RateGain IC Phillip Capital

INSTITUTIONAL EQUITY RESEARCH
RateGain Travel Technologies Ltd

(RATEGAIN IN)Player – Beneficiary of Strong Travel Demand
Travel SaaS
26 May 2023
INDIA | IT SERVICES | Initiating Coverage
RateGain Travel Tech (Rategain) is India's first listed software as a service (SaaS) player
exclusively focused on the travel vertical: Started in 2004 by Mr Bhanu Chopra, it initially
BUY
offered point pricing solutions (Daas) to hotels. Today, it is one of the most diverse travel SaaS CMP RS 393
players that offers product and services across right pricing (DaaS), distribution channels TARGET RS 540 (+37%)
(DHISCO, RezGain), and digital marketing (martech). Rategain provides solutions to a wide SEBI CATEGORY: SMALL CAP
range of segments including hotels, airlines, car rental companies, online travel agents (OTAs),
cruise lines, vacation rentals, and destination marketing organizations (DMOs). Rategain’s COMPANY DATA
O/S SHARES (MN) : 108
software solutions help its clients to accelerate their revenue growth through customer MARKET CAP (RSBN) : 43
acquisition, retention, and wallet share expansion. MARKET CAP (USDBN) : 0.5
52 - WK HI/LO (RS) : 425 / 235
Travel tech is a US$ 11.5bn opportunity; co has a premier client base across key markets LIQUIDITY 3M (USDMN) : 1
PAR VALUE (RS) : 1
Leading travel industry research firm, Phocusright, pegs the TAM (total addressable market)
for global third-party travel and hospitality technology at US$ 11.5bn by CY25. By Rategain’s SHARE HOLDING PATTERN, %
estimates, out of this TAM, the serviceable available market (SAM) will be US$ 8.5bn by CY25. Mar 23 Dec 22 Sep 22
Rategain is in an effective position to mine this SAM with a robust presence (86% of FY23 PROMOTERS : 55.8 55.8 55.8
revenue) in key developed markets including the US (56%) and Europe (30%). Additionally, DII : 14.7 14.2 8.0
FII : 4.0 4.0 7.3
within hospitality, Rategain focuses on mid to large hotel chains that have larger tech budgets. OTHERS : 25.5 26.0 28.8
Its clientele includes 8 of the Fortune 500 global companies, 23 of the top-30 hotel chains,
and 25 of the top-30 OTAs, leading car rentals, airlines, and cruise lines. RateGain powers PRICE PERFORMANCE, %
distribution for over 190,000 properties, which includes 500+ chains across the world. 1MTH 3MTH 1YR
ABS 12.7 13.7 38.9
Rategain to benefit from demand momentum in travel, despite macro headwinds REL TO BSE 9.8 9.6 23.7
Recent commentaries of travel companies across segments (hotels, airlines, OTAs, cruise
PRICE VS SENSEX
lines) remains positive on travel demand sustaining, despite macro uncertainties and high
inflation in the US and Europe. The International Air Transport Association (IATA) expects 130
global passenger departures to surpass pre-COVID-19 levels, reaching 4mn in 2024, which is 110
103% of the 2019 total. US TSA Checkpoint data shows US air traffic has almost reached pre-
90
pandemic levels. Leading airlines like American Airlines, Delta, Southwest and Lufthansa are
seeing very strong summer holiday demand, which they expect to sustain based on bookings 70
momentum. Marriott International has increased CY23 RevPar growth guidance to 10-13% 50
yoy (vs. 6-11% earlier) with major delta coming from international markets, which it expects Dec-21 Jun-22 Dec-22
RATEGAIN IN BSE Sensex
will grow 22- 25% (vs. 12-18% earlier). Hilton has also increased its CY23 RevPar growth
guidance to 8-11% vs. 4-8% earlier. These positive indicators bode well for Rategain, a 100% KEY FINANCIALS
verticalized travel SaaS player poised to benefit from sustained travel demand. Rs mn FY23 FY24E FY25E
Net Sales 5,651 8,924 10,725
FY24 revenue growth guidance of 55% to 58% with 200bps EBITDA margins EBITDA 846 1,518 2,041
Rategain's management has guided for 55% to 58% revenue growth in INR terms (17% to 20% Net Profit 684 1,018 1,485
organic, PCe). Rategain’s gross revenue retention (GRR) ratio has remained consistently high EPS, Rs 6 9 14
at 90% resulting in high renewal business from existing customers. Strong organic growth PER, x 62.3 41.9 28.7
guidance is on the back of strong order book (Rs 1.3bn in FY23, up 25% yoy), pipeline (Rs EV/EBITDA, x 48.0 26.7 19.5
3.8bn), high GRR and investments. Being a Saas player, Rategain benefits from positive PBV, x 6.0 5.3 4.4
operating leverage resulting in margins expansion - 1250bps improvement over FY21-23. For ROE, % 10.3 13.4 16.8
FY24, management has guided for further 200bps EBITDA margins expansion to 17%, which
we believe is achievable on strong growth and operating leverage. Karan Uppal, Research Analyst
kuppal@phillipcapital.in
At 3.6x FY25 EV/sales, the stock remains attractive; Initiate with BUY
Harshraj Rao, Research Associate
We initiate coverage on the stock with a BUY rating and target price of Rs 540 based on 5x
hrao@phillipcapital.in
FY25 EV/sales. Rategain currently trades at an attractive FY25 EV/sales multiple of 3.6x,
compared to key vertical/horizontal SaaS players that trade at CY24 EV/sales multiple of
4.3x/7.7x. We are factoring in 38% revenue CAGR with 400bps EBITDA margin expansion over
FY23-25 resulting in 47% PAT CAGR. Risks include reversal in travel demand risking future
growth, competitive intensity increasing and margin expansions not playing out as expected.
Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker-dealer unregistered in the USA. PHILLIPCAP research
is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt
Securities Inc, an SEC registered and FINRA-member broker-dealer. Powered by EQUITEC
RATEGAIN TRAVEL TECHNOLOGIES LTD INITIATING COVERAGE
Rategain Travel Tech – Key Charts

Revenue Growth driven by strong travel demand Margins to expand in FY24-25 on positive operating leverage
Revenue ($mn) Growth % EBITDA ($mn) EBITDA Margins
55% 30 25%
140 50% 60%
45% 43%
120 25 19.0%
40% 20%
17.0%
20%
100 20 15.0%
20%
15%
80
$ mn
$ mn
0% 15
130.8 8.3% 8.3%
60 24.9 10%
108.8 7.2%
-20% 10 18.5
40 -40% 70.1
56.1 2.5% 10.5 5%
20 49.2 -40% 5
37.3 33.9
3.1 4.0 0.8 4.1
0 -60% 0 0%
FY19 FY20 FY21 FY22 FY23 FY24e FY25e FY19 FY20 FY21 FY22 FY23 FY24e FY25e
Source: Company Data, PhillipCapital India Research Source: Company Data, PhillipCapital India Research
Revenue by segment, engagement and geography (FY23) Gross Revenue Retention remains high at 90%
100% RoW, 3% Gross Revenue Retention
90% Asia , 11%
100% 92.78% 95.5%
Martech, 89.2% 90.1% 90.1%
80% 37% Hybrid, 43%
Revenue Contribution (%)
70% Europe, 30% 80%

60%
50% Distribution, 60%
Transaction,
40% 34% 25%
North 40%
30% America,
20% Subscription, 56%
20%
Daas, 29% 33%
10%
0% 0%
Segment Engagement Geography FY19 FY20 FY21 FY22 FY23
Top client concentration reducing in recent years Clients and LTV-CAC ratio
Top 10 Clients Non Top Clients Client Count LTV to CAC
100%
3500 25
21.3
80% 3000
20
58% 56%
63% 68% 68% 2500
% of Revenue
60%
Client Count
12.9 15
2000
40% 1500 8.8 8.5 2942 10

2399
1000
20% 42% 44%
37% 32% 32% 1274 1337 5
500
0% 0 0
FY19 FY20 FY21 FY22 FY23 FY20 FY21 FY22 FY23

Rategain is a leading integrated travel SAAS / services player

Transforming travel with innovative SaaS solutions
RateGain Travel Technologies Ltd, the first software as a Service (SaaS) company to get
listed on the Indian Stock Exchanges, was started in 2004 by Mr Bhanu Chopra. Initially
focused on a single-point solution of pricing intelligence that it offered to hotels,
Rategain has now become one of the world’s largest processors of electronic
transactions, price points, distribution and digital marketing for the travel and
hospitality industry.
Provides the travel and hospitality industry with comprehensive pricing solutions
Today, the company offers travel and hospitality solutions to many verticals including
hotels, airlines, car rental companies, online travel agents (OTAs), vacation rentals,
package providers, and travel management companies. RateGain’s products, solutions
and services are aimed at helping its clients make better decisions with accurate
insights, acquire more customers, retain their customers, and expand their wallet
share.
Rategain classifies its existing business under three main categories - a) Data as a
services (Daas) which provides data and information on competitive rate and rate
parity to Hotels, Airlines, OTAs, Car Rentals, etc., b) Distribution which provides
seamless connectivity between hotels and their demand partners including OTAs, GDS
(global distribution system) and others and c) Martech (Marketing Technology) which
provides end-to-end digital marketing suite to manage brand presence for hotels
across social media and meta-search platforms. Of the above, Daas and Distribution
are pure Saas product offerings while Martech is service offering to Hotels.
Company currently has 2,942 customers (+543 annual addition in FY23) across more
than 100 countries. The company powers distribution for more than 191,000
properties, encompassing 500+ hotel chains worldwide. Its clientele is impressive –
including 8 of the Fortune 500 Global companies, 23 of the top-30 hotel chains, 25 of
the top-30 OTAs, in addition to leading car rental companies, airlines, and cruise lines.
RateGain serves customers across the entire travel industry value chain
Source: Company Data, PhillipCapital India Research

Rategain’s travel tech journey
Rategain’s product offerings across three major buckets

DaaS Distribution Martech
➢ Provide data and information to players ➢ Seamless connectivity between ➢ End-to-end digital marketing suite to
across the travel and hospitality industry hotels and their demand partners manage brand presence for hotels across
➢ Deliver insights, including competitive and including OTAs, GDS (global social media and meta-search platforms
Overview rate-parity intelligence distribution system) and others ➢ To optimize direct bookings
➢ AI-led products to gauge demand and ➢ Communicate availability, rates, ➢ Monitor guest engagement 24x7
optimise pricing inventory and content
➢ Standardised content distribution
RezGain - subscription model
Revenue Model Subscription and hybrid model Subscription model
DHISCO - transaction model
Rev Mix – FY23 28.6% 34.4% 37.0%
Hotels Yes Yes Yes
OTAs Yes Yes
Airlines Yes
Car Rentals Yes
Others* Yes Yes
Total SAM in $mn (CY25e) USD 1.1bn USD 1.9bn USD 5.5bn
BCV Social (2019)
Acquisitions Adara (2023) DHISCO (2018) MyHotelshop (2021)
Adara (2023)
Rev AI
New Products Content AI Engage AI
Demand AI
*Others for DaaS includes vacation rentals, package providers, tour operators and cruise lines
*Others for distribution includes GDS and corporate travel agents

