Here’s the Indian travel company that just went public on the Nasdaq

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Indian travel portal Yatra went public on the Nasdaq on Monday, following the footsteps of its main rival MakeMyTrip, which had its initial listing on the tech-heavy exchange in 2010.

Yatra is just the fourth Indian company to be listed on the Nasdaq, following its reverse merger with Terrapin 3 Acquisition Corp. The public fundraising effort comes after a series of investments in the company by private equity investors including Norwest Venture Partners and Network18.

Yatra faces domestic competition from multiple players, and profits have still eluded online travel portals.

In email interview with Business Insider, Yatra’s CEO Dhruv Shringi discussed the company’s rationale for listing on the Nasdaq, his outlook for the Indian travel industry, and concerns over Yatra’s profitability and competition.

Prashanth Perumal: Why the decision to go public?

Dhruv Shringi: We think it is the right time to go public as we have a very strong and trusted brand, a growing market, and the right internal structure, processes, and systems in place to take this huge leap forward. Over the course of the past decade, Yatra has established itself as one of the leading brands and companies in the Indian Internet and e-commerce space. We are now a force to be reckoned within the Indian travel market. With the largest Indian hotel network (61,000+) and more than 14,000 travel agents in over 1,100 cities and towns, a cumulative of more than 4.5 million customers and gross bookings of $897 million in fiscal 2016, our IPO could not have come at a better time. Also, our strategic partnership with Reliance JIO, with a preloaded Yatra app on 35 million phones, will be instrumental in our growth.

Perumal: Why Nasdaq over the Indian stock exchanges?

Shringi: Nasdaq has emerged as the market where a lot of our peer group of companies – the online travel companies from China, Latin America and even India – are listed. There is a lot of research analyst coverage happening for such companies on the Nasdaq, as well as liquidity and demand for these stocks. These were the factors that we kept in mind while making the decision to list on the Nasdaq.

Perumal: MakeMyTrip made a similar decision to list in the Nasdaq a few years ago. Is there a trend here?

Shringi: They would have their own reasons. We would not like to comment for them.

Perumal: Can you explain your bullish case about India’s middle-class helping Yatra?

Shringi: India is the fastest growing global economy driven by a young population and travel expenditures are forecasted to grow significantly faster than the economy. India has hundreds of large cities and rising per capita income which are boosting demand for travel. Demographics, government policy, growing smartphone and mobile internet penetration, and an improved investment environment are driving growth, especially in Tier 2 and Tier 3 cities in India. The recent demonetization initiative of the Government is going to accelerate digital payments and fuel online purchasing. India is today the second largest outbound market after China, and growing faster. Also, one of the major reasons for more Indians travelling overseas is to visit their friends and families as there are a large number of Non-Resident Indians residing in various parts of the world.

Perumal: Why do you think customers would choose Yatra over other online travel companies?

Shringi: Yatra is one of the most trusted brands in the Indian market, with a strong emphasis on excellent customer service. This, coupled with a powerful loyalty program, has created a very loyal set of customers with almost 74% of transactions coming in from repeat users. We also have the largest hotel inventory amongst all OTAs and our strategic alliance with Reliance Jio that will enable us to efficiently reach tier 2 and 3 markets in India will ensure that Indian travelers choose us over competitors.

Perumal: When will Yatra likely turn profitable?

Shringi: India is a large travel market that is growing rapidly and will continue to grow over the next decade, fueled by increasing middle class disposable incomes. In addition, the rapid digital transformation that is taking place in India, coupled with the increasing penetration of smartphones and the mobile internet especially in tier 2 and tier 3 cities, is going to further drive the online travel market. In this kind of scenario, driving market share and customer acquisition is critical to building a huge business in the long term. We will invest in a number of key areas to accelerate growth in the business – building increased brand awareness, investing in mobile technology and leveraging our multi-channel approach – all of these will be critical to build a large, profitable business in the long term.

Our financial projections are in the public documents associated with the listing process and we are on track to achieve those.

Perumal: Are investors in Yatra looking at the IPO as a chance to exit their investment?

Shringi: Our existing investors will have between 57-60% of holding in the listed entity so they are not looking at exiting their investment in Yatra.