TBO Tek IPO subscribed 43.31 times on Day 2 so far; GMP corrects

The initial public offering (IPO) of TBO Tek saw a strong response from the investors during the third and final day of the bidding process, thanks to interest across all investor categories. The issue which was sailed on the first day of the bidding ended the second day of the bidding more than 4 times.
 

The New Delhi-based TBO Tek is selling its shares in the price band of Rs 875-920 apiece. Investors can apply for a minimum of 16 shares and its multiples thereafter. It is looking to raise Rs 1,550.81 crore via IPO, which includes a fresh share sale of Rs 400 crore and an offer-for-sale (OFS) of 1,25,08,797 equity shares.
 

According to the data, the investors made bids for 40,21,56,096 equity shares, or 43.31 times, compared to the 92,85,816 equity shares offered for the subscription by 2.30 pm on Friday, May 10. The three-day bidding for the issue, which kicked off Wednesday, May 8, concludes today.
 

The allocation for while qualified institutional bidders (QIBs) was subscribed 52.94 times, while the portion reserved for non-institutional investors saw a subscription of 40.07 times. However, the quota set aside for employees attracted bids for 19.87 times of their reservation, while quota for retail investors was booked 12.97 times as of the same time.
 

TBO Tek, formerly known as Tek Travels, is a travel distribution platform that offers travel inventory according to the needs of its customers and supports a wide range of currencies along with forex help.  The Rs 1,550.80 crore IPO of TBO Tek includes a fresh share sale of Rs 400 and offer-for-sale (OFS) of up to 1,25,08,797 equity shares by its promoters and existing shareholders.
 

The grey market premium of TBO Tek has remained firm, even after a mild correction. Last heard, the company was commanding a premium of Rs 525-530 in the unofficial market, suggesting a listing pop of about 57 per cent for the investors. However, the premium in the grey market stood around Rs 555-560 levels, a day earlier.
 

Brokerage firms are mostly positive on the issue, suggesting investors to subscribe to it on a niche business model, rising demand of traveling across the world and limited competition in the sector. However, some analysts are skeptical over rich valuations and a big chunk of OFS in the issue.
 

TBO Tek operates in a niche business model, it is a travel technology platform specializing in outbound travel. Serving as an intermediary between online travel agents and a diverse array of suppliers, including airline service providers, hotel services, car rentals, and transfer services, TBO Tek Limited has developed proprietary software in-house, said Canara Bank.
 

"TBO Tek is available at P/E of 64.74 times for FY23, considering the absence of domestic listed peers for direct comparison and given the company's anticipated key role in benefiting from the expanding penetration in the travel segment, this valuation appears justified. We recommend to subscribe the issue for listing gains due to increasing competitive intensity," it said.
 

TBO Tek raised Rs 696.51 crore via anchor book it allocated 75,70,807 equity shares at Rs 920 per equity share. For the nine-months ended on March 31, 2023, TBO Tek reported a net profit of Rs 154.18 crore with a revenue of Rs 1,039.56 crore. The company's bottomline came in at Rs 148.49 crore with a revenue of Rs 1,085.77 crore for the financial year ending March 2023.
 

Indsec Research believes the issue is priced effectively with room for upside. "We have a 'subscribe' rating on the company owing to the scale it can address through its platform, add ancillary business lines catering to buyers and suppliers needs," it said.
 

TBO Tek has reserved shares worth Rs 3 crore for its eligible employees, while 75 per cent of the net offer shall be reserved for the qualified institutional bidders (QIBs) and 15 per cent shares shall be allocated towards non-institutional investors (NIIs). Retail investors will have only 10 per cent of the allocation in the issue.
 

Axis Capital, Goldman Sachs (India) Securities, JM Financial and Jefferies India are the book running lead managers of the TBO Tek IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with May 15, Wednesday as the tentative date of listing.