Writing my first thread here on ValuePickr as i was a bit surprised that no-one has written any thread on RateGain.
The company was listed in December 2021. Issue Price 425/ Current Price 285.
Business : It provides subscription based services to hotels, Online Travel Agents (OTA) like Booking MMT Cleartrip etc., car rental companies etc.
What kind of services does it offer?
It has 3 main verticals :
Distribution : This is like a bridge between the Hotels and the OTA. Where Rategain software is used to do real time updation of bookings done on OTA on to the database of the hotel. It is also used to update the content of the hotel automatically on the OTA like photos, rates etc. The press release of 16-nov-22 mentions that BOOKING.COM has started integration of its “Content AI” software through which photos etc can be seamlessly updated and tagged and modified by the hotels onto their website.
Martech : They do digital marketing, social media marketing of various hotels in this business segment. So that the marketing spends of the hotel is better spent on the targeted audience. They have launched a product called “Engage AI” which is basically like a WhatsApp bot which will act as a virtual concierge on behalf of the hotel you have booked and you can do a lot of stuff through this bot like Online checkin/Chekout, spa, restaurant reservations etc, real time enquiry resolution.
It will also upsell services of the hotel or hotel associates by way of recommendations.
DAAS : Data as a Service. So, basically the data they are collecting through their business is being analyzed by them and then sold to the hotels, airlines, car companies etc for predicting the future demand and recommending them the prices to be set for their services. A lot of major airlines use their services. Recently Akasa air even before their full launch has started using their product in this category for their dynamic pricing.
In the Q2 (FY23) the company’s revenue has grown 47% and PAT for H123 is 21 Crore. Which includes amortization of its earlier acquisition of Rs. 13 crores. So, if we remove the Amortization, yearly run rate is about 68 crores of PAT. But, generally the H2 is much better for the company then H1.
Cash on the books is 435 crores. Current market cap is 3000 crores.
At the time of IPO, the company was servicing 1462 customers, in 1 year it is now providing services to 2557, though not all the customers use all the services. They are confident of maintaining 15% EBIDTA and achieving 40% growth.
Can this be 1 tech company which can shine in between all the doom and gloom there is right now for the New-age business.
Seems to be a good company but i think we can invest in this for long term only as these companies doesn’t catch investors attention as most of them want quick money. Any one has any more info on this.
Thanks for starting this thread. I have been tracking this from the sidelines since early this year. Here are some of my notes as of Mar 2022:
The company distinguishes itself from its competitors due to its niche set of products and technology.
It derives 95 per cent of its revenue from leisure travel with 65 per cent of the contribution is from the United States.
The company’s business is scalable with an asset-light business model, leveraged with technology backed by artificial intelligence. The largest services as a service (SaaS) company in the hospitality and travel industry in India. almost nil competition in the Indian market. Need to verify if this is indeed true?
In the first six months of the financial year, the company’s customer base had 1,462 customers, with at least eight global Fortune 500 companies. Its customers include 25 out of the top 30 OTAs, several of the world’s fastest-growing airlines, 23 of the top 30 hotel chains, 7 leading car rental companies, large cruise lines companies, and the largest travel management companies
Key points about business model and MOAT:
74 per cent of business comes from subscription-based revenue which are with some of the leading brands of the industry – that are stable businesses, and any seasonality does not impact the business immediately. However, in an adverse event where the travel business reduces by 50 per cent we will see some impact on our transaction business
75% revenues comes from N. America. 24% from Europe
Biggest MOAT - is the Integrations we have on both supply side and demand side with close to 1000 partners allowing them to scale their business with high ROI. The other MOAT RateGain has is the high degree of interoperability – which means that our products can talk to each other – to share deeper insights which our competitors cannot provide or replicate at the scale which we are able to provide
Risks/Downside - Can someone highlight what the risks or anti-thesis is for RateGain? Its tightly coupled with Travel and leisure industry so its a given that another lockdown kind of situation is a major risk. But apart from that, I would like to understand why Hotels and OTAs might not use their services?
Disclaimer - This is an accumulation of notes i collected over time from various online forums/websites.
Company looks good and seems to leading the pack. Anti thesis
Company is expesive even after 30 percent correction.
Highly competitive segment
High Esop issuance.
Low margin as of now
Only thing in favour is Management is growth focused and has a buge addressable market.
Interested