DaaS: Real-time actionable insights on the competitive

landscape
Ratagain’s categorizes its pricing-intelligence products as data as a service (DaaS).
These products deliver competitive pricing and parity intelligence to hotels, OTAs,
airlines, cruise lines, car rental companies, vacation rentals, package providers and tour
operators. DaaS empowers suppliers and demand providers to leverage data for
improved acquisition and conversion rates. Through its AI and cloud capabilities,
Rategain is able to process considerable amounts of pricing data – 6 billion points,
updating information in just 60 seconds – which it procures through 500+ sources in
real time. With such humongous dataset, Rategain is the only provider that has access
to data from each segment in the industry value chain. It offers its DaaS products
through a subscription model, under which customers across sectors subscribe for a
period (usually a year). Its recurring revenue rate of 97% (FY22) suggests a high level of
customer retention, also indicating that its Daas products remain relevant to its
customers across the travel value chain that it serves. Out of 650+ active customers
within Daas, OTAs, Car Rentals are mature segments. Expedia was one of the first client
of Rategain for its Daas product. Within Hotels segment, Rategain targets top and mid-
market hotel chains like Marriot, Hilton, Lemon Tree etc., as these chains have a
greater budget for tech investments, than the long tail of small and regional hotels.
Airlines are one of the newest segments with Daas where Rategain has 40 airlines as
clients out of 300+ airlines. With over 650 active customers, the company offers data
under two categories:
• Market Intelligence: This provides access to pricing data (at scale) and analytics
that show trends, opportunities, and market developments.
• Dynamic Pricing Recommendations: Within the travel industry, this category
serves segments that have traditionally used a flat or seasonal pricing.
Daas: Real-time pricing insights; caters to almost all players in the travel value chain

Competitive intelligence products

Product Name Offered to Product Description
Custom created airfare pricing intelligence product for the airlines industry, powered by big data and AI.
AirGain Airlines Offers pricing insights and competitive intelligence data that enables airlines to formulate revenue strategies considering
latest market data.
Rental market intelligence and parity audit product that provides solutions to benchmark competition and distribution
Car Rental
CarGain partners. It utilizes and scales pricing of car rental products based on various rental categories and parameters – such as
Companies
type of vehicle, origin, length of rental, etc.
FerryGain is an AI-enabled revenue-management product designed specifically for ferries, to provide cruise lines with
FerryGain Cruise lines
accurate forecasting and pricing insights.
Optima is a real-time rate intelligence platform that syndicates hotel software databases with smart data analytics. Optima
Optima Hotels enables users to compare competitor rates and OTAs’ ranks in real-time, along with generating parity-check reports. It
provides details of intra-day rate changes and additional insights to assist with pricing strategies.
Rate intelligence for OTAs is customized and enables OTAs to track member rates and corporate rates across competitors,
Rate Intelligence OTAs check real-time prices and discounts on online packages and track negotiated rates and brand rates as well as across
particular GDS.
Rate Parity Products

Product Name Offered to Product Description
The product offers an intuitive closed-loop rate-parity solution for hotels that analyses their rate-parity status quo,
Parity+ Hotels defines strategies to minimize revenue losses, and helps enhance their brand reputation. Not only does it confirm the
source of parity violation, it also provides assistance to correct it instantly.
AirGain Parity This product is a parity tracking solution for airlines that enables online sales and ecommerce teams to manage revenue
Airlines
Watchtower losses and also assists in validation of rate parity through a closed-loop system.
Parity Watch OTAs and This is a rate-parity tool for OTAs and meta-search sites. It provides market managers with details of rate violations and
Tower Meta-search Sites it can generate information for a particular region, city, and at a hotel level.
Daas continues to grow strongly; Company expanding clientele in Airlines segment

Rategain is seeing strong growth momentum in DaaS across its mature segments like
OTAs, Car Rentals, Hotels and also in its relatively newer segment Airlines.
Within geographies, Asia Pacific region is seeing strong traction, as travel restrictions
have eased (esp China) and overall demand remains strong. For its AirGain product,
the company recently signed Air India, Akasa Air, Jazeera Air, Sky Express and other
airlines as clients for its Airgain product.
Latest wins announced in Daas – String of Deals announced within Airlines segment
Client Name Segment Region Details
Vacation ownership business NA One of World’s largest vacation ownership business chooses Optima for enhancing its pricing strategy
Middle East
Air Cairo Airline Egypt’s second largest carrier, Air Cairo chose AirGain for increasing market share and optimizing pricing
(Egypt)
Europe SKY express chose Airgain for accurate and real-time competitive pricing insights as it looks to expand its
SKY Express Airline
(Greece) footprint across Europe.
Air India selected Airgain to assist in dynamically adjusting ticket prices with real-time, accurate and
Air India Airline Asia (India)
high-quality airfare data
Akasa Air Airline Asia (India) Akasa Air selected RateGain’s AirGain product for accurate and real-time airfare data
Jazeera Middle East Jazeera Airlines, the second-largest carrier and leading low-cost carrier of Kuwait, selected Rategain’s
Airline
Airways (Kuwait) Airgain product to dynamically adjust prices with real time, accurate and high quality data.
Holiday Parks Chain Holiday Parks Europe (UK ) Holiday Parks Chain selected RevAI for demand forecasting and price optimization
Cruise Lines Cruiseline NA Two luxury Cruise Lines on-boarded Rategain for competitive price intelligence
Leisure Resorts
Hotels/Resorts US Fastest growing leisure resorts company in US selected demand forecasting platform RevAI
Company
Latin America
Grupo Posadas Hotels/Resorts Grupo Posadas, Mexico’s largest chain selected Rategain for Rate intelligence and parity.
(Mexico)
Airlines Airline NA Three new airlines added in Q1FY23.

Key competition in the DaaS segment

In DaaS, Rategain competes with different players in the very fragmented ‘rate
intelligence’ space. There are point solutions available in key markets for different
categories (hotels, OTAs, car rental, airlines). Below is the list of players that compete
with Rategain in DaaS.
Key competitors for RateGain in Daas

OTA Insight Fornova TravelClick Paraty Tech Rate-Highway
Rate intelligence (Rate Rate-monitor, car rental
Competitive and distribution 360), demand forecasts booking engine; revenue management;
Market and price rate
intelligence; (Demand 360); revenue management; rate-monitor premium,
intelligence; tracking
Products/Offerings ecommerce optimizer, business intelligence web and online where premier clients
parity performance
revenue intelligence and and media solutions; marketing; loyalty receive additional services
and PMS analytics
operational analytics reservations and clubs; Ring2Travel that expand upon rate-
booking engine, CRS; highways
Hotel, OTAs,
Hotels,
Verticals Hotels Car rental companies, Hotels Hotels
Car Rental Companies
Booking sites
Founded (Year) 2012 2010 1985 2011 2003
Clients 50,000 50,000 52,000 Over 3,000 NA
Revenue USD 22.2mn (2019) GBP 10.3mn (2018) $373mn (2017) NA US$3.34mn in 2021
Acquired by Amadeus
Funding USD 20mn USD 26mn Unknown Unknown
for $1.52bn (2018)
Employees 191 51-200 1100 11-50 11-50
Headquarters London London New York, US Malaga, Spain Irving, California
Channel checks suggest strong competition from OTAInsight and TravelClick

Our channel checks with both luxury and affordable hotels suggests that competition
is high from players OTAInsight and TravelClick. Following was the feedback given by
users:
Our DaaS channel checks

Company Feedback from Channel Checks
➢ Like the overall user experience. Better UI/UX – graphical representation makes
understanding really simple.
➢ Very comfortable to use with real-time updates on competitor rates with terrific
OTAInsight accuracy.
➢ Support is excellent with response time less than a few minutes.
➢ Provides a link of the source from where it fetches rates data, so users can verify
it instantly.
➢ Overall great product with real-time updates and excellent support.
➢ Gives overall picture of performance of property vs. peers, but only for GDS
TravelClick
markets.
➢ Not great with price shopping vs competition
➢ Decent product with good reporting.
➢ Excel sheet reports are very robust.
Rategain
➢ Pricing accuracy is good
➢ Scope of improvement in overall UI/UX.

Management targets 25% organic growth in FY24; long term outlook is positive
DaaS growth is driven by online bookings and travel industry momentum: With the
rising popularity of online bookings (currently 50%+ adoption), the need for Data as a
Service (DaaS) products should increase, as demand and supply partners would require
pricing intelligence to compete effectively.
FY23 was a robust year for the company for Daas, with 43% USD revenue growth (25%
organic, PCe) and 54% INR revenue growth, and it now represents 29% of overall FY23
revenue. Rategain is seeing greater traction in existing accounts mature segments
(OTAs, Car Rentals, Hotels) who are expanding volume requirements given strong
travel demand. In addition, company’s relatively newer segment - airlines - is also
seeing strong momentum with new customer additions (see table above). Out of 300+
airlines, which the company categorises as potential customers, 40 are the clients of
the company. Existing large clients like Singapore Airlines are consuming more data as
travel demand remains strong for effective pricing strategy. Factoring all these,
management is targeting 25% organic revenue growth in INR terms in the Daas
segment in FY24, which we believe is achievable given strong momentum in existing
clients and new client addition.
Daas: Strong momentum of last two years to sustain in FY24

IRs mn FY19 FY20 FY21 FY22 FY23* FY24E* FY25E
DaaS Revenue 1,294 1,254 934 1,049 1,618 3,094 3,652
Growth (%) -3.1% -25.5% 12.3% 54.3% 91.2% 18.0%
Organic growth (%) 34.7% 25.2% 18.0%
*Total growth includes Adara contribution

