ixigo IPO: The ‘Cockroach Startup’ Goes Public

ixigo IPO: The ‘Cockroach Startup’ Goes Public

When we caught up with Ixigo cofounder Aloke Bajpai in early 2023, the focus had turned away from the company’s first bid to go to the public market.

And now 15 months later, Bajpai and ixigo are once again on the cusp of the IPO. This time around though there’s no hitting the brakes like in 2021.

The ixigo IPO opens tomorrow morning and with this one of the most unique startups in the Indian ecosystem will soon be jostling with listed competition in the stock market.

Unique because ixigo is often called a ‘cockroach startup’. “We have always been a very scrappy and frugal company,” Bajpai told us last year in reference to the cockroach startup moniker, when we dove into ixigo’s playbook for frugal and sustainable growth

And also unique because it is a major milestone in the 18-year journey of a venture funded startup. Not many venture-backed startups have displayed such resilience, survived multiple cycles of recessions and reached profitability like ixigo has done.

So the ixigo story is something different, and that’s the subject this Sunday. But only after a look at these top stories from our newsroom this week:

• The Startup Ecosystem’s Wishlist: Aarin Capital’s partner Mohandas Pai has called on the next Narendra Modi-led government to ease angel tax hurdles and set up an INR 50K Cr fund of funds for startups to take the Startup India vision forward
• Swiggy’s IPO Test: With Swiggy all set to bring in one of the largest IPOs in India for a tech startup, what is the grey market’s view on the valuation and what Swiggy needs to do to win over investors
• Zomato’s Rollercoaster: Despite the high potential for Blinkit, a profitable food delivery business and the ever-growing Hyperpure B2B vertical, Zomato seems to have lost some of its charm in the stock market. So what gives?

ixigo On The IPO Bandwagon

After three startups went for public listings in May, it’s now ixigo’s turn to keep the IPO momentum going in June. Come tomorrow, the ixigo IPO will open for subscription and once again test the appetite of public markets investors for new-age tech stocks.

Given the recent experiences of TBO Tek, Go Digit and Awfis last month, the subscription for ixigo is expected to be healthy, the competition is steep in the travel tech segment. But ixigo’s profitability and its sustainable model are being counted as major advantages despite the competition.

The ixigo IPO comprises a fresh issue of shares worth INR 120 Cr and an offer for sale (OFS) component of 6.67 Cr shares worth INR 620 Cr. The startup has set a price band of INR 88-93 per equity share for its public issue.

At the upper end of the price band, ixigo is expected to raise a total of INR 740 Cr. Out of this, the company has raised over INR 333 Cr from 23 anchor investors at a price of INR 93 per equity share.

Most analysts believe that the competition will be iixgo’s biggest challenge given players such as EaseMyTrip, MakeMyTrip, Yatra, Flipkart-owned Cleartrip, as well as the likes of Paytm, Amazon, PhonePe and others that have travel ticketing verticals.

In fact, travel tech is one of the most competitive spaces in India and the market is still underpenetrated to a large extent given the use of ticketing agents and travel agencies in smaller towns and even large cities for corporate bookings.

This could be a cause for concern according to some analysts, because investors might not move to ixigo as soon as they see the IPO. Many investors have built a robust travel portfolio in the past two years, so this could be one potential hurdle for ixigo, but in all likelihood the IPO will see healthy oversubscription.

“The likes of EaseMyTrip, Yatra, TBO Tek and others might have tapped some of the liquidity of large investors in the past two years, and nobody wants too much exposure to travel given the present geopolitical situation around the world,” says one travel segment analyst with a Big Four firm.

The analyst added that ixigo has a strong moat in the railway ticketing business, which is an untapped market for investors after IRCTC.

Going Beyond The Comfort Zone

As we noted a few weeks ago, the competitive advantage in railway ticketing could become a double-edged sword for ixigo since IRCTC is the platform’s most important partner and also its biggest rival for direct train bookings. In its DRHP, the company highlighted that any variation or termination of its agreement with IRCTC might have an adverse impact on its business.

Train ticketing constitutes almost half of ixigo’s revenue. For the nine months ending December 2023, train ticketing revenue of INR 265 Cr contributed 45.3% to the total ticketing income of INR 585 Cr. ixigo posted a consolidated net profit of INR 65.7 Cr in the first nine months of FY24, up 3X from INR 23.4 Cr in the entire FY23.