What you must know about Wise Travel India | WTI Cabs IPO ?

Wise Travel India Ltd (WTI Cabs) was incorporated in the year 2009 to offer transport services, car rentals and other allied services. The services are essentially targeted at corporate customers and for bulk orders.  The company offers the service across 130 cities across the length and breadth of India. Apart from car rentals, Wise Travel India Ltd (WTI Cabs) also offers customized and deeper transport customization like employee transportation, end-to-end employee transport solutions, Monthly rental plans (both fixed and flexible), airport transfers et. In addition, Wise Travel India Ltd (WTI Cabs) also offers to its customers, comprehensive fleet management services, cutting-edge mobility tech solutions, project mobility solutions, strategic consulting on mobility, community commute etc. Its cars range from executive cars, sedans to luxury cars to SUVs and coaches.

Currently, Wise Travel India Ltd (WTI Cabs) offers its services across key first tier and second tier metros like Delhi, NCR, Mumbai, Pune, Hyderabad, Bengaluru, Chennai, Chandigarh, Ahmedabad, Guwahati, Jaipur, and Kolkata. The client offers its services to a fairly large base of premium corporate clients. Some of the premium clients of Wise Travel India Ltd (WTI Cabs) include names like Nokia, Indi-Grid, Amazon, Microsoft, Tesco, Vedanta, Indigo Airlines, Royal Bank of Scotland (RBS), Coca Cola, American Express, Renault, LinkedIn, Hitachi, Sapient, Panasonic etc; among others. The company has a total of 784 employees on its rolls as of the last count.

Key terms of the SME IPO of Wise Travel India (WTI Cabs)

Here are some of the highlights of the Wise Travel India (WTI Cabs) IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 12th February 2024 and closes for subscription on 14th February 2024; both days inclusive.
   
• The stock of the company has a face value of ₹10 per share and it is a book built issue. The price for the book building issue is set in the price band of ₹140 to ₹147 per share. Being a book built issue, the final price will be discovered in the above band.
   
• The IPO of Wise Travel India Ltd (WTI Cabs) has only a fresh issue component and no offer for sale (OFS) portion. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh issue portion of the IPO, Wise Travel India Ltd (WTI Cabs) will issue a total of 64,41,000 shares (64.41 lakh shares), which at the upper band of IPO price of ₹147 per share aggregates to fresh fund raising of ₹94.68 crore.
   
• Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Therefore, the overall IPO size will also comprise of the issue of 64,41,000 shares (64.41 lakh shares) which at the upper band IPO price of ₹147 per share will aggregate to overall IPO size of ₹94.68 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 4,38,000 shares. Share India Securities Private Ltd will be the market maker to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing.
   
• The company has been promoted by Ashok Vashist, Hema Bisht, and Vivek Laroia. The promoter holding in the company currently stands at 95.63%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 69.76%.
   
• The fresh issue funds will be used by the company towards funding the working capital gaps and for general corporate purposes. Part of the funds raised will also be applied towards the issue related expenses.
   
• Share India Capital Securities Private Ltd will be the lead manager to the issue, and Beetal Financial & Computer Services Private Ltd will be the registrar to the issue. The market maker for the issue is Share India Securities Private Ltd.

IPO allocation and minimum lot size for investment

Wise Travel India Ltd (WTI Cabs) has already announced the market maker allocation at 4,38,000 shares as inventory for market making. Share India Securities Private Ltd will be the market maker for the IPO. The net offer (net of market maker allocation) will be divided between the QIB investors, retail investors and the HNI / NII investors. The breakdown of the overall IPO of Wise Travel India Ltd (WTI Cabs) in terms of the allocation to various categories are captured in the table below.

The minimum lot size for the IPO investment will be 1,000 shares. Thus, retail investors can invest a minimum of ₹147,000 (1,000 x ₹147 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 2,000 shares and having a minimum lot value of ₹294,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Key dates to be aware of in the Wise Travel India (WTI Cabs) IPO

The SME IPO of Wise Travel India Ltd (WTI Cabs) IPO opens on Monday, 12th February 2024 and closes on Wednesday, 14th February 2024. The Wise Travel India Ltd (WTI Cabs) IPO bid date is from 12th February 2024 at 10.00 AM to 14th February 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 14th February 2024.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on February 16th 2024, will be visible to investors under the ISIN Code – (INE623Y01011).

Financial highlights of Wise Travel India Ltd (WTI Cabs)

The table below captures the key financials of Wise Travel India Ltd (WTI Cabs) for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years.

• The revenues have grown at over 100% in each of the last 2 years, leading to a six-fold rise in revenues in the last two years. The PAT margins are relatively low, but steady around a tad over 4%. That is because, these businesses typically price their services based on an IRR based model and hence their profit growth comes from volumes and not exactly from expansion of net margins.
   
• While net margins of the company have been stable, it is the return on equity that has grown at a rapid pace. This is a low capital business with a strong cash flow component and hence the company is able to run with low levels of equity and borrowings.
   
• The asset turnover ratio or the sweating ratio has been above 2 and that is a good sign that sales have picked up to cover the asset outlays. With scale, the impact should be visible on profits too. However, with the ROA at 8.44%, lower sweating is still sustainable.

The company has latest year EPS of ₹5.91 and due to the rapid growth, the previous EPS may not be too relevant. The latest year earnings are being discounted by the IPO price of ₹147 by nearly 24-25 times P/E ratio. One has to look at the P/E ratio from two perspectives. Firstly, the half year EPS for FY24 up to September 2023 is much higher at ₹6.54, which makes the valuations look a lot more reasonable if the EPS is annualized and extrapolated. However, the real story is that the stock would become lot more enticing once the economies of scale start to show on profits due to rapid expansion of top line. That is likely to take some time, but this is a business worth betting, with the increased trend towards outsourcing non-critical services. Investors with a higher level of risk appetite and a longer time frame can look at this IPO.