This travel stock surges up to 40% in two days; do you own it?

Hotel and travel-related stocks have recovered and outperformed the benchmark indices in the calendar year 2022, thanks to rebound in the economy following ease in Covid-induced restrictions, which had rattled the hospitality industry ever since the pandemic broke out. Easy Trip Planners, a midcap company that operates EaseMyTrip - the second largest online travel agency in India in terms of gross revenue, is one such stock that has more than doubled investors’ money in the past one year, as compared to a nearly 5% gain in the BSE benchmark Sensex during this period.

EaseMyTrip has delivered 126% returns to its shareholders in the last one year, with the share price rebounding from its 52-week low of ₹29.69 on November 23, 2021, to ₹67.10 in intraday today. The stock of the travel company has rallied 40% in just two days, after falling over 5% in five consecutive sessions, ahead of its board meeting on November 23 to consider and approve the issuance of bonus shares and subdivision of equity shares. 

After hitting a 20% upper circuit in the previous session, EaseMyTrip share price opened 3.9% higher at ₹59.4, against Monday’s closing price of ₹57.15 on the BSE. During the session, the travel stock gained as much as 17.4% to hit a 52-week high of ₹67.1, driven by strong volume trade. The stock breached its previous 52-week high of ₹59.56 touched on May 24, 2022. On the volume front, 20 lakh shares changed hands over the counter as compared to the two-week average volume of 9.77 lakh stocks. The market capitalisation stood at ₹11,481.60 crore at the time of reporting. In comparison, the 30-share Sensex was trading 214 points higher at 61,358 levels.  

The board of EaseMyTrip is scheduled to meet on November 23 to consider and approve a 3:1 bonus issue and a 1:2 stock split. Last month, the board had approved the sub-division of equity shares of the face value of ₹2 into 2 equity shares of the face value of ₹1. The board also gave a nod to the issue of 3 bonus equity shares for every 1 share held in the company. As per the company, the sub-division of equity shares will allow small potential shareholders to partake in the firm's future.

EaseMyTrip, one of the leading online travel portal in India, reported 3.9% growth in its net profit at ₹28.2 crore for the July-September quarter of 2022 (Q2 FY23), as compared to ₹27.2 crore in the same period the previous year. However, on a quarter-on-quarter basis, the profit dropped 15% from ₹33.2 crore in Q1 FY23.

The revenue from operations jumped 67.7% to ₹169.1 crore, from ₹100.9 crore in the same period last year. On a sequential basis, the revenue rose 28.6% as compared to ₹131.5 crore in the June quarter of the current fiscal.

EBITDA rose 8.6 YoY to ₹36.7 crore, while it declined 11.8% on a sequential basis, due to higher marketing spending, which increased sharply by 258% on yearly basis.

On Monday, ICICI Direct revised the target price of EaseMyTrip to ₹63 and maintained a “buy” rating on the stock. The agency in its report said that the online travel market in India is set to grow at 12-13% CAGR during FY23E to FY27E. “We believe the low cost model and no convenience fee strategy would strongly support the company in gaining market share further from competitors, going ahead,” it said.

EaseMyTrip offers a comprehensive range of travel-related products and services for end-to-end travel solutions, including airline tickets, hotels and holiday packages, rail tickets and bus tickets. Airline tickets accounted for 94% of revenues (pre-Covid levels) while hotels, other services contributed 5.4%, 0.6% of revenues, respectively.