Distribution: Connecting travel demand and supply partners

Rategain’s distribution platform helps hotels to sell the right product at the right price
on the right channel – by serving the right content through demand partners. The
platform enables mission-critical distribution including availability, rates, inventory,
and content connectivity between leading accommodation providers (hotels) and their
demand partners (OTAs, meta-search, GDS). Its distribution products also allow the
delivery of reservations back to hotel systems from their demand partners, which
ensures smooth operations and accurate reporting by hotels. RateGain’s distribution
platforms are used by 23 of the top-30 hotel chains and 25 of the top-30 OTAs. It
connects around 191,000 hotel properties encompassing 500+ hotel chains to around
400 demand partners covering almost all major source markets in the world. Its
distribution platform processes 200bn transactions annually.
Global travel is influenced by big OTAs driven by their marketing prowess. This in turns
drives more online bookings throughs their platforms which is a natural growth driver
for channel manager software such as Rezgain and DHISCO Switch. This is a pure SaaS
business as more bookings online covert to more volume processing by the distribution
platforms. As a result, gross margins in this business are very high. The DHISCO
platform contributes majority of revenue, serving 140 hotel chains with 150,000
properties across the world connected to it. The remaining distribution revenue comes
from Rezgain, which is targeted to affordable chain hotels (Lemon Tree, OYO,
Millennium Hotels). Hotels depend majorly on channel-management software to
distribute their pricing and inventory
Distribution – Connects Hotels with Demand Partners seamlessly

Rategain distribution: Connects +191k properties with 400+ demand partners
Rategains has two products in the distribution segment– RezGain and DHISCO
(acquired in 2018): RezGain is sold on a subscription basis where customers pay a
monthly/annual subscription fee to access the product targeted to mid-market chains.
DHISCO operates on a transaction model where revenue generation is through
bookings done by OTAs and GDS operators.
RezGain: AI-enabled distribution channel manager for hotels and OTA

• AI-enabled smart distribution channel manager that helps distribute, availability,
rates, and inventory thereby generating additional revenue opportunities.
• It bridges the gap between supply partners (hotels and hospitality chains) and
demand partners (OTAs, GDS).
• It offers a comprehensive channel-management solution for online distribution
enabling end-to-end two-way integration with PMS (Property Management
System), CRS (Central Reservation System) and RMS (Revenue Management
System) companies, tour operators, GDS, bed-banks, wholesalers, and OTAs.
• It shares inventory across channels and provides real-time updates as inventory is
sold.
• Rezgain is sold via subscription to hotels and hospitality chains.
DHISCO Switch: Providing seamless hotel distribution, revenue optimisation

• Provides mission-critical connectivity, which enables hotels to drive reservations,
and connects the hotel and hospitality chains with demand channels.
• DHISCO’s smart technology ensures that CRS can maintain optimal performance
and reduces the load on data originator by providing fresh rates and availability
data that is used to serve respective requests by OTAs on a real-time basis.
• It provides change-hint notifications that ensures that user channels are up-to-
date about availability, rates, and inventory.
• API connectivity ensures property owners can distribute properties across
channels and OTAs simultaneously and in real-time.
• DHISCO Switch’s revenue depends on transaction volumes.

Rategain was named Expedia’s Elite Connectivity partner in 2023

In March 2023, Expedia named Rategain as its Elite Connectivity Partner (topmost
connectivity status) based on the results it delivered on various performance metrics –
such as maintaining high-quality connections and helping hotel partners to grow their
business on Expedia group’s marketplace. Being an Elite Connectivity Partner will
enable Rategain to help shape Expedia’s future products and technology solutions.
Rategain earned its elite status from Expedia due to the following reasons:
• Improving traveller experiences on Expedia group websites
• Enabling a wide range of tools and capabilities for lodging properties integrated
with the Expedia group’s travel platform.
• Providing quality connection with a reliable user experience.
• Ensuring a streamlined boarding experience and high-quality support for
properties.
• Empowering business growth for clients on Expedia Group websites.
Booking.com recognised Rategain as premier connectivity partner in 2022

In 2022, Booking.com recognised Rategain as its ‘Premier Connectivity Partner’ for fifth
year in a row. Both companies have been working together for over ten years and their
product teams together launched a room-rate management API, as a part of the
product API that Booking.com promoted. This API empowers distribution teams to
seamlessly create or retrieve room rates directly from RezGain, RateGain’s hotel
channel manager software, without signing into Booking.com’s extranet. This solves
numerous bandwidth challenges for hoteliers already working with a reduced
workforce post-covid. Due to this, partner properties can push room rates from
RezGain to OTAs for travellers.
Latest wins announced in distribution

Client Name Region Details
Hotelkey PMS US Integration with HotelKey’s PMS system to offer distribution, central reservation and pricing capabilities.
Booking.com Europe and US Content.AI integration with Booking.com for seamless content distribution
Leading PMS system Expanding footprint with enterprise customers and in partnership with leading PMS system
Mobile travel app New pairings with the world’s fastest growing mobile app
Sonder US Sonder, hospitality company based out of the US, selected Rategain to expand Corporate Travel Access on GDS
Royal Orchid Hotels India Royal Orchid Hotels selected Rategain for connectivity to global OTAs
Top 5 Hotel Chains 50+ new pairings enabled for customers including top-5 hotel chains in the world
Channel checks suggest competition is strong in luxury and affordable segments

• Our channel checks with luxury and affordable hotels suggest that competition is
high from players like Derbysoft and SynXsis by Sabre in luxury hotels.
• Hoteliers like seamless connectivity with OTAs and GDS systems. Direct connect
by larger hotel chains to larger OTAs is a threat for channel-manager software
providers.
• For affordable hotels, feedback on Rategain’s distribution products is positive. In
this segment, feedback on products like STAAH Channel Manager, TravelClick, and
Maximojo is also positive.

Key competition in distribution

TravelClick SiteMinder * DerbySoft Infare
Products/Offering Media solutions; Channel manager; Streamlined For Airlines, Altus – for airline network mgmt and route
reservations & booking engine; connectivity; property planning; Pharos – for airline rev mgmt and pricing teams;
booking engine; website design; connect; marketing Data Feeds – for data-driven market pricing insights; Airline
integrated booking business insights; services, WeChat PPS – an Air Cube solution for airline revenue management
suite; central hotel metasearch hotel Mini Program and pricing executives; Channel Monitor – an Air Cube
reservations system; payment processing; GDS Provider; Content solution for airline distribution and ecommerce executives;
property management; distribution services Vacation – for competitive pricing of vacation packages
guest management For Airports, Altus – for airport route development; Infare
solutions; business Airports – for airport network monitoring.
intelligence; sales & For Travel Agencies, Vacations for tour operators to unpack
catering; service the pricing of various package components for comparative
optimization analysis and benchmarking
Hotels Independent and Airlines, airports,
Verticals Hotels
chain hotels travel agencies
Founded (Year) 1985 2006 2002 2000
Top-10 global hotel
groups
All leading third-party
central reservation
Over 250 airlines
Clients 52,000 35,000 systems and hundreds of
worldwide
regional hotel chains of
all sizes throughout
Europe, China and North
America
Revenue USD 373mn (2017) AUD 100mn (2019) Unknown Estimated USD 19.4mn per year
Acquired by Amadeus Infare has acquired Air
Funding USD 105.3mn USD 30.5mn
for USD 1.5 billion Cube on May 5, 2021
Employees 1001-5000 501-1000 251-500 51-200
Headquarters New York, US NSW, Australia Dallas, Texas Copenhagen, Denmark
Management targets 15% growth in distribution in FY24

In FY23, the distribution business grew 37% yoy in INR terms and 27% in USD terms
and now represents 34% of overall FY23 revenue. The company is seeing healthy
volumes growth in OTA and GDS channels along with growth across mid-size hotel
chain segments. For FY24, management is targeting 15% organic growth in distribution
on levers such as more OTAs connected to hotel chains and higher online bookings
leading to an increase in revenue. Travel demand continues to be strong and
distribution products should naturally benefit with more online bookings, hence we
believe there remains an upside risks to these estimates.
Distribution revenue to grow 15% in FY24

Rs mn FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Distribution revenue 1,322 1,994 1,218 1,415 1,943 2,247 2,589
Growth % 50.8% -38.9% 16.2% 37.3% 15.6% 15.2%

MarTech: Improving hotel margins with reduced CAC

What is MarTech?
Martech is a term derived from the combination of "marketing" and "technology." It
refers to the use of technology and software solutions to facilitate and enhance
marketing activities. Martech encompasses various tools and platforms that help
marketers automate processes, analyze data, manage campaigns, and optimize
marketing strategies. These technologies can include customer relationship
management (CRM) systems, data analytics tools, content management systems
(CMS), email marketing software, social media management platforms, and more.
Martech enables marketers to streamline their operations, improve efficiency, and
deliver targeted and personalized marketing experiences to their audience.
Driving direct bookings through social media and meta-search platforms

Martech offerings from Rategain help hotels and hospitality partners drive more direct
bookings through social media and meta-search platforms. Rategain contends that 70-
80% of bookings involve a smartphone during the entire process and over 50% of
booking decisions are made based on social media reviews and content. One can
conclude that the hospitality industry has reasonable interest in using social media to
drive more bookings. In fact, hotels are trying to leverage their social media platforms
to drive visitors to book directly from their website to improve their margins by
lowering their distribution costs and driving significant return on investments.
Social media and meta-search optimization for hotels

Rategain offers end-to-end digital marketing services to hotels, which includes
targeting and optimizing campaigns on social media for luxury hotels, and engaging
with value-driven travellers on meta-search sites such as Google and Tripadvisor to
drive conversions. The company manages social media for luxury travel suppliers,
allowing the latter to be responsive to social-media engagements 24x7; it also
effectively manages their social media handles and runs promotional campaigns.
Rategain offers real-time social listening and guest communication, active
management of social assets, and campaign management through AI-based solutions
to increase awareness, engagement, and sales – which help hotels to personalize guest
experiences.
The martech segment earns revenue on a subscription basis only. As of FY22, it had
1,000+ active customers – more than doubled from 350 in FY21. Rategain aims to
expand in US, UAE, India and parts of EU – which offer significant opportunity. The
company continues to invest in sales and cross-selling / upselling product offerings. It
will expand offerings that will create customer value with end-to-end social media
management.

