RateGain Shares Drop 10% After FY25 Guidance Cut

SUMMARY

RateGain also reduced its FY25 revenue growth outlook to 15% year-on-year (YoY), a decrease from 20% growth in the same period a year earlier

Besides, Kotak Institutional Equities downgraded its rating on the stock to a 'reduce' from the previous 'add' call, citing lofty valuations

At 12:10 PM, the stock was trading 10.1% lower at INR 748.3 on the BSE. Its market capitalisation stood at INR 8,825.12 at the time

Traveltech SaaS company RateGain’s shares slumped as much as 10.4% to INR 747.55 apiece during the intraday trading session on the BSE today (November 12) after the company lowered its FY25 guidance.

Rategain also reduced its FY25 revenue growth outlook to 15% year-on-year (YoY), a decrease from 20% growth in the same period a year earlier.

At 12:10 PM, the stock was trading 10.1% lower at INR 748.3 on the BSE. Its market capitalisation stood at INR 8,825.12 at the time.

The company cited four key reasons behind lowering the guidance. First, it lost a major mid market hotel chain customer in the martech segment due to M&A. Secondly, order booking for the quarter remained weak due to delayed order bookings by clients. Thirdly, travel demand among US clients has normalised and lastly, the company faced pricing pressure on some large contracts.

Meanwhile, the company remains optimistic about margin expansion moving forward. It continues to uphold its earlier projection of a 150-200 basis point growth in margins, which was revised upward in the previous quarter.

Last quarter, the company increased its margin expansion growth guidance to 150-200 bps and its holding on to that.

Besides, Kotak Institutional Equities downgraded its rating on the stock to a ‘reduce’ from the previous ‘add’ call, citing lofty valuations. Kotak has assigned a fair value of of INR 800 to RateGain stocks.

RateGain’s consolidated profit after tax (PAT) zoomed 74% to INR 52.2 Cr in the quarter ended September 2024 (Q2 FY25) from INR 30 Cr in the year-ago period.

Meanwhile, operating revenue rose 18% to INR 277.2 Cr during the quarter under review from INR 234.7 Cr in Q2 FY24. On a quarter-on-quarter (QoQ) basis, it rose 6.6% from INR 260 Cr.

RateGain said it bagged INR 127.5 Cr worth of new contracts in the quarter under review, while its annual recurring revenue (ARR) stood at INR 1,109 Cr.

In terms of segment, martech recorded a 25% revenue growth in the first half of FY25. The growth for data-as-a-service (DAAS) segment was at 19% and for distribution at 9.6%.

RateGain entered the stock market in December 2021. The stock debuted at INR 425, which was at the upper end of its IPO price range of INR 405 to INR 425.

On the YTD basis, the company has given a modest 3.06% return to its investors.