Travel business is booming in India and Yatra Online is the pure game

By Lisa Thompson

NASDAQ: UTRA

READ THE FULL YTRA RESEARCH REPORT

Management says travel demand remains at unprecedented levels

While here in North America consumers seem to be cutting back on spending as inflation and interest rates weigh on spending, in India the consumer seems to be holding steady. The country still shows pent-up demand for both leisure and corporate travel, and according to Yatra management, it has not been as strong in the last 15 years. In the September quarter, INR-adjusted revenue grew 21% sequentially in what is usually a seasonally weak quarter – but not this year. The company is seeing record days with revenue surpassing the pre-Covid period.

Yatra Online (NASDAQ:YTRA) noted that its business is quickly reaching pre-pandemic levels. By September, India’s domestic passenger traffic reached 90% of pre-Covid levels and gross business travel bookings for Yatra reached 100% of pre-Covid levels. International travel also continued to improve gradually in the last quarter, reaching 70% of pre-COVID levels.

Yatra had record customer signings in the September quarter with 30 contracts signed for large and medium enterprises, surpassing last quarter’s record of 27 signings. These additional 57 customers are in addition to the previous 720, which is an 8% increase in the customer base. This increase in market share alone contributes to growth. The company’s IPO in India is still on track for the March ’23 quarter, with the timing dependent on market conditions.

FYQ2 Ends 30 September 2022

The September quarter was the second full quarter of open travel in India. Yatra reported FYQ2 unadjusted revenue grew 68% year-on-year in dollar terms and 92% in INR due to dollar depreciation. Adjusted revenue was $18.6 million versus $10.6 million a year ago in dollars. Air passenger bookings were up 41% for Yatra in the quarter and hotel room stays were up 43%. Vacation packages have increased from 1,000 last year to 5,000 this year. It had adjusted EBITDA of $955,000 for the quarter, compared with $313,000 last year. Yatra was also cash flow positive during the quarter.

Adjusted revenue was $18.6 million versus $10.6 million a year ago in US dollars, an increase of 75% and reaching its highest level since COVID. Adjusted airfare revenue increased 110% year-over-year to $10.7 million, while adjusted hotel and package revenue increased 47%. Other services grew by 5% and consisted mainly of advertising income, facilitation fees and the return of debts no longer required for payment.

Air Ticketing’s net revenue margin increased to 8.1% both year-over-year and sequentially.

Hotel & Packages’ net revenue margin of 12.4% was down year-over-year from 16.5% last year, and sequentially.

Industry traffic numbers declined in the September quarter to around 30.2 million passengers compared to 33.6 million in June, as shown in the chart below. Due to the holidays, Q4 should be higher consistently as seen by early trends in the October number.

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