MarTech: Powering hotel chains to directly acquire new customers online
Key competition in martech

Destination Think Lodging Interactive Casual Fridays Pandemic Labs
Products/Offerings Destination strategy, branding HotelSiteXPRESS – Digital marketing strategy Digital strategy
Creative platforms hotel websites. Social media ads Content production
Tourism Sentiment Index Social media marketing and Social media and reputation Measurement and analytics
reputation management. management Social media management
Omnichannel marketing Content marketing Digital media planning and buying
Influencer marketing Content audits
Influencer marketing
Events, experiences and activations
Verticals Destination management Hotels, restaurants Hotels, non-profit, education, Hotels, cruises, DMOs,
organisations (DMO), Convention Entertainment
and Visitors Bureau, National
Tourism Organizations and
events
Clients 100+ 65+ hotels NA
700 hospitality properties
worldwide
Revenue USD 5mn USD 1.8mn USD 5.55mn in 2021 USD 0.86mn
Funding NA NA NA NA
Employees 11-50 51-200 11-50 11-50
Headquarters Vancouver, Canada Parsippany, NJ San Diego, California Boston, Massachusetts
Due to its DaaS advantage, Rategain has insights on pricing and demand trends in
advance, which helps it to strategize spending on social media and meta-search
platforms for advertisements for hotels. With Adara’s addition, Rategain’s offerings in
Martech become even more compelling, helping Hotels drive higher ROI on their
marketing investments. There are two main streams within martech – (1) brand
engagement and (2) paid digital media. Within this, Rategain tends to manage the
entire social media strategy providing good returns on clients’ marketing spend. It also
optimises and leverages spend on meta-search platforms like Google and Trivago.

Rategain’s latest wins in martech

Quarter Client Name Region Details
Q4FY23 Leading hotel chains North America New properties onboarded across North America
Over 65+ new hotel properties added
Q3FY23 Iconic luxury hotel chain North America Servicing all properties of this chain in North America
Asia Pacific; ME Good traction in the Asia Pacific and Middle East region with new brands on-boarded
Over 80+ new hotel properties added
Q2FY23 Iconic luxury hotel Middle East Iconic luxury hotel properties in the Middle East added as customers
Joint case study with Google launched for increasing RoI on direct bookings
Over 70+ new hotels added
Q1FY23
Iconic luxury hotel USA Iconic luxury hotel properties in New York and Orlando added as customers
Rategain is one of the few players present across the three segments
OTA Destination Casual Pandemic
Rategain Fornova TravelClick Siteminder Derbysoft
Insight Think Fridays Labs
Daas Yes Yes Yes Yes Yes
Distribution Yes Yes Yes Yes
Martech Yes Yes Yes Yes
Management targets 20% organic growth in FY24

Martech business grew 74% in FY23 in INR terms (31% organic, PCe) and now
represents 37% of overall FY23 revenue. Rategain continues to expand in APAC and
Middle East region and its brand engagement business witnessed good traction in
North America region. Company onboarded multiple properties with comprehensive
paid digital media solutions. Management has guided for 30% growth in its paid digital
media while its brand engagement business may remain flat due to client
rationalisation underway. Hence overall the company has guided for 20% organic
growth in Martech in FY24, which we believe is achievable given strong travel demand
in compelling hotels to be present in front of consumers though effective online
marketing.
MarTech revenue to grow by 20% organically in FY24

In Rs mn FY20 FY21 FY22 FY23* FY24E* FY25E
MarTech Revenue 740 356 1,202 2,090 3,584 4,484
Growth (% ) -52% 238% 74% 71% 25%
Organic growth (%) 31% 20% 25%
*Total growth includes Adara contribution

Revenue by individual segments

DaaS Distribution MarTech
6000
5000
2,090
4000
740
Rs mn
3000 1,202
1,943
1,994 356
2000 1,322
1,415
1,218
1000
1,294 1,618
1,254 934 1,049
0
FY19 FY20 FY21 FY22 FY23
Revenue by engagement (FY19-23)

Subscription Transaction Hybrid
100%
24% 30%
80% 35% 35%
43%
% of revenue
60% 35% 26%

24%
35% 25%
40%
20% 41% 44% 41%

30% 33%
0%
FY19 FY20 FY21 FY22 FY23

New Product Offerings generating strong traction

Rategain’s product and engineering teams constantly try to build new products to help
solve travel and hospitality industry challenges through technology. In FY22, they
identified new use cases and built three new AI-powered products as part of their RG
Labs initiative – Rev.AI, Content.AI, and Demand.AI. These products are designed to
solve unmet needs, and help the industry move towards a new technology roadmap.
The management reckons it is seeing good traction in the adoption of these products,
with clients across regions showing interest. Demand.AI and Content.AI were also
recognized for technology Innovation at the HSMAI Adrian awards.
Demand.AI – AI powered Demand Forecasting

• A DaaS product that provides an aggregated, real-time view of demand based on
data-mining across various silos including internet searches, flight activity, booking
engine inventory and pricing data.
• This product has resolved the inability of sectors to accurately gauge demand
disruptions.
• Using this tool, hotel customers can gauge predicted demand for a particular
property.
• Customers can also generate granular information to manage demand fluctuations
in their vicinity, and for a similar category of hotel rooms.
• The tool is aimed at all segments of the industry; management said it is seeing
good traction for this.
• One of Spain’s largest holiday operators selected Demand.AI.
Rev.AI – optimize pricing to monetise demand surges

• A DaaS product, an AI-powered revenue management solutions platform that
combines real-time demand indicators using AI to optimize pricing and maximize
margins.
• This product line is focused on solving the issue of inability to monetise demand
surges.
• It is primarily focused on the car rental, ferries and holiday parks companies as
these segments replace static pricing mechanisms with dynamic pricing
recommendations to optimize yield, generate demand through cohort
promotions, and enhance utilization through inventory management.
• The biggest franchise for Budget Group in the United States uses Rev.AI.
Content.AI – AI to optimize and update content across channels

• Content.AI is a content distribution tool focused on solving the issue of inefficient
operations hampering conversions.
• It is targeted at mid-market chains that have little bandwidth in managing content
• It uses AI to optimize and update content across all demand partners to increase
chances of conversions.
• It is able to transform content and augments imagery that increases the chances
of conversion on demand platforms.
• One of Germany’s largest hotel operators uses Content.AI.
Engage AI – virtual concierge for hotels for effective cross sell

• Engage-AI is RateGain’s virtual assistant that leverages commonly used B2C
communication channels like WhatsApp and FB messenger to help hotel guests
interact with the hotel to seek guidance and information regarding their stay and
visit.
• Engage-AI is used by the hotel to share promotions and other products and
services that the hotel has to offer.
• Personalization helps in pitching the right offers to the right guest at the right time
for the right price and with Engage-AI.

Rule of 40: A key benchmark to evaluate SaaS companies

Rule of 40 is a financial metric used to evaluate the financial health and performance
of software as a service (SaaS) companies. As per this rule, a SaaS business is considered
to be healthy if the sum of revenue growth and margins is at least 40%.
For example, if a SaaS company has a revenue growth rate of 50% and breakeven at
operating margin levels, then its score would be 50, indicating that the company is
heavily investing in growth at the expense of profitability. Conversely, if the growth is
20% and operating margin is 20%, its score would be 40, indicating that the company
is achieving healthy balance between growth and profitability.
As per Mckinsey, only a a small share of SaaS companies sustain growth rates above
30-40%. Of the 100 public SaaS companies with revenue above US$100mn analysed by
Mckinsey in 2021, the median revenue growth rate was just 22%.
For analysing Rategain, we consider EBITDA margins, because below that there is
considerable volatility due to depreciation, other income, and exceptional items. Also,
EBITDA margins gives the true picture of the company’s operating profitability.
Rategain consistently meets the ‘Rule of 40’ performance criteria

FY19 FY20 FY21 FY22 FY23 FY24e FY25e
Revenue (INR mn) 2,616 3,987 2,508 3,666 5,651 8,924 10,725
growth % 52% -37% 46% 54% 58% 20%
EBITDA 216 287 62 306 846 1,518 2,041

EBITDA Margins 8.3% 7.2% 2.5% 8.3% 15.0% 17.0% 19.0%
Total (Rev Growth +

60% NA 55% 69% 75% 39%
Margins)
Rule of 40 Yes No Yes Yes Yes Yes
Sabre Corp has been underperforming on margins

CY18 CY19 CY20 CY21 CY22 CY23e CY24e
Revenue ($ mn) 3,867 3,975 1,334 1,689 2,537 2,939 3,298
growth % 7% 3% -66% 27% 50% 16% 12%
EBITDA 975 778 (624) (403) (76) 303 561

EBITDA Margins 25.2% 19.6% -46.8% -23.9% -3.0% 10.3% 17.0%
Total 32.7% 22.4% -113.2% 2.7% 47.2% 26.2% 29.2%

Rule of 40 No No No No Yes No No
Source: PhillipCapital India Research, Company Data
Amadeus has consistently met Rule of 40 performance criteria except CY20

Revenue (Euro mn.) 4,936 5,570 2,174 2,670 4,486 5,447 6,136
growth % 6% 13% -61% 23% 68% 21% 13%
EBITDA 2,028 2,232 59 599 1,640 2,119 2,119

EBITDA Margins 41.1% 40.1% 2.7% 22.4% 36.6% 38.9% 34.5%
Total 47.5% 52.9% -58.3% 45.2% 104.6% 60.3% 47.2%

Rule of 40 Yes Yes No Yes Yes Yes Yes

Bookings has consistently met Rule of 40 criteria except CY20

Revenue ($ mn) 14,527 15,066 6,796 10,958 17,090 20,537 22,813
growth % 15% 4% -55% 61% 56% 20% 11%
EBITDA 5,767 5,814 -173 2,917 5,553 6,783 7,835

EBITDA Margins 39.7% 38.6% -2.5% 26.6% 32.5% 33.0% 34.3%
Total 54.3% 42.3% -57.4% 87.9% 88.5% 53.2% 45.4%

Rule of 40 Yes Yes No Yes Yes Yes Yes
Salesforce has missed three out of last five years on lower growth
Revenue ($ mn) 13,282 17,098 21,252 26,492 31,352 34,623 38,500
growth % 26% 29% 24% 25% 18% 10% 11%
EBITDA 1,517 2,432 3,301 3,846 4,816 12,121 14,308

EBITDA Margins 11.4% 14.2% 15.5% 14.5% 15.4% 35.0% 37.2%
Total 37.4% 43.0% 39.8% 39.2% 33.7% 45.4% 48.4%

Rule of 40 No Yes Yes No No Yes Yes

Adara acquisition to strengthen Daas and Martech offerings

Rategain acquired Adara in January 2023 through an asset purchase agreement for
total consideration of US$ 16.1mn (upfront consideration US$ 14.6mn) – at a P/S
multiple of 0.58x on FY22 revenue.
About Adara – leading travel data exchange platform

