Wise Travel India
- Wise Travel India is coming out with initial public offering (IPO) of 64,41,000 shares of Rs 10 each in a price band Rs 140-147 per equity share.
- The issue will open for subscription on February 12, 2024 and will close on February 14, 2024.
- The shares will be listed on NSE SME Platform.
- The face value of the share is Rs 10 and is priced 14.00 times of its face value on the lower side and 14.70 times on the higher side.
- Book running lead manager to the issue is Share India Capital Services.
- Compliance Officer for the issue is Shivani Rastogi.
Profile of the company
Wise Travel India (WTI) has stated its operations as transportation service provider with an objective to redefine urban mobility and metamorphose the fabric of daily commutes. Its Promoter Ashok Vashist; Hema Bisht and Vivek Laroia who have been actively involved in the growth of its business and actively advise it on finance, corporate strategy and planning. It has a strong management team with significant industry experience. Thus, vast experience of the Promoters has been influential in determining the vision and growth strategies for the company. The company’s market position has been achieved by adherence to the vision of its Promoters and senior management team and their experience of over a decade in the industry in which the company operates.
The company provide Car Rental Services for Corporates - providing chauffeur driven cabs to help them to transport employees, guests or VIP’s to airport, conferences, a sales call, intra city travel, hotel pickup & drop, outstation or for their long term or daily car rentals needs. Moreover, the company’s airport counters are strategically located in 12 airports throughout India, precisely positioned after the security hold areas. These airports experience high international & domestic traffic, making them ideal locations for its counters. By placing its counters after the security hold areas, it ensures convenient access for travellers, allowing them to avail of its transportation services conveniently. Further, since inception, the company has been serving in the modern business of fleet management and leasing services. Not only it helps business owners and managers in conserving expenses, it helps them to save time with its full-service offerings that also reduce the potential hassle associated with a vehicle lease or purchase.
The company provides mobility services for Meetings, Conferences Exhibitions to corporates. Providing Mobility Solutions to corporates helps to improve safety and operational efficiencies. It offers comprehensive mobility services for individuals and enterprises across major cities in India. The company’s primary focus is on providing safe and cost effective transportation solutions while ensuring delightful experiences of its customers. The company is all geared up to provide Sustainable Mobility by inducting electric vehicles for staff transportation and Corporate Car Rental services across the country, creating an ecosystem alongside.
Proceed is being used for:
- Meeting working capital requirement.
- General corporate purpose.
- Meet the issue expenses.
Industry overview
The Taxi Market size is estimated at $253.27 billion in 2023, and is expected to reach $388.79 billion by 2028, growing at a CAGR of 8.95% during the forecast period (2023-2028). Over the long term, taxi industry is expected to grow due to increasing demand for ride-hailing and ride-sharing services, increasing demand from online taxi booking channels, and an increase in the cost of vehicle ownership. Compared to other modes of transportation, increasing traffic congestion and low taxi fare are the other major factors driving the taxi market. However, industry development is hampered by improvements in public transit and differing government laws on taxi services in different nations worldwide. The rise of eco-friendly electric cab services will likely provide an attractive potential for market expansion throughout the forecast period. Asia Pacific is expected to witness the considerable growth rate in the target market. This is due to the fact that the region is home to 60% of the world's population, with India and China contributing significantly to the region having the highest working population in the world.
In India, the Transportation industry has transformed over the years in terms of infrastructure, and preferences of consumers. Road transportation, in particular, has witnessed significant changes and improvements to ensure safe & hassle free commute from one place to another. In fact, it is one of the fastest developing urban infrastructures in the country at the moment. According to a report published by IBEF, India has the 2nd largest road network in the world that spans a total of 4.87 million kilometers. The report further states that Indian roads facilitate the transport of over 60 per cent of all goods and 85 per cent of total passenger traffic. Additionally, National Highways across the country account for up to 1.9 per cent of the total road network, and are further projected to be 100,000 km. long by the end of the 2017 from 97,135 km. in 2015. The IBEF report further states that the Indian government has developed a seven-phase program called the ‘National Highway Development Project (NHDP)’ assigned with the National Highways Authority of India (NHAI), for development of National Highways across the country.
The organized cab services market in India is dominated by the online cab services segment. The online cab or radio taxi service providers in the country operate either as aggregators or as radio cabs, based on their tracking feasibility. In 2019, the aggregator based model or app-only based model of online cab services, contributed more than 95% of the revenue generated from the overall India online cab services market. The online cab services market in India was valued at INR 30.72 Bn in FY 2020 and is expected to expand at a compound annual growth rate (CAGR) of 12.93% during the FY 2021 - FY 2025 period, to reach a value of Rs 55.15 billion by FY 2025. Increasing smartphone penetration in India coupled with availability of high-speed internet connectivity and rising investments in India online cab/ taxi market by the foreign institutional investors (FII) are some of the major factors that are currently driving the growth of the market. However, government’s interventions in the online cab service operations, imposition of Goods and Services Tax (GST) on respective rides, and a demand-supply gap in the market are disrupting a stable growth in the online cab services market in India.
Pros and strengths
Scalable business model: The company’s business model is order driven, and comprises of optimum utilization of its existing resources. This business model has proved successful and scalable for the company in the last few financial years. It has adequate capacity to scale upward and it also undertakes aggressive marketing of its products along with maintaining superior quality.
