Kotak initiates coverage with buy rating on RateGain. Check target price

According to a Kotak Report to investors, the company is expected to experience growth from the rebound in the travel industry and strengthened connections with hospitality clients following the end of the Covid-19 pandemic.

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Brokerage firm Kotak Institutional Equities has initiated coverage on RateGain Travel Technologies Ltd with a buy rating and kept a target price of Rs 450 a share from current market price.

The stock has jumped nearly 40% in the last one and half month amid higher volume. The stock, which had its IPO in December 2021, priced at Rs425, is still down 14 per cent from the issue price. RateGain is a leading travel & hospitality industry-specific SaaS player, focused on revenue maximization for clients.

According to a Kotak Report to investors, the company is expected to experience growth from the rebound in the travel industry and strengthened connections with hospitality clients following the end of the Covid-19 pandemic. The report states that the company’s strong financial position allows for the potential acquisition of new businesses, which would broaden their product offerings and customer base.

“We forecast 20% organic US$ revenue CAGR for the company over FY2022-25E and adjusted EBITDA margin stabilizing in the ~20% range by FY2026E. Our DCF-based FV of Rs450 implies 4.3X EV/sales FY2025E, in line with trading multiples of global SaaS players”, Kotak report said.