Rategain – Fast Growing SaaS Leader

Few points I want to highlight about Rategain:

1. TAM by FY25 – 70,125cr (Huge Opportunity)

2. Many of their new product launches are higher in value chain and have limited to no competitive intensity. Gross margins are north of 90%. Good lever for margin expansion along with operating leverage on matured products.

   

3. Airlines is a relatively new segment and they are competing with only one player in this.

   

4. Cyclicality of the travel and hospitality industry is definitely a risk. Cycle is in favor now and just reaching pre-covid levels.

5. Management guiding to double the revenues on FY24 base by FY27. FY24 revenue should be around 875cr. So FY27 revenue comes around 1750cr. You can model with PAT margin expectation.
   If mgmt walks the talk, PAT margin can be 20%, which comes to around 350cr.
   In base case scenario, giving 40x PE multiple comes to 14000cr Mcap (around 21% CAGR)

Disclosure: Invested, Not a reco.