MakeMyTrip Ltd, the parent company of MakeMyTrip (India) Pvt Ltd and makemytrip.com, on Thursday fixed the price of its initial public offer (IPO) at $14 per share. India’s largest travel portal, which is selling 5,000,000 ordinary shares through an IPO, got listed on the Nasdaq on Thursday. At $14 a share, MakeMyTrip would be valued at $478 million (Rs 2,236 crore), or five times recent sales.
Analysts said that’s expensive relative to Expedia, a little higher than Priceline.com, but cheap compared to Ctrip, the Chinese travel portal which made a debut in 2003. Thursday, Ctrip is worth $5.4 billion or 17 times trailing 12-month sales, wrote Tim Mullaney in a recent column on Reuters’ Breakingviews.com, which appears in Business Standard Monday to Saturday.
If MakeMyTrip can close even a portion of the gap with its Chinese counterpart, shareholders will be in for a profitable journey, wrote Mullaney. The portal earns the bulk of its revenues by selling air tickets; it also sells hotel rooms and travel packages. It achieved revenue of $83.6 million in the year ending this March and posted positive operating cash flow, but a net loss of $6.2 million. It managed to bring down losses from $18.9 million two years before.
Close to a third of the stock is being sold by existing shareholders, including venture capitalists and CEO Deep Kalra. Of the total offering, 3,846,154 ordinary shares are being offered by the company, while 1,153,846 ordinary shares are being offered by certain selling shareholders.
In connection with the offering, the company and some of the selling shareholders have granted to the underwriters an option to purchase up to an additional 750,000 ordinary shares to cover over-allotments.
MakeMyTrip Ltd has stated it intends to use the net proceeds from sale of the ordinary shares by the company to expand its operations, by acquiring or investing in strategic businesses or assets that complement the company’s service and product offerings, and to invest in enhancements to its technology, and for working capital and other general corporate purposes. Morgan Stanley was the sole book running manager of the offering and Oppenheimer & Co Inc and Pacific Crest Securities LLC were co-managers, the travel portal said in a statement issued on Thursday.