Online travel agency Easy Trip Planners, according to Exness Là Gì, has posted excellent profits since its listing on March 19. Its shares have risen by more than 220% in the last six months to Rs 599 crore, making it the third highest gainer among listed IPOs this year. The other two are Nureca (up 317 per cent) and Laxmi Organic Industries (up 315 per cent).

The stock has outperformed Nifty50, which is up 19.5 per cent, and the Nifty Midcap 100 Index, which is up 26.5 per cent in the last six months.

Rally riders

Good financial performance, further easing of travel restrictions after a strong vaccination, operational efficiency and expansion of international presence are some of the main reasons for this rally.

"The company has expanded its international presence to include 100% subsidiaries in the Philippines, Thailand and the US. It is expected to benefit from huge pent-up travel demand globally as restrictions are lifted and the vaccination campaign picks up," said Ankur Saraswat, research analyst at Trustline Securities.

He said cost rationalisation, efficiency gains, growth in disposable income and deeper penetration of travel in lower tier cities will drive future growth.

Gaurav Garg, head of research at CapitalVia Global Research, agreed that the stock started rising after the easing of Lockdown 2.0 restrictions.

"The main reason for the company's success seems to be its financial performance. The company reported profit growth of about 85% in FY21. The reason for the increase in profitability, despite lower revenues, was mainly due to higher margins and commissions, as well as a reduction in operating costs," he explained.

EaseMyTrip.com reported a significant 85 per cent jump in profit of Rs 61 crore in FY21 compared to the previous year, despite fewer bookings in the pandemic year. But revenue fell 24.5 per cent y/y to Rs 106.71 crore in FY21.

According to Vivek Gupta of GEPL Capital, it is one of the few profitable online travel companies.

In the first quarter of FY22, the company recorded a nearly 518 per cent jump in profit despite the second wave of disruption in the travel industry, to Rs 15.4 crore as compared to Rs 2.5 crore in the corresponding period last fiscal. Revenue for the quarter jumped 425.6 per cent y/y to Rs 18.7 crore.

Where to go next?

The stock looks expensive given the stellar rise in its issue price. However, given the recovery in the tourism industry, it could rise to Rs 1,000 crore in the next 6-8 months (medium term) and Rs 820-880 crore in the short term.

"The P/E ratio of the stock is currently 115.16 times. It does look expensive in the short to medium term. However, with the revival of travel, profits could go up. The company's return on invested capital (ROCE ) is 65.5% and hence the overall outlook for the stock looks positive," said Garg of CapitalVia Global Research.

"The stock has shown a flag break on the daily charts and it can cross the Rs 1,000 crore level in 6-8 months after a little profit taking. Our target price for the next 6-8 months is Rs 1,025," he said.

According to Trustline Securities' Saraswat, the stock is expected to test the Rs 820-880 level in the short term. It has strong support around the Rs 540-580 level. Gupta of GEPL Capital thinks the share price could hit Rs 1,000, but he is not sure of the timing. "Given that it is 70 times March 2021, it is not cheap," he said.

Easy Trip Planners launched an initial public offering of Rs 510 crore in March 2021 and saw a huge subscription of 159 times, but the listing was muted due to weak market conditions.

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