RateGain Makes Weak Debut On Stock Exchanges, Shares List At 15% Discount

Shares of travel tech startup RateGain recorded a weak debut on the stock exchanges today (December 17th, 2021) as it got listed with a discount of 15.29% on the National Stock Exchange (NSE).

On the NSE, the shares got listed at INR 360, against the issue price of INR 425 per share.

At 10.50 a.m, its shares were trading at INR 360.25, lower than INR 64.75 or 15.24% from the issue price.

On the BSE, RateGain’s shares got listed with a discount of 14.16% at INR 364.80. Currently, they are trading at INR 360, lower by INR 65 or 15.29% from the issue price.

Parth Nyati, founder of Tradingo said, “Despite being the first mover, the startup saw a moderate subscription of 17 times. On the back of a pandemic, it has been losing money for the last two years, and rising Covid cases are still a concern.”

For short-term investors, a stop loss of INR 325 should be put in place, while long-term investors are encouraged to hold it. When things return to normal, the startup should show great growth potential,” Nyati added.

Santosh Meena, head of research at Swastika Investmart Ltd was of the view that the timing of RateGain IPO does not fit despite most of the IPOs are witnessing a handsome return because Covid is hurting its business in the near term while worry of Omicron variant is another challenge.  

Although the shares have listed with a discount, they were commanding a premium in the grey market.

The IPO which closed on December 9th, 2021 was subscribed 17.41 times. The retail portion was subscribed 8.08 times while the qualified institutional buyers booked their allotted portions 8.42 times. The non institutional investors (NII) which largely include corporates and high net worth individuals subscribed the earmarked portion 42.04 times.

The offer opened at the price band of INR 405 – INR 425 on Tuesday, December 7, 2021.

Anchor Investment

On December 6th, RateGain raised INR 598.83 Cr in the anchor investment from 34 anchor investors at the upper price band of INR 425 per equity share.

Some of the key anchor investors included in the round were the Government of Singapore, Monetary Authority of Singapore, Nomura, ICICI Prudential Mutual Fund, SBI Life Insurance, Nippon Mutual Fund, Pinebridge, Axis Mutual Fund, Birla Mutual Fund and ICICI Prudential Life Insurance.

RateGain: The Financials

For the last financial year (FY21), the Delhi NCR-based startup reported a net loss of INR 28.57 Cr, 42% higher than INR 20.10 Cr of net loss registered in FY20.

Its revenue from operations fell 37% to INR 250.79 Cr in FY21, compared to INR 398.71 Cr reported in FY20.

Founded in 2004 by Chopra, RateGain offers a SaaS product that helps travel and hospitality companies streamline operations and sales. It enables them to determine the right pricing for their products based on the demand, the current market rates that help hotels and booking agents to maximise revenue.

RateGain’s clientele includes InterContinental Hotels, Lemon Tree Hotels, The Kessler Collection and another IPO-bound travel unicorn OYO Hotels and Homes.

Recent Startup IPOs

RateGain has joined the list of startups to have gone public of late. 

FSN E-Commerce, the parent company of online lifestyle marketplace Nykaa witnessed a bumper stock market debut last month as it listed with 79% premium. 

Fintech unicorn Policybazaar’s shares got listed with a 17% premium on the domestic exchanges. The shares of Fino Payments Bank however, witnessed a weak debut with a discount of over 5%.

The mega listing of Paytm, too saw weak performance. Its shares debuted with a discount of around 9%.