By Rajesh Singla
In the bustling realm of tech startups, where the allure of rapid growth often overshadows profitability, IXIGO emerges as a rare gem, poised to make waves with its upcoming IPO. As we embark on an exploration of IXIGO’s journey from inception to IPO, we are greeted with a narrative rich in innovation, strategic foresight, and commendable financial health.
Genesis and Returns Perspective of IPO
IXIGO, one of the leading online travel aggregators in India, refiled its DRHP with SEBI on February 14, 2024, and plans to raise funds through an IPO. The IPO comprises a fresh issue of Rs. 120 crores and an offer for sale (OFS) of 6,66,77,674 equity shares by the existing shareholders, including SAIF Partners, Peak XV Partners, Micromax, and others. IXIGO is a rare profitable online travel tech startup in the Indian market, having reported a net profit of Rs. 65 crores in Q3 of 2024.
The company has shown strong resilience and growth despite the Covid-19 pandemic and the travel restrictions. The company has a strong presence in the rail and bus segments, with a >52% market share in IRCTC bookings and a 12.5% market share in bus ticketing by H1 20224. IXIGO also has the highest app usage among the online travel aggregators, with 83 million monthly active users as of September 2023.
A Deep Dive into IXIGO’s Business Model
Central to IXIGO’s success is its innovative blend of technology and customer-centric solutions. Deploying AI, ML, and data analytics, IXIGO has curated personalized travel experiences, resonating particularly well with the tech-savvy millennial demographic. IXIGO has also expanded its presence and reach through strategic collaborations and acquisitions, such as AbhiBus and Confirmtkt, which have added value to its offerings and increased its user base.
As per data.ai (formerly App Annie), in 2022, the IXIGO trains app and ConfirmTkt app were also featured in the top 10 travel apps in India with the IXIGO trains app ranked 2nd and ConfirmTkt ranked 7th, in terms of most downloaded travel apps.
Financial Health: A Testament to Profitability
IXIGO is one of the few online travel tech startups in India that has achieved profitability. The company has overcome the hurdles of the competitive OTA market and the Covid-19 pandemic and delivered impressive financial results. The company’s fiscal performance shows its strong growth trajectory, with a revenue of Rs. 497 crores and a net profit of Rs. 65 crores in the first nine months of FY24, which marks a substantial increase from FY23, where IXIGO’s revenue was Rs. 517 crores and its net profit was Rs. 23 crores. The company has also improved its margins and efficiency, with an EBITDA margin of 7% and an expense-to-revenue ratio of 0.97 in FY23. These numbers reflect IXIGO’s dedication to sustainable growth and financial prudence.
Leadership and Strategic Vision
At the helm of IXIGO are visionaries Aloke Bajpai and Rajnish Kumar, whose strategic acumen has propelled the company to new heights. Their unwavering focus on customer retention and affordable travel solutions has not only earned IXIGO a loyal following but has also set a benchmark for leadership excellence in the tech startup sphere.
The Market Impact of IXIGO’s IPO
With its IPO on the horizon, IXIGO is poised to make a significant impact on the market. Valued at ~ INR 6,000 crore+, the IPO signifies more than just an investment opportunity; it embodies a belief in IXIGO’s profitable and innovative business model. The IPO’s intended raise of approximately INR 120 crore underscores investor confidence in IXIGO’s growth trajectory, positioning the company as a formidable player in the tech IPO arena.
An Interesting Perspective for Pre-IPO Investors
It’s worth noting that shares of IXIGO were available at the PreIPO platform at Planify between ₹60 – ₹90 a year back. This presents a potentially lucrative opportunity for PreIPO investors, who stand to make excellent returns once the shares get listed. This highlights the potential of early investment in promising startups like IXIGO.
Comparative Industry Analysis
IXIGO has demonstrated its operational efficiency in a highly competitive landscape. The company spent only 18.6% of its revenue on marketing and promotional expenses in FY23, which is significantly lower than the industry average of 35.8%. IXIGO has achieved high customer acquisition rates, with 25 million monthly active users. The company has also maintained a lean cost structure, with an expense-to-revenue ratio of 0.97 in FY23. These numbers reflect IXIGO’s strategic prowess and market agility in the online travel sector.
Navigating Future Challenges
IXIGO is facing the future challenges of the online travel sector with confidence and optimism. The company has deferred its IPO plans due to the market volatility, but it has kept its growth and innovation strong. The company has launched new products and services, such as IXIGO Assured, a premium travel product that offers guaranteed refunds, free flight changes, and priority support, and ixigo Money, a loyalty program that rewards users with cashback and discounts. The company has also invested in new technologies, such as artificial intelligence, machine learning, and data analytics, to enhance its user experience and personalization. These initiatives have helped IXIGO to increase its user base, market share, and revenue, and to overcome the challenges posed by the Covid-19 pandemic and the travel restrictions.
Conclusion: A Model of Profitable Growth
IXIGO’s journey from inception to IPO is a testament to its profitable growth in the tech startup ecosystem, underscored by innovation, customer-centricity, and financial prudence. The company’s IPO process is meticulously planned, aiming to leverage the 500+ Cr in revenue and a 10% EBITDA margin as highlighted in the image. With a valuation currently undervalued at 6.8x EV/Revenue, IXIGO stands poised for significant market expansion. The company has raised $53 million in a pre-IPO round led by Singapore’s sovereign wealth fund GIC, which valued it at $600 million. Post-IPO, IXIGO’s expansion strategy will be anchored in scaling its diverse portfolio of customer-centric solutions and exploring new market frontiers. As IXIGO prepares for this pivotal transition, it aims to enhance its market position leveraging robust financials and an unwavering commitment to innovation. IXIGO not only challenges the status quo but also sets an ambitious trajectory for future tech startups aspiring for similar feats of success and market leadership.
The author is co-founder and CEO, Planify
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