• About Adara: Founded in 2009, Adara is leading travel data exchange platforms,
providing access to permissioned travel intent data. Using first-party permissioned
data from brands, Adara delivers actionable travel-intent to drive better marketing
ROI.
• Data Partnerships: Adara has data partnerships to acquire permissioned data from
270+ companies that include some of the largest travel and hospitality companies.
• Clientele: It has 300+ enterprise customers including hotels, airlines, destination
marketing organization (DMOs), agencies, etc; 67% of Adara’s revenue comes
from North America.
• 1.5bn Digital Identities Marked: It is global leader with verified 1.5bn digital
identities and over 24bn data elements across 100 countries for targeted
marketing campaigns.
• Revenue: Adara’s revenue run rate of was US$ 27.4/21.2mn in FY22/21 and in
H1FY23 it clocked revenues of US$ 13.1mn.
• FY24 Outlook: Management is targeting 15% revenue growth in Adara with 15%
EBITDA margins. In Q4, company did c$5mn revenue with 10% EBITDA margins.
Adara’s two revenue streams – data and media

• Adara has two revenue streams: (1) Data - SaaS based data application that
provides custom segment audience data based on travel intent. (2) Media: Full-
service performance media operation for programmatic advertising leveraging the
data backbone.
• The revenue split of data and media business is 50:50, but data earns high gross
margins of 91% while media business earns lower margins at 69%.
Rategain and Adara will help customers make data-driven decisions, drive better marketing ROI

Adara should help to expand Rategain’s footprint across all industry segments
Adara’s acquisition will complement existing Daas and Martech offerings

Acquiring Adara should help Rategain to drive driving both DaaS and martech business
lines. This is because it creates one of the largest travel intent data platform (DaaS) and
provides for superior return on ad spend (RoAS) for campaigns (martech). With Adara,
Rategain will be able to expand into adjacent verticals like DMOs and also deepen its
existing relationships with hotels, car rentals and airline customers. Together Adara
and RateGain will become a comprehensive travel-intent platform that processes over
200bn ARI (availability, rates, inventory) updates, manages close to 30bn data points,
and works with 700+ partners across 100+ countries – giving the industry a single
source to understand intent, and target and convert customers.

M&A: Solid track record of adding key strategic assets
DHISCO: In the distribution segment

July 14, 2018
• Purchase consideration: Rs 974mn.
• Revenue contribution: Rs 1.12bn
• Profit/loss contribution: Rs 4.5mn loss
• P/S multiple: 0.87x.
• About DHISCO: DHISCO is one of the single-largest processors of electronic hotel
transactions, delivering connectivity and distribution solutions to over 100,000
hotels in 200 countries. Through a global distribution system, it connects hotels to
many disparate channels via a single direct connection. This allows hotels to drive
bookings through OTAs, meta-search sites, and travel agencies.
BCV Social – in martech

June 11, 2019
• Purchase consideration: Rs 1.6bn.
• Revenue contribution: Rs 679mn.
• Profit/loss contribution: Rs 288mn loss
• P/S multiple: 2.36x.
• About BCV Social: Marketing technology company. To focus on social media
management for the hospitality sector. BCV helps hotels in direct sales through
social media, provides guest interactions, and mitigates negative experiences, thus
helping hotel chains maximize their guest lifetime value. This acquisition will help
RateGain unlock revenue across hotel chains, airlines, car rentals, OTAs, cruise
lines, package providers, TMCs (Travel Management Company), and vacation
rentals.
Myhotelshop – in martech
Sep 23, 2021
• Purchase consideration: NA
• Revenue contribution: NA
• About MyHotelShop: It provides bid management and advertising campaign
management solutions to hotels to drive maximum traffic to their hotel’s website.
MyHotelshop has a presence in Austria, Switzerland, and Germany. RateGain is
helping MyHotelshop scale up at a global level, cross-selling to its existing large
clients in the US and Europe.
Adara – in DaaS and martech

Jan 3, 2023
• Purchase consideration: US$ 16.1mn; upfront consideration US$ 14.6mn,
Deferred consideration US$ 1.5mn.
• Revenue: US$ 13.1mn (H1FY23), US$ 27.4mn (FY22), US$ 21.2mn (FY21), US$
101mn (FY20)
• P/S multiple: 0.58x
• About Adara: One of the world’s largest travel data exchange platforms, providing
access to permissioned travel intent data. Using first-party permissioned data from
brands, Adara delivers actionable travel-intent to drive better marketing ROI.
Global leader with verified 1.5bn digital identities and over 24bn data elements
across 100 countries for targeted marketing.

FY24 Guidance: 55% to 58% revenue growth

Rategain management has guided for 55% to 58% revenue growth in INR terms (17%
to 20% organic, PCe). Rategain’s gross revenue retention ratio has remained
consistently high at 90% resulting in high renewal business from existing customers.
FY24 will have 9+ months of contribution of Adara. Strong organic growth guidance is
on the back of strong order book (Rs 1.3bn in FY23, up 25% yoy), pipeline (Rs 3.8bn),
high GRR and investments in sales and marketing. The new deal wins (Rs 1.3bn)
incrementally add revenue to existing top line providing strong growth visibility. Hence,
we believe the overall guidance is achievable and there remains upside risks to it.
Gross Revenue Retention Client Count and LTV to CAC

Gross Revenue Retention Client Count LTV to CAC
100% 92.78% 95.5% 3500 25

89.2% 90.1% 90.1% 21.3
3000
80% 20
2500
Client Count
60% 12.9 15
2000
1500 8.8 8.5 2942

40% 10
2399
1000
20% 1274 1337 5
500
0% 0 0
FY19 FY20 FY21 FY22 FY23 FY20 FY21 FY22 FY23
Q1 is expected to be weak, given seasonality, followed by a pickup in growth in the

remaining three quarters. Segment-wise, Daas is expected to grow 25% yoy organically
where the company is seeing strong traction in existing clients and new client
additions, particularly in airlines. Within distribution, the company is seeing healthy
volumes growth in OTA and GDS channels along with growth across mid-size hotel
chain segments. For FY24, management is targeting 15% organic growth in distribution
on levers such as more OTAs connected to hotel chains and higher online bookings
leading to an increase in revenue. Within martech, Rategain continues to expand in
APAC and the Middle East region and its brand engagement business saw good traction
in North America. The company has guided for 20% organic growth in nartech in FY24.
FY24 growth aided by Adara’s acquisition; Organic growth at 17% to 20%

Revenue ($mn) Growth %
55%
140 50% 130.8 60%
45% 43%
120 108.8 40%
20%
100
20%
80 70.1
$ mn
56.1 0%
60 49.2
37.3 33.9 -20%
40 -40%
20 -40%
0 -60%

Margin expansion to be driven by positive operating

leverage
Rategain has shown considerable margins expansion in last two years – EBITDA margins
have expanded from 2.5% in FY21 (Covid-19 impact) to 15.0% in FY23 - 1250bps
improvement. Being a Saas player, Rategain benefits from positive operating leverage.
Its gross margins after deducting data-hosting charges and demand partner fees are
very high at 75%. Investments in sales, marketing, and new product developments
results in lower EBITDA margins. We believe that with strong revenue growth over the
next two years, there remains room for further margins expansion. For FY24,
management has guided for 200bps EBITDA margins expansion to 17% which we
believe is achievable given operating leverage and client rationalisation in martech.
Overall, we are factoring in 400bps margins expansion in over FY23-25.
Expansion in EBITDA margins driven by positive operating leverage

EBITDA ($mn) EBITDA Margins
30 25%
25 19.0%
17.0% 20%
20 15.0%
15%
$ mn
15
8.3% 8.3% 24.9 10%
7.2%
10 18.5
2.5% 10.5 5%
5
3.1 4.0 0.8 4.1
0 0%

Travel Tech US$ 12bn opportunity; SAM at US$ 8.5bn

Third-party travel tech players eye significant opportunity by CY25
As per Phocusright, a leading travel industry research firm, opportunity for Global
travel third party technology players is pegged at US$ 11.5bn by CY25. Rategain
estimates that out of total TAM (total addressable market) of US$ 11.5bn, serviceable
available market (SAM) will be US$ 8.5bn in CY25. Third-party players provide benefits
such as uptime, availability, and focus on cloud technologies. Travel players such as
hospitality, airlines, car rentals, lag in terms of overall digitization.
Travel industry's technological transformation amidst challenges

With significant disruption caused by the covid-19 pandemic in the last two years, the
travel industry suffered a demand shock initially, followed by a supply shock. The
industry is slowly adapting to servicing demand with lesser resources, by leveraging
technology. With increased cost and supply pressures, it is resorting to third-party
players who can bring in technological advantages along with efficiency.
TAM for third-party tech players represents a US$ 12bn opportunity

(US$ bn) 2021E 2022E 2023E 2024E 2025E
OTA Revenue 17 23 28 32 34
Airlines Revenue 266 396 499 571 616
Hospitality Revenue 307 406 479 522 554
Vacation Rentals Revenue 71 85 95 101 104
Car Rental Revenue 36 43 49 53 56
Cruise Revenue 7 19 25 30 34
Holiday Parks Revenue 45 51 54 56 57
Total Revenue 749 1023 1229 1365 1455
Technology spend @ 3.94% 29.5 40.3 48.4 53.8 57.3
Third Party Spend @29% 8.6 11.7 14.0 15.6 16.6
Ex Hardware Spend @31% 5.9 8.1 9.7 10.8 11.5
SAM for Rategain Products
Current products 3.7 5.1 6.1 6.8 7.2
Future Products 0.7 0.9 1.1 1.2 1.3
Total SAM 4.4 5.9 7.1 7.9 8.5
By 2024, IATA expects air traffic to recover to 2019 levels

• Air passenger traffic (2022) gained momentum globally in 2022, and recovered
substantially to 68% of 2019 revenue passenger-kilometers (RPKs) in in 2022 from
42% in 2021.
• Summer Travel 2023: Air ticket sales for the upcoming summer season (May -
September 2023) increased by 35.2% yoy, reaching 92% of 2019 industry-wide
levels. This growth underscores the strong desire among travelers worldwide to
fly during the peak summer season in the northern hemisphere.
• China Reopening a major catalyst: China's decision to reopen its aviation markets
in January has been instrumental in fueling traffic growth globally, and particularly
in the Asia Pacific region, which experienced the largest year-on-year increase in
ticket purchases (134.7%) and restored 77% of pre-pandemic volumes (see chart
below).
• Aircraft deliveries: Aircraft deliveries to airlines fell sharply in 2020 to 802 from
1,400 in 2019, and failed to recover to pre-pandemic levels until recently. 2023’s
overall schedule of deliveries shows that deliveries should come back to 2019
levels this year.
• IATA’s long-term forecast: Expects global passenger travel to return to 2019 levels
of activity in 2024.

