Key Takeaways:
- Yatra launched its IPO on Sep. 15.
- The company faced a lower investor turnout.
- Overvalued KPIs and undisclosed grey market prices are some of the reasons.
YEREVAN (CoinChapter.com) — Online travel management agency Yatra launched its online initial public offering (IPO) on Sep. 15. But the response to it has been dismissive.
Here are three reasons why stock market investors should avoid the Yatra IPO today and in the coming days.
Accredited Investors Avoid Yatra Online IPO
The Yatra online IPO has failed to capture rich investors’ attention — be it high net-worth individuals (HNI) or qualified institutional buyers (QIBs).
Retail investors were more interested in the Yatra IPO as they bid for 1.41 times the shares offered as of Day 2 on Sep. 18. In comparison, rich investors looked skeptical, with HNIs and QIBs placing bids for only 10% and 7% of the shares allocated in the first two days of the Yatra IPO.
Overall, Yatra could attract bids for only 32% of the total shares issued as of Sep. 18, raising alarms that most investors don’t agree with the company’s share price brand of ₹135-142 per share.
Overvalued Shares
As noted, the Yatra IPO listed its shares at the price band between ₹135 and ₹142. However, the company appears to be overvalued if one compares the price to the company’s price-earning (PE) ratio, which measures a company’s current share price relative to its per-share earnings.
As of Sep. 19, Yatra’s PE ratio was 205.8, much higher than what the market considers a healthy score (around 20 and 25). That explains why most accredited investors have maintained a distance from the Yatra IPO — and why retail investors should do the same.
The ₹135-142 per share offer will close on Sep. 20.
No Yatra IPO GMP Listed So Far
Yatra IPO has not disclosed the Grey Market Price (GMP) since the launch. For the unversed: a GMP is is “the difference between the price at which shares of an Initial Public Offering (IPO) are traded in the grey market and the issue price set by the company.”
That raises the possibility of the GMP opening at a lower price than the listed one — another reason investors should avoid the Yatra IPO until further clarity on the GMP.
