IXIGO - Anchor Investors Fuel INR 333 Cr Pre-IPO Boost - bizTrailblazer

ixigo Takes Off: Anchor Investors Fuel INR 333 Cr Pre-IPO Boost

IXIGO, the parent company of Le Travenues Technology had moved a step ahead towards its initial public offering (IPO) by raising INR 333 crore from 23 anchor investors at the upper end of its price band. This shows that investors have faith in ixigo’s ability to grow in this Indian travel tech industry which is rapidly changing. So, let us look more into this information and examine what it means for ixigo in the long run.

A Look Back at ixigo’s Journey: From Records to Mobile Rails

Alokesh Bajpai and Rajnish Kumar founded ixigo in 2007. The story of Ixigo began with selling music records. However, they quickly adapted to changing market dynamics and reoriented their business towards travel services in FY20. This change from offline to online mode of travel bookings fits perfectly into India’s expanding travel market estimated to reach INR 2.5 trillion by 2025 (Source: Statista).

Building a Niche in the Competitive OTA Landscape

The Indian OTA market is a fiercely competitive space, dominated by established players like MakeMyTrip and Goibibo. ixigo has carved out a niche for itself by focusing on specific segments. Here are some key differentiators:

  • Railway Focus: Unlike other OTAs who primarily focus on air travel, ixigo offers a strong train booking service to a large segment of the Indian population who prefer rail travel.
  • Deep penetration into Tier 2 & Beyond cities: Ixigo has gained ground in smaller cities and towns beyond metros thereby reaching a wider customer base.
  • Innovation Focus: For instance, there are innovative features like “modified search” for trains where users can select trains based on amenities as well as preferences.

These aspects have worked effectively for Ixigo making them attract clients all over without losing them easily.

Decoding the Anchor Investors’ Move

On the other hand, participation by twenty-three anchor investors including SBI Magnum Children’s Benefit Fund & Nomura Funds Ireland implies confidence in the growth story of their investment despite risks associated with unproven business models or uncertain prospects about profitability immediately after listing such stocks. Anchor investors typically invest large sums at the beginning of an IPO, providing stability and boosting investor sentiment.

Additionally, the fact that ixigo was able to secure funding at the higher side of the price band also demonstrates investor’s confidence in the company’s future profitability.

Financial Performance and Growth Trajectory

Ixigo reported INR 65.7 crore as consolidated net profit in the first nine months of FY24 which was an increase from INR 23.4 crore recorded during the entire FY23. Operating revenue also jumped, indicating strong financial performance. This will most likely be one of the factors that will attract investors.

Further, the Indian Travel Tech Market is expected to achieve a CAGR of 11.1% between 2023 and 2028 (Source: Mordor Intelligence). ixigo has multiple opportunities to grow its market share and enhance profitability within this expanding industry.

The Road Ahead: What to Expect from ixigo’s IPO

With the successful placement of anchor investors, ixigo is well on its way to a successful IPO. The public offering is expected to open on Monday, June 10th, 2024. Here are some key aspects to watch:

  • Public Response: The success of this offering will depend on how well it is received by the public at large. Ixigo with its strong financials, unique market positioning, and growth potential could attract investors across various categories.
  • Post-IPO Strategy: A crucial feature of the company’s fund expenditure strategy following the I.P.O. is that it should help investors see how Ixigo plans to expand its services, technology, and marketing reach.
  • Competition: The ongoing need for innovation to differentiate itself from established players in the OTA market can be seen as a differentiator factor.

ixigo’s IPO marks a significant milestone in its journey. Having solid foundations, expanding markets, and innovation focus, India’s travel tech landscape seems ripe for ixigo to take off and become a key player. The next few months will be critical as the company goes through its IPO process and maps out its way forward for future growth.

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