Air Travel continues to recover: Share of 2019 tickets purchased for May-Sep Travel
Source: IATA, PhillipCapital India Research
Passenger ticket sales, % yoy from 2019 IATA expects industry recovery to 2019 levels by 2024
Source: IATA, PhillipCapital India Research Source: Company Data, PhillipCapital India Research
US TSA checkpoint data – US air traffic has almost reached pre-pandemic levels
TSA checkpoint travel numbers 30 day moving average
3500000
3000000
2500000
2000000
1500000
1000000
500000
Source: US Transport Security Administration (US TSA), PhillipCapital India Research
IATA expects overall traveller numbers to reach 4bn in 2024 (counting multi-sector
connecting trips as one passenger), exceeding pre-covid-19 levels (103% of 2019’s
total).

Air traffic to recover to pre-pandemic levels by 2024 Regional forecasts

IATA - Passenger numbers
2021 2022E 2023E 2024E 2025E
(Share of 2019)
Industry-wide 47% 83% 94% 103% 111%
International 27% 69% 82% 92% 101%
Domestic 61% 93% 103% 111% 118%
Asia Pacific 40% 68% 84% 97% 109%
Europe 40% 86% 96% 105% 111%
North America 56% 94% 102% 107% 112%
Africa 46% 76% 85% 93% 101%
Middle East 42% 81% 90% 98% 105%
South America 51% 88% 97% 103% 108%
Central America 72% 96% 102% 109% 115%
Caribbean 44% 72% 82% 92% 101%
Source: IATA, PhillipCapital India Research Source: IATA, PhillipCapital India Research
Regional passenger recovery (2019=100); all regions to recover to 2019 levels by 2024
Source: IATA, PhillipCapital India Research
Airbus and Boeing’s Air Traffic Outlook:
Boeing - air traffic to recover to pre-covid levels by 2023-24 Airbus - air traffic to recover to pre-covid levels between 2023-25
➢ Air traffic outlook: Global passenger traffic increased c. 70% in ➢ Air traffic outlook: Commercial air traffic continued to recover in
2022; at 75% of pre-pandemic levels globally, at 90% excluding 2022, with domestic and regional markets leading the way.
China. This shows that demand is quite robust. In its Q2 CY22 call, International traffic has progressively been closing the gap. The
management had indicated that overall passenger traffic will recent reopening of China is proving to be a strong positive driver
return to 2019 levels in 2023-24. for air traffic. In its Q2 CY22 call, Airbus’ management said it
➢ Passenger traffic in February 2023 increased by more than 55% expects commercial air traffic to recover to pre-covid levels
yoy and was at 85% of pre-pandemic levels; comprised of 97% between 2023 and 2025.
domestic and 78% international.

Aircraft deliveries per region – 2018-2022 Scheduled aircraft deliveries; CY23 deliveries at 2019 levels
Source: IATA, PhillipCapital India Research Source: IATA, PhillipCapital India Research
As per Skift research, Global OTA bookings and overall hotel revenues continue to
recover. Skift forecasts 13% growth in OTA bookings in CY23 with bookings surpassing
2019 levels. Similarly, global hotel revenues should grow 9% in CY23 to US$ 838bn,
which will match 2019 revenue.
Global OTAs: Gross bookings to exceed 2019 levels in 2023 Global hotel revenue: To reach 2019 levels in 2023
Global Online Travel Agency Gross bookings (bn. $) Global Hotel Revenue (in Bn. $) Growth %
Growth % 1000 60%
700 65.4% 80% 889
618 819 843 38.0%34.9% 838
783 769 40%
600 555 60% 800 711 723
524 38.7%
491 40% 9.0% 6.1% 20%
500 8.3% 4.6% 570
13.0% 11.4% 600 1.7% 2.9%
20%
$ bn
400 354 413 0%

$ bn
0% 400
300 -20%
214 -20%
200 200 -51.0%
-59.2% -40% -40%
100 -60%
0 -60%
0 -80%
2019 2020 2021 2022 2023E 2024E
Source: Skift Research, PhillipCapital India Research Source: Skift Research, PhillipCapital India Research

Recent financial performance of Rategain’s client

segments
Airlines remains positive boosted by leisure and business travel
American Airlines: Strong performance and positive commentary

CY22 Performance and commentary
• 2022 performance: Record revenues of US$ 48.9bn for 2022 (up 64% yoy), 7% yoy
over 2019, despite flying 8.7% less capacity.
• Bookings: Post-holiday bookings are off to a strong start, with the best-ever post-
holiday booking period so far this year. Broad strength seen across all entities and
travel periods.
• Demand: Expects strong demand environment to continue in 2023, and further
improvement in demand for long-haul international travel.
• Customer behaviour: Leisure travellers are booking more in advance. Customers
are more willing to buy higher-value-fare products and shop directly.
Q1CY23 performance and commentary

• Q1 performance: Record first quarter revenues of nearly US$ 12.2bn, an up 37%
vs. 2022, 9.2% more capacity yoy.
• Customer mix: In Q1CY23, c.35% of volume was leisure discretionary based trips,
35% was blended trips, and 30% was business trips (vs. first quarter 2019 where it
was c.30% leisure, 30% blended, and 40% business).
• Demand: Strong demand this summer is likely to continue. Robust bookings
strength across the airline network. Long-haul international is seeing many more
bookings coming in a lot sooner, reflecting pent-up demand in many markets.
Delta Airlines: CY23 revenue growth guidance of 15-20% yoy

CY22 performance and commentary
• 2022 performance: Operating revenue of US$ 45.6bn, 2% lower than the 2019.
• Demand: Momentum continues in 2023 with strong demand trends. Management
expects March quarter adjusted revenue to be 14-17% higher than 2019, despite
1% lower capacity. Consumer demand remains healthy with advanced bookings
significantly higher for each month of the March quarter than in 2019.
• Business bookings: Domestic corporate sales in the December quarter recovered
to 80% of 2019 levels. Recent corporate survey results indicate that 96%
companies expect their travel to stay the same or increase sequentially in the
March quarter.
• Outlook: Reaffirmed earlier full-year 2023 guidance; expects revenue growth of
15-20% yoy.

• Q1 performance: Delivered record March quarter revenue at US$ 11.8bn, +14%
vs. 2019 even on 2% less capacity.
• Outlook Q2: Expects record June quarter revenue growth of 15-17% yoy.
• CY23 outlook: Maintained earlier full-year 2023 guidance for revenue growth of
15-20% yoy.
• Demand: To meet increasing demand, Delta is increasing international seats by
over 20% in the June quarter vs. last year, with 75% of bookings already secured.
• Recent corporate survey results indicate that 96% of companies expect their
travel to increase or stay the same sequentially in the June quarter.

Southwest Airlines: to spend US$ 1.3bn in 2023 in technology; Strong

outlook overall
• 2022 performance: Record 2022 operating revenues of US$ 23.8bn, up 6.2% vs.
2019.
• Operational disruptions: Experienced an increase in flight cancellations and
deceleration in bookings for January and February 2023, possibly due to
operational disruptions in December 2022.
• Bookings: March 2023 showed strong leisure booking and yield trends.
Improvements in close-in booking trends is encouraging. The company currently
expects March 2023 managed business revenues to be roughly restored to March
2019 levels.
• Tech investments: Investing up to US$ 1bn per year on technology (including
recurring and investment spend), with a budget to spend US$ 1.3bn of 2023’s
annual operating plan on investments, upgrades, and maintenance of IT systems
– higher than in 2022.
• Outlook: Expects March 2023 managed business revenues to be roughly restored
to pre-pandemic 2019 levels.

• Leisure demand and yields, which are well above pre-pandemic levels, continue to
be strong heading into summer
• Managed business revenues improved significantly throughout the quarter. Nearly
restored to March 2019 levels by March 2023, just shy of 100%.
• Outlook Q2: good visibility, about 75% of the quarter is booked at this point. 50%
of June booked.
– All signs point to strength in the second quarter. Leisure demand is strong;
managed business should improve sequentially.
– Based on bookings, it looks like Q2 is set to turn in another record revenue
performance.
Lufthansa Airlines: Raised earnings forecast for FY22

CY22 Performance and commentary
• Continues to see strong demand for air travel. Average passenger business yields
remain well above the pre-crisis level.
• Earnings performance in October and November exceeded expectations. The
booking situation for the coming months indicates a continuation of the positive
trend in the group’s passenger business.
• EBIT guidance upgraded (on 13 Dec, 2022): The group expects adjusted EBIT of
c.EUR 1.5bn in FY22 financial year (vs. more than EUR 1bn earlier).

• Expects significant increase in adjusted EBIT yoy.
• EBIT outlook: Adjusted EBIT will exceed the pre-crisis 2019 level of EUR 754mn in
Q2. Does not foresee any moderation in demand for Q2, based on current
bookings.
• Advanced bookings for the summer months are very strong.
– On short/medium-haul touristic routes, demand already exceeds 2019 levels.
– Many flights are already fully booked and the company is on the verge of its
strongest summer ever in traffic revenue, with high aircraft utilization.
• Premium leisure demand stays high: Trend towards higher-value bookings for
private travel stayed, so existing premium-level leisure travellers almost
completely compensate for those who have not yet completely returned.

Cruise lines players are seeing strong demand, record bookings
Royal Carribean Cruise Lines: Record bookings in Nov; outlook remains

very positive
• 2022 performance: Load factors at 85% overall. Full fleet operational since June
2022. CY22 revenue at US$ 8.8bn vs. US$ 1.53bn in 2021, (up 475% yoy).
• Outlook: Seven biggest booking weeks in its history since the last earnings call in
November 2022. Expects to exceed prior record adjusted EBITDA (achieved in
2019).
• Bookings: Very enthused about the demand environment for 2023. Booking
volumes in Q4 were significantly higher than the corresponding period in 2019,
culminating in record booking weeks for the group. Consumer spending on-board
and pre-cruise purchases continue to exceed prior years, driven by greater
participation at higher prices, indicating quality and healthy future demand.
• Geo outlook: North America sailings are leading the way and are booked in line
with record 2019 levels for the full year. Bookings for European itineraries have
been accelerating during WAVE and are now higher than 2019

• Q1CY23 performance: Revenue of US$ 2.9bn. Growth of 10.8% qoq and 172.4%
yoy; stronger-than-anticipated demand, record-breaking and extended WAVE
season combined with continued strength in on-board spending have led to strong
Q1.
• Full-year 2023 outlook: The company expects to significantly exceed prior record
adjusted EBITDA achieved in 2019.
• Leisure travel continues to strengthen, as consumer spending further shifts
towards experiences.
• Booking: Booking volumes in Q1 were significantly higher than in the
corresponding period in 2019 and were considerably better than expected.
• Geo: It is generating significantly more bookings at meaningfully higher prices than
in prior years, particularly from North American consumers.
Norwegian Cruise Lines: Record bookings for CY23 at higher pricing

• Q4 Bookings: the Company’s current cumulative booked position for the Q4CY22
is below the comparable 2019 period but at higher prices.
• CY23 Bookings: Booking trends for full year 2023 remain positive with cumulative
booked position equal to record 2019 levels inclusive of the Company’s increase
in capacity. Pricing is significantly higher than that of 2019 at a similar point in
time for full year 2023. Net booking volumes continue to be at the pace needed to
reach historical Load Factor levels in 2023.

