The brokerage in its coverage initiation report late last month said in a highly fragmented market, we believe RateGain Tech is well placed to increase its wallet share versus peers, as well as, in-house technology teams of enterprise customers, given its relationships with marquee clients, cross-selling opportunities, and innovative products.
The brokerage has a buy call on the stock, with a target price of Rs 450, suggesting a 46 per cent upside from Thursday’s close of Rs 308.20 on BSE.
The stock, which listed in December 2021, currently trades 28 per cent below its IPO price of Rs 425 and 41 per cent below all-time high of Rs 525 thanks to the broader market selloff, and growing investor aversion to technology names.
Global travel market research firm Phocuswright expects global travel bookings to reach $1,380 billion by 2024, and IIFL Securities sees RateGain as its direct beneficiary.
“Further, a chunk of the spending is expected to go to third party players as large companies look to cut costs. The travel technology market also provides consolidation opportunities for integrated multi-offering SaaS vendors,” the brokerage added.
IIFL Securities forecasts RateGain to clock revenue and EBITDA CAGR of 33 per cent and 96 per cent, respectively over FY22-24. Over the last two financial years, it has been reporting back-to-back losses. With the company slated to post its March quarter numbers on Monday, it remains to be seen the impact of unlocking has impacted the company.
Lastly, the brokerage believes the company’s customer base of over 2,200 provides it with a large opportunity to cross-sell its offerings to existing clients. “Hence, unlike peers, RateGain is a client mining story with the potential to consolidate market share, with few entry barriers,” it added.
The brokerage flags delayed travel recovery, M&A integration and rising competition as key risks.