Investors scanning the Indian stock market for accessible entry points often narrow their search to companies trading at very low absolute prices, a habit that has kept interest alive in what is commonly referred to as the category of Stocks Under Rs 10. Among the names that regularly appear in such screens is a well-known online travel platform, and discussions around the Easy Trip Planners Share Price have become fairly common on retail trading platforms and financial news portals. As one of the more visible players in India’s online travel booking space, the company’s stock movement offers a window into how smaller-ticket equities in a competitive consumer-facing industry tend to behave, and what factors investors should weigh before forming a view on such counters.
A Snapshot of the Company’s Standing
The company provides a travel booking platform, which is one of the most popular brands in India’s online travel agency space, facilitating flight and hotel bookings, holiday packages, rail and bus tickets along with some ancillary services such as insurance and visa processing as well. The man behind the company Nishant Pitti himself has been one of the most visible faces of the company till date while promoter’s stakeholding trends continue to be monitored by market analysts as a vote of confidence as well.
The company’s asset-lite model, wherein it focuses on utilizing technology and forming partnerships rather than acquiring most assets required to facilitate bookings itself, has always been seen as its biggest strength against competition in the online travel booking space.
However, the company’s counter has witnessed a significant decline in the past year or so, as most counters in this space have witnessed a significant decline due to increased competition in the online travel booking industry with most major players exerting pricing pressures on ticket and package bookings, with the result that most counters in the space have witnessed a decline in their margins with this counter as well not being an exception. The company’s quarterly results in the past couple of quarters as well have been mixed as compared to its consistent profitability as compared to previous years, when it was consistently able to report profits as a listed entity.
Why Investors Watch This Segment Closely
The travel and tourism segment in India has witnessed a significant uptick in the past couple of years driven by increase in disposable income, rise in inclination to travel for leisure and increased propensity to book tickets online as compared to traditional methods. As a result, multiple counters dealing in travel technologies have emerged as important counters, wherein investor sentiments towards India’s evolving travel landscape are reflected.
However, at the same time, the online travel booking segment is exceptionally competitive as well with most major players competing to acquire large market share by adopting aggressive pricing strategy; thereby leading to lower margins for most counters in the space even with higher volume of bookings due to a relatively lower average sale price that they can command for their offerings.
As a result, while a relatively small change in terms of number of bookings or average sale price that the company books, has a significant impact on the resultant net profits, which in turn gets reflected in the movements in the counter’s price as compared to the broader market.
A small change in terms of gross booking values, take rates, customer acquisition costs and similar other metrics would have a significant impact on the company’s overall profitability, and as a result, such a counter tends to get valued on the basis of broader macro trends impacting general travel sentiments as well as the resultant impact on the company’s volume of bookings or average sale price.
The Role of Trading Volumes and Liquidity
One of the primary characteristics of this counter is its consistently high trading volumes given its valuation levels. As a result, the price discovery process for this counter tends to be quick and reflective of most near term developments impacting the company as well as the overall sector. As a result, a change in the overall market sentiments about the travel sector or even developments impacting the company specifically could quickly get reflected in the price discovery process of this counter.
Assessing Long-Term Potential Versus Short-Term Noise
Trying to separate noise in terms of near-term price fluctuations, with actual long term trends on ground is always a challenge. As such, a quick uptick or decline in terms of price, following a positive or negative quarterly report respectively, should be seen as a beginning of a new trend instead of a significant development on its own.
Promoter activities related to the company such as sale of stakes or block deals should also be monitored closely as such developments could often be reflective of changing sentiments on ground in terms of the company’s prospects in the future, although such developments also tend to reflect wider macroeconomic concerns that are unrelated to the company’s overall fundamentals.
Final Considerations for Prospective Investors
Investing in a travel sector counter with a low price per share requires one to look at the opportunity on two fronts. Firstly, evaluating the long-term prospects of the travel sector overall, which continues to witness a significant uptick driven by the increase in disposable income and inclination towards recreational travel amidst an increasing number of individuals who prefer booking tickets and travel online. Secondly, evaluating the short-term challenges that such a counter faces in terms of competition with larger players in the space and its ability to overcome such headwinds to expand its overall footprint and increase its share in the overall online travel booking space.