• CY23 Bookings: Cumulative booked position for the remainder of 2023 continues
to be at record levels and at higher pricing
• As of March 31, 2023, the Company’s advance ticket sales balance, including the
long-term portion, was a record $3.4bn, approximately up 26% qoq and
approximately up 60% higher than the first quarter of 2019.
• On the heels of a very strong WAVE season, the Company continues to
experience strong consumer demand

Large hotel chains and OTAs remain optimistic on leisure travel
Marriot International: Strong momentum in leisure and business travel

• 2022 Performance: Marriot International reported $20.8bn revenue in CY22, up
50% yoy.
• Demand Env (Leisure and Business): Leisure demand remained robust and group
demand more than fully recovered, leading to fourth quarter group revenues 10%
above pre‐pandemic levels. Business transient demand was at nearly 90%
recovery in the quarter.
• Outlook: As we look ahead, while concerns about the macroeconomic
environment persist around the world, booking trends to date remain robust and
we have significant momentum in our business. Marriott is well‐positioned for
strong growth over the coming years as people around the world further embrace
their love for travel.
• CY23 Guidance: CY23 RevPar growth guidance of 6-11% with US and Canada at 5-
9% and International at 12% to 18%.
• CY23 guidance upgraded: CY23 RevPar growth guidance of 10-13% with US and
Canada at 6-9% and international at 22-25%.
• Demand environment: Globally, leisure demand and ADR (Average Daily Rate) are
still incredibly robust. Following a year of leisure demand already well above pre‐
pandemic levels, Q1 transient room nights for the segment increased 12%, with
ADR rising 8% yoy.
• Outlook: While macroeconomic uncertainty persists, it has not weighed on travel
demand so far. In fact, demand continued to rise across all customer segments
in the quarter.
• Forward bookings are solid, though our transient booking window is still short‐
term at around three weeks, so trends could change relatively quickly.
Hilton Worldwide: Remains optimistic on growth

• 2022 performance: Hilton Worldwide reported US$ 8.7bn revenue in CY22, up
51% yoy.
• CY23 guidance: System-wide comparable RevPAR, on a currency neutral basis, is
expected to increase between 4% to 8% compared to 2022.
• RevPar: Our Q4 and full year results surpassed our expectations, with Q4 system-
wide RevPAR meaningfully exceeding the same period in 2019 driven by growth
across all segments. This marked the second consecutive quarter that RevPAR
exceeded pre-pandemic levels. Positive momentum has continued into the new
year, with exciting growth opportunities ahead.
• CY23 guidance upgraded: System-wide comparable RevPAR, on a currency neutral
basis, should increase between 8% and 11% compared to 2022.
• Leisure trends remained strong throughout the quarter with RevPAR surpassing
2019 by approximately 15%, ahead of prior quarter performance.
• Performance Q1: System-wide RevPAR grew 30% yoy and 8% compared to 2019.
Rate continued to drive growth, up 11% compared to 2019, and system-wide
occupancy reached 68%, up from the prior quarter and just two points shy of peak
levels.
• Globally, all segments outperformed expectations, and the lifting of COVID
restrictions in China drove significant recovery in demand across Asia Pacific
throughout the quarter.
– As a result, RevPAR in March exceeded 2019 levels across all regions and
segments for the first time since the pandemic began.

Airbnb: Bookings were at a record high in Q4; demand stayed strong

• 2022 performance: Revenue was at US$ 8.4bn grew 46% yoy in CC.
• Demand: Highest active bookers ever in Q4, demonstrating guest excitement to
travel on Airbnb despite evolving macroeconomic uncertainties. Guests are
increasingly returning to cities and crossing borders. Guests continue to book
longer stays on Airbnb. Tremendous growth in supply on Airbnb too.
• Europe demand: Europeans tend to book summer travel at the beginning of the
year; this year, they booked even earlier on Airbnb. Seeing slightly longer lead
times in general across Airbnb overall.
• China outbound: Feel very bullish on China outbound travel. Asia is still down vs.
2019, but it is still the fastest growing region in Q4.

• Q2CY23 revenue growth: Expects to achieve revenue of US$ 2.35-2.45bn in Q2
2023, which represents yoy growth of 12-16%.
• Q2CY23 volume growth: Night and experiences booked will have unfavourable
yoy comparisons in Q2, as we overlap pent-up 2022 demand following the covid
Omicron variant (UNCLEAR). Expects yoy growth in this in Q2CY23 to be lower
than revenue growth (12-16%).
• ADR rates are up due to higher overall pricing, especially in North America.
• 25% growth in H2 bookings: People booked much earlier in 2023 than they have
historically. So there were longer overall booking rates for the second half of the
year, leading to strength.
• Strong demand across the globe and very stable demand in North America.
Expedia: Guided for double-digit revenue growth in CY23

• 2022 Performance: Record full-year and fourth-quarter lodging bookings and
revenue. Total revenue was US$ 11.7bn, up 36% yoy. Most profitable year for
Expedia in its history.
• Demand: We continue to see that people are prioritizing travel over just about
everything. Rates are still very high. Demand is high. Planes are full. We still
haven't seen really Asia come back fully.
• Asia opening up: We think Asia opening up will be good for us. We've had some
big relationships there, including China, where we haven't gotten much output
during COVID.
• Outlook: Committing to double-digit revenue growth outlook in CY23. YTD growth
has been 20%.
Q1CY23 Performance and commentary

• Q1 performance: Highest-ever first-quarter revenue was US$ 2.7bn, an increase
of 18% compared to 2022.
• Throughout the quarter, we saw strong consumer demand with acceleration in
international and big-city travel and more of Asia reopening.
• The re-emergence of major international cities has meant increased hotel
demand, offset in part by flattening demand in vacation rentals, as travel demand
mix changing to shorter stay in urban destinations over extended beach and
mountain trips .
• Broad travel demand remains strong in what appears to be a more structural
post-pandemic environment – of people prioritizing travel above most other
categories of spend. This has held up despite inflation and recession worries.

Valuation: At 3.6x FY25 EV/sales, stock remains attractive

• We initiate coverage on the stock with a BUY rating and target price of Rs 540
based on 5x FY25 EV/sales.
• Rategain currently trades at an attractive FY25 EV/sales multiple of 3.6x, compared
to key vertical/horizontal SaaS players that trade at CY24 EV/sales multiple of
4.3x/7.7x.
• We are factoring in 38% revenue CAGR with 400bps EBITDA margin expansion over
FY23-25 resulting in 47% PAT CAGR.
• Risks include reversal in travel demand risking future growth, competitive intensity
increasing and margin expansions not playing out as expected
Global Saas players Revenue, EBITDA, PAT CAGR

Revenue CAGR EBITDA CAGR PAT CAGR
Market Cap ($mn) EV ($mn.) CY2019-22 CY2022-24 CY2019-22 CY2022-24 CY2019-22 CY2022-24
Travel SaaS Players
Rategain Travel (in INR) 42,404 38,990 12% 38% 43% 55% NA 47%
Bookings Holdings (in USD) 1,04,124 94,341 4% 16% -2% 19% -4% 20%
Amadeus IT Group (in EUR) 32,039 32,282 -7% 17% -10% 14% -16% 35%
Sabre Corp (in USD) 1,283 5,589 -14% 13% NA NA NA NA
Siteminder (in AUD) 957 862 28% NA NA
Horozontal SaaS Players
Microsoft 25,05,505 23,08,513 16% 9% 21% 9% 24% 9%
Salesforce 2,24,458 2,11,431 22% 11% 26% 73% 27% 28%
Adobe 1,80,131 1,66,247 16% 11% 22% 26% 30% 11%
Servicenow 1,09,931 99,714 28% 22% 39% 112% 35% 27%
Snowflake 61,811 53,826 133% 77% 55% NA NA NA
Workday 54,556 47,925 20% 16% NA 316% NA NA
Freshworks 4,729 3,288 42% 18% NA NA NA NA
Source: Company Data, Bloomberg, PhillipCapital India Research
Global Saas players Valuation

EV/Sales EV/EBITDA PE
FY1e FY2e FY1e FY2e FY1e FY2e
Travel SaaS Players
Rategain Travel 4.4 3.6 25.7 19.1 41.9 28.7
Bookings Holdings 4.6 4.1 13.9 12.0 20.6 18.0
Amadeus IT Group (in EUR) 5.9 5.3 15.2 15.2 29.5 23.8
Sabre Corp 1.9 1.7 18.1 9.1 15.8
Siteminder (in AUD) 5.7 4.6 NA 526.6 NA NA
Horizontal SaaS players
Microsoft 10.9 9.8 22.7 19.9 34.9 30.5
Salesforce 6.1 5.5 17.4 14.7 31.6 26.2
Adobe 8.6 7.7 17.5 16.6 25.5 22.8
Servicenow 11.3 9.3 35.8 28.1 56.3 44.4
Snowflake 19.0 14.0 206.2 124.8 300.9 237.7
Workday 6.7 5.7 23.7 19.5 40.8 33.6
Freshworks 5.6 4.7 196.5 92.0 170.4 185.9
Overall Median 6.1 5.5 20.4 19.5 34.9 28.3
Travel Saas Median 5.2 4.3 15.2 13.6 25.1 18.0
Horizontal Saas Median 8.6 7.7 23.7 19.9 40.8 33.6
Source: Bloomberg, Company Data, PhillipCapital India Research

Sensitivity analysis (Target Price) on Revenue Growth and EV/Sales Multiple

TP Sensitivity Analysis
Revenue Growth CAGR (in INR)
34% 36% 38% 40% 42%
4.0 420 430 440 450 470
4.5 470 480 490 510 520
EV/Sales Multiple 5.0 510 530 540 560 570
5.5 560 580 590 610 620
6.0 610 620 640 660 680
Rategain Stock Price Chart

Price
550
500
450
400
Rs
350 393
300
250
200
25-04-2023
25-12-2021
25-01-2022
25-02-2022
25-03-2022
25-04-2022
25-05-2022
25-06-2022
25-07-2022
25-08-2022
25-09-2022
25-10-2022
25-11-2022
25-12-2022
25-01-2023
25-02-2023
25-03-2023
25-05-2023
Source: Bloomberg, PhillipCapital India Research
Usage of IPO funds (as of Q4FY23)

