Thomas Bushey of Sunderland Capital Partners presented his in-depth investment thesis on Yatra (US: YTRA) at Best Ideas 2019.

Thesis summary:

Yatra, headquartered in India, is an online travel agency catering to the evolving travel industry in India. Yatra is the largest corporate online travel agency and the second-largest consumer online travel agency in its market. It is well-positioned for the coming growth in travel in India. The company is well-run, as evidenced by revenue growth of 30+% and the acquisition of leading corporate travel agency Air Travel Bureau.

The vehicle through which YTRA went public has not been conducive to garnering a long-term shareholder base. Since the founding in 2006, $200+ million has been invested in the company, exceeding recent enterprise value.

In essence, we are buying the business for about half the investment it took to build it over the last twelve years. Yatra trades at a major discount to peers on the basis of sales (and a reasonable multiple of the profitable corporate travel earning stream). The attractive corporate business has strong growth, 15-25% margins, and has been subsidizing the leisure business.

The company has sufficient cash to operate until it reaches cash flow breakeven on a combined basis. Yatra’s future profile of 20-30% top-line growth justifies a higher multiple, as suggested by the discount to peers.

Idiosyncratic trading events and turnover in the shareholder base notwithstanding, the quality of the business is underappreciated as the online travel market in India has a long runway of growth ahead.

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About the instructor:

Thomas Bushey has over fifteen years of experience managing and investing capital. Prior to founding Sunderland, he was a portfolio manager at Blackrock. Prior to Blackrock, Mr. Bushey was a Senior Analyst for Mayo Capital Partners from 2010 to 2012. Before that, he served a Senior Analyst at Millennium Partners from 2008 to 2009, where he was part of a global industrial investment team. Mr. Bushey began his career as an analyst for Credit Suisse First Boston (“CSFB”) and later moved to HCI Equity Partners (Thayer Capital). At CSFB, he executed and analyzed mergers, acquisitions, leveraged buyouts, divestitures, takeover defenses, restructurings and debt and equity financing for corporate clients and financial sponsors. At HCI, he was a member of the investment team responsible for private equity funds focused on industrial products and services. Mr. Bushey has a BS in Economics from the Wharton School of the University of Pennsylvania.