Existing client relationship: The company has earned reputation based upon which it has been successful in retaining its reputed clients. The company constantly tries to address customer needs around its services offered by it in field of Travel Services Industry. The company’s existing customer relationship helps it to get repeat business from its customers. This has helped it to maintain a long-term working relationship with its customers and improve its customer retention strategy. Its relationship with the existing customers represents a competitive advantage in gaining new customers and increasing its business.
Quality assurance of its services: Quality Assurance of services offered are integral part of its operations. Quality is an ongoing process of building and sustaining relationship with the Customers. Training & orientation programs done on self & client campus with proper document verification of the enrolled Chauffer’s to ensure Passengers Safety. Ensured safety while travelling allows its customer the freedom to relish the lively moments on the road. In the event of emergency, its vehicles have GPS tracking, Panic Button, Fire Extinguisher and First Aid Kit.
Risks and concerns
No long-term agreements with most of its suppliers/customers: The company is dependent on few customers/suppliers for its operations. As on September 30, 2023, the company’s top 10 customers account for 38.74% of its sales. Top 5 customers account for 25.03% of the total sales. It typically does not enter into long-term supply contracts with any of its suppliers with respect to its service. The company typically does not enter into long-term agreements with most of its customers. The company’s relationship with its customers is generally on a non-exclusive basis and accordingly, its customers may choose to source alternative options. Therefore, it cannot assure that it will receive repeat orders from its customers in the future. Additionally, its customers have high and stringent standards for quality as well as delivery schedules. Any failure to meet its customers’ expectations and specifications could result in the cancellation of contract of service and loss of revenue.
Foreign exchange risk: The company has incorporated an entity namely, WTI RENT A CAR L.L.C C in Emirate of Dubai on September 13, 2023 to cater the International market with the objective of providing car rental services. As on date, the company has no revenue in international sources but from FY 2023 onwards its revenue from operations may affected by foreign exchanges fluctuations. Because of foreign currency exposures, exchange rate fluctuations, can have a material impact on its results of operations, cash flows and financial condition. The exchange rate between the Indian Rupee and U.S. dollar has been volatile in recent periods and may continue to fluctuate in the future. Fluctuations in the exchange rates may affect it to the extent of its revenues. The company may enter into certain contracts to hedge exchange rate fluctuations which may or may not adequately cover the potential loss that may arise as a result of such foreign exchange transactions. Moreover, these hedges do not cover all such exposures and are in any event subject to their own risks, including counterparty credit risk. Adverse moves in exchange rates that it has not adequately hedged may impact its profitability and financial condition.
Intense competition could affect its pricing: The company operates in a competitive industry that experiences rapid changes in customer requirements. Its competitors include the big and mid-sized competitors in the various geographic markets. It may face competition from companies that grow in size or scope as the result of strategic mergers or acquisitions, which may result in larger competitors with significant resources that benefit from economies of scale and scope. Such events could have a variety of negative effects on its competitive position and its financial results, including reducing its revenue, increasing its costs, and lowering its gross margin percentage. If its competitors develop and implement methodologies that yield greater efficiency and productivity, they may be able to produce products similar to ours at lower prices without adversely affecting their profit margins. Even if its offerings address industry and client needs, its competitors may be more successful at selling their products. If the company is unable to provide its clients with superior products at competitive prices or successfully market those products to current and prospective clients, its business, results of operations and financial condition may suffer.
Outlook
Wise Travel India is a transport company that offers car rentals and transportation services. The company offers services across 130 cities in India. The company offers a range of services including car rental, employee transportation, end-to-end employee transport solutions (MSP), flexible fixed/monthly rental plans, airport counters, fleet management, mobility services for MICE, cutting-edge mobility tech solutions, sustainable mobility, project mobility solutions, strategic consulting and advisory on mobility, and community commute. The company offers a variety of rental cars, including executive cars, luxury cars, coaches, SUVs, and sedans. On the concern side, the company does not have long-term agreements with most of its suppliers or customers and the loss of one or more of them or a reduction in their demand for its services could adversely affect its business, results of operations, financial condition and cash flows. Moreover, intense competition in the market of cab service Industry could affect its pricing, which could reduce its share of business from clients and decrease its revenues and profitability.
The company is coming out with an IPO of 64,41,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 140-147 per equity share. The aggregate size of the offer is around Rs 90.17 crore to Rs 94.68 crore based on lower and upper price band respectively. On performance front, total income for the financial year 2022-23 stood at Rs 24,997.04 lakh whereas in Financial Year 2021-22 the same stood at Rs 8,970.00 lakh representing an increase of 178.67%. The main reason of increase was increase in the volume of business operations of the company. The company’s profit after tax for the year increased to Rs 1029.36 lakh in financial year 2022-23 from Rs. 377.74 lakh, the increase of 172.51%.
The company’s goal is to build long-term sustainable business relationships with its customers to generate increasing revenues. The company plans to continue to expand the scope by continuing to build its expertise and extending its capabilities. Leveraging its market skills and relationships is a continuous process in its organization and the skills that it imparts in its people give excellence to customers. It aims to do this by leveraging its marketing skills and relationships and further enhancing customer base. The company’s ability to maintain and improve the services it offers to customers enables it to generate stable revenue and minimize customer complaints. It now focuses on upgrading the experience of customer to one of much greater engagement and satisfaction.
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