Sr. No. Particulars Amount (Rs Mn) Status
Repayment of debt availed by RateGain UK to Silicon
1 853 Fully utilized
Valley Bank
2 Payment of deferred consideration – DHISCO 252 Fully utilized
3 Strategic investments, acquisitions and inorganic growth 800 Fully utilized in January 2023 towards acquisition of Adara
Investment in technological innovation, AI and other
4 500 Utilized Rs 278mn towards in-house product development
organic growth initiatives
Purchase of certain capital equipment for the data Project has been initiated and funds utilization has started in April
5 408
centre 2023
Fully utilized
Utilized Rs 182.9mn towards IPO issue-related expenses.
6 General corporate purposes 938
Rs 534.1mn towards acquisition of Adara
Rs 220.6mn towards working capital requirements of subsidiary
Total 3,750

Financials
Income Statement Cash Flow
Y/E Mar, Rs mn FY22 FY23 FY24E FY25E Y/E Mar, Rs mn FY22 FY23 FY24E FY25E
Net sales 3,666 5,651 8,924 10,725 Pre-tax profit 109 673 1,234 1,800
Growth, % 46.2 54.2 57.9 20.2 Depreciation 301 358 481 490
Other operating income - - - - Chg in working capital (776) (1,451) (603) (406)
Raw material expenses - - - - Total tax paid 100 (122) (207) (315)
Employee expenses 1,914 2,528 3,898 4,649 Cash flow from operating activities (267) (542) 904 1,569
Other Operating expenses - - - - Capital expenditure (287) (356) (491) (500)
EBITDA (Core) 306 846 1,518 2,041 Chg in investments (239) (12) (100) (100)
Growth, % 396.2 177.0 79.4 34.4 Chg in marketable securities - - - -
Margin, % 8.3 15.0 17.0 19.0 Cash flow from investing activities (526) (367) (591) (600)
Depreciation 301 358 481 490 Free cash flow (752) (894) 324 980
EBIT 5 488 1,037 1,551 Equity raised/(repaid) 99 1 - -
Growth, % - 9,667.0 112.3 49.6 Debt raised/(repaid) (860) (7) - -
Margin, % 0.1 8.6 11.6 14.5 Dividend (incl. tax) - - - -
Interest paid 52 15 14 14 Cash flow from financing activities 2,798 215 - -
Other Income 156 199 211 263 Net chg in cash 1,878 (436) 113 769
Non-recurring Items - - - -
Pre tax profit 109 673 1,234 1,800
Tax provided 24 (11) 216 315
Profit after tax 84 684 1,018 1,485
Valuation Ratios
Minorities - - - - FY22 FY23 FY24E FY25E
Net Profit 84 684 1,018 1,485 Per Share data
Growth, % - 711.4 48.8 45.9 EPS (INR) 0.8 6.3 9.4 13.7
Net Profit (adjusted) 84 684 1,018 1,485 Growth, % - 659.5 48.8 45.9
Unadj. shares (m) - - - - Book NAV/share (INR) 61.0 65.4 74.8 88.5
Wtd avg shares (m) 102 109 109 109 FDEPS (INR) 0.8 6.3 9.4 13.7
CEPS (INR) 3.8 9.6 13.8 18.2
CFPS (INR) - - - -
Balance Sheet DPS (INR) - - - -
Y/E Mar, Rs mn FY22 FY23 FY24E FY25E
Cash & bank 2,451 2,015 2,127 2,896 Return ratios
Marketable securities at cost 1,418 1,160 1,360 1,560 Return on assets (%) 1.4 7.9 10.0 12.6
Debtors 941 1,608 2,217 2,754 Return on equity (%) 2.0 10.3 13.4 16.8
Inventory - - - - Return on capital employed (%) 7.7 28.7 36.6 48.7
Loans & advances - - - -
Other current assets 472 264 608 673 Turnover ratios
Total current assets 5,282 5,047 6,312 7,884 Asset turnover (x) - - - -
Investments 247 258 358 458 Sales/Total assets (x) 0.5 0.6 0.8 0.8
Gross fixed assets 66 63 73 83 Sales/Net FA (x) 56.0 89.6 122.1 129.1
Less: Depreciation - - - - Working capital/Sales (x) 0.4 0.2 0.2 0.2
Add: Capital WIP - - - - Receivable days 93.7 103.8 90.7 93.7
Net fixed assets 66 63 73 83 Inventory days - - - -
Non - current assets 2,216 4,084 4,182 4,248 Payable days 45.4 62.5 48.8 46.0
Total assets 7,811 9,452 10,925 12,673 Working capital days 149.1 68.8 74.8 81.4
Current liabilities - - - - Liquidity ratios

Provisions 1,230 1,874 2,241 2,473 Current ratio (x) 4.0 2.6 2.7 3.0
Total current liabilities 1,334 1,968 2,356 2,596 Quick ratio (x) 4.0 2.6 2.7 3.0
Non - current liabilities - - - - Interest cover (x) 0.1 32.3 75.1 112.4
Total liabilities 1,619 2,354 2,810 3,073 Total debt/Equity (%) - - - -
Paid - up capital 107 108 108 108 Net debt/Equity (%) (43.6) (32.0) (30.6) (34.9)
Reserves & surplus 6,084 6,989 8,007 9,492
Minorities - - - - Valuation
Shareholders’ equity 6,192 7,097 8,115 9,600 PER (x) 473.5 62.3 41.9 28.7
Total equity & liabilities 7,811 9,452 10,925 12,673 PEG (x) yoy growth - 0.1 0.9 0.6
Price/Book (x) 6.4 6.0 5.3 4.4
EV/Net sales (x) 11.0 7.2 4.5 3.7
FY22 FY23 FY24E FY25E EV/EBITDA (x) 131.5 48.0 26.7 19.5
US$ Revenue (mn) 49 70 109 131 EV/EBIT (x) 8,035.9 83.2 39.1 25.6
Growth, % 45.2 42.7 55.1 20.2
Organic Growth (%) - in USD 27.9 24.5 18.0 20.2
Re / US$ (rate) 74.6 80.6 82.0 82.0
Source: Company, PhillipCapital India Research

Rating Methodology
We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year.
We have different threshold for large market capitalisation stock and Mid/small market capitalisation stock.
The categorisation of stock based on market capitalisation is as per the SEBI requirement.
Large cap stocks

Rating Criteria Definition
BUY >= +10% Target price is equal to or more than 10% of current market price
NEUTRAL -10% > to < +10% Target price is less than +10% but more than -10%
SELL <= -10% Target price is less than or equal to -10%.
Mid cap and Small cap stocks

Rating Criteria Definition
BUY >= +15% Target price is equal to or more than 15% of current market price
NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%
SELL <= -15% Target price is less than or equal to -15%.
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PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives, and Private Client Group.
This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may, may not match, or may be contrary at
times with the views, estimates, rating, and target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.
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Additional Disclosures of Interest:
Unless specifically mentioned in Point No. 9 below:
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report.
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company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report.
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any other products or services from the company(ies) covered in this report, in the past twelve months.
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9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report:

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investment banking transaction by PCIL
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of the company(ies) covered in the Research report
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IMPORTANT DISCLOSURES FOR U.S. PERSONS

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PhillipCapital (India) Pvt. Ltd.

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DN: c=IN, o=PHILLIPCAPITAL (INDIA) PRIVATE
LIMITED, ou=PRIVATE LIMITED,
KARAN
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e610311170e2a7c9b5707cdd5e443ee38,
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KISHORE
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Date: 2023.05.26 12:22:26 +05'30'

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INSTITUTIONAL EQUITY RESEARCH

RateGain Travel Technologies Ltd

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

Rategain Travel Tech – Key Charts

70% Europe, 30% 80%

40% 1500 8.8 8.5 2942 10

Page | 2 | PHILLIPCAPITAL INDIA RESEARCH

Rategain is a leading integrated travel SAAS / services player

Source: Company Data, PhillipCapital India Research

Page | 3 | PHILLIPCAPITAL INDIA RESEARCH

Rategain’s travel tech journey

Source: Company Data, PhillipCapital India Research

Rategain’s product offerings across three major buckets

Page | 4 | PHILLIPCAPITAL INDIA RESEARCH

DaaS: Real-time actionable insights on the competitive

Source: Company Data, PhillipCapital India Research

Page | 5 | PHILLIPCAPITAL INDIA RESEARCH

Competitive intelligence products

Rate Parity Products

Daas continues to grow strongly; Company expanding clientele in Airlines segment

Page | 6 | PHILLIPCAPITAL INDIA RESEARCH

Key competition in the DaaS segment

Key competitors for RateGain in Daas

Channel checks suggest strong competition from OTAInsight and TravelClick

Our DaaS channel checks

Page | 7 | PHILLIPCAPITAL INDIA RESEARCH

Daas: Strong momentum of last two years to sustain in FY24

Page | 8 | PHILLIPCAPITAL INDIA RESEARCH

Distribution: Connecting travel demand and supply partners

Distribution – Connects Hotels with Demand Partners seamlessly

Source: Company Data, PhillipCapital India Research

Page | 9 | PHILLIPCAPITAL INDIA RESEARCH

Rategain distribution: Connects +191k properties with 400+ demand partners

Source: Company Data, PhillipCapital India Research

RezGain: AI-enabled distribution channel manager for hotels and OTA

DHISCO Switch: Providing seamless hotel distribution, revenue optimisation

Page | 10 | PHILLIPCAPITAL INDIA RESEARCH

Rategain was named Expedia’s Elite Connectivity partner in 2023

Booking.com recognised Rategain as premier connectivity partner in 2022

Latest wins announced in distribution

Channel checks suggest competition is strong in luxury and affordable segments

Page | 11 | PHILLIPCAPITAL INDIA RESEARCH

Key competition in distribution

Management targets 15% growth in distribution in FY24

Distribution revenue to grow 15% in FY24

Page | 12 | PHILLIPCAPITAL INDIA RESEARCH

MarTech: Improving hotel margins with reduced CAC

Driving direct bookings through social media and meta-search platforms

Social media and meta-search optimization for hotels

Page | 13 | PHILLIPCAPITAL INDIA RESEARCH

MarTech: Powering hotel chains to directly acquire new customers online

Source: Company Data, PhillipCapital India Research

Key competition in martech

Page | 14 | PHILLIPCAPITAL INDIA RESEARCH

Rategain’s latest wins in martech

Management targets 20% organic growth in FY24

MarTech revenue to grow by 20% organically in FY24

Page | 15 | PHILLIPCAPITAL INDIA RESEARCH

Revenue by individual segments

Source: Company Data, PhillipCapital India Research

Revenue by engagement (FY19-23)

60% 35% 26%

20% 41% 44% 41%