

No legal case against the company:

One of the best thing about this company is that no litigation against the company & its promoters which is very good sign. It means that company is following up all rules & regulation which is good sign for the shareholders.

Profit or Loss of Rate gain travel technologies company:

If we will calculate the Fiscal 2019, then company was into the profit of 110 million, in Fiscal 2020, Company had reported loss of (201) million & this loss had extended in the fiscal of 2021 & reported (285) million of loss. It was expected due to the less demand of company services at global level but in the coming years demand will come into the focus & company management would like to grab this opportunity. Net Cash flow generated by the company from operating activities in fiscal 2019 was nearly 362 million but in Fiscal 2021 it was dropped to 206 million. It may recover too.

RateGain travel IPO had received average response from retail investors & subscribed 5.24 times & NII portion had received bids of 1.44 times. It reflects nearly 1.4 multiple bids for IPO price band of 405rs to 425rs per share which is not too bad.

Right Use of Raising Funds:

As per company management, Raised fresh funds from this issue will be used for making repayment of debt which was availed by its subsidiary Rategain UK & for acquisition of DHISCO & Strategic investments and inorganic growth.

Question:

What are the negative about the Rategain tech stock?

Answer:

1) Company has more dependency on travel, hospitality business which suffered a lot in the past 20 months.

2) Company had not shown consistent performance in term of revenues & profit. Especially in last 2 years. Size of the company is also small.

What should you do after IPO listing of Rategain tech stock hold or sell ?

 As of now company management outlook is good from shareholders point of view & Valuations looks comfortable because competition is also bit less in this segment & innovative industry specific solutions and marquee client base.

If You will get listing gains in Rategain travel then it will be good to book profit on higher level but in any case You will not get listing gains because of the stock market current situation then long term investors can hold it & try to accumulate at lower levels. Fundamental & Growth story of the company looks good. If global travel & Hospitality industry will recover in the coming months which is expected then we may see good returns in “Rategain travel stock” in the coming years. Company is leader in its business segment. Promoters of the company are young & having good outlook.

Short to medium targets of Rategain tech stock:

 Traders may consider short to medium term targets of rategain travel stock are 490rs+. It is also recommended to new investors can also accumulate this stock after some profit booking  if comes in the coming weeks after its IPO listing.

If you had received number of allotment s in this IPO then  get a chance to book some  on higher levels in the short term otherwise keep strict stoploss of 5%  or 391.20rs. Nothing is bad with the company so do not panic if you will not get many returns on the listing day. Long term investors may keep this stock into their portfolio for 1 to 2 years of point of view.

Our Long term targets for rategain tech are 600rs+. We are bullish on Rategain tech stock from investment point of view. Only risk is associated with the company is pandemic situation in the world. But it may effect on company only for short term. In long term company may recover.

We are maintaining positive view for Rategain travel stock only for longer term point of view investment. We may revise the price targets in the coming months after analysis the financial performance of the company in the coming quarters.