In the dynamic world of digital travel aggregation, TBO Tek is shaping up as a resilient growth story, and JM Financial appears to agree. The brokerage has maintained its ‘Buy’ rating on the company despite revising its target price downward from INR 1,870 to INR 1,400, implying an upside of 31.5%.
While the lower target may appear cautious at first glance, the brokerage’s conviction in TBO Tek’s medium- to long-term performance remains solid. The recalibration, according to JM Financial, is more a reflection of pragmatic forecasting in light of global travel headwinds than a loss of confidence in the company’s fundamentals.
TBO Tek: A High-Growth Travel-Tech Innovator
Founded in 2006, TBO Tek operates a B2B travel distribution platform that connects travel agents, hotels, airlines, and service providers across geographies. The company’s core revenue streams include software development charges, hotel and package bookings, and air ticketing.
With a market capitalization of INR 11,592 crore (~USD 1.38 billion) as of 11 April 2025, the company sits firmly in the small-cap bracket but punches above its weight in operational metrics and strategic relevance in the digital travel ecosystem.
TBO Tek Q3 Snapshot & Q4 Projections
Despite a sequential dip in Q3 FY25 income, TBO Tek’s year-on-year growth remains compelling:
- Q3 FY25 Revenue: INR 438.76 crore, up 29.57% YoY, though down 4.14% QoQ.
- Net Profit (Q3): INR 49.98 crore.
- Q4 FY25 Estimates: Revenue projected at INR 464.5 crore, marking a 25.8% YoY growth.
- FY25 Forecast: Estimated revenue of INR 1,755.8 crore and net profit of INR 214.5 crore.
Segment Breakdown (Q4 FY25 Estimates)
| Segment | Revenue (INR Cr) | YoY Growth |
|---|---|---|
| Hotel & Package Bookings | 365.9 | +34.6% |
| Air Ticketing | 86.9 | +15–20%* |
| Allied Services (Others) | 11.6 | Moderate |
Hotel and package bookings remain the cornerstone of the company’s topline, contributing nearly 79% of total revenue. This focus aligns with global travel recovery patterns, especially in leisure and B2B booking trends post-pandemic.
Financial Health
JM Financial points to improving margins and operating leverage as key levers for TBO’s profitability:
- Gross Profit Margin: Projected at 70.3% in Q4 FY25, up from 68% a year ago.
- EBITDA Margins: Expected to moderate slightly in the short term (by 80–130 bps) due to continued growth investments.
- Earnings Forecast: EPS estimates trimmed by 7–12% across FY25–27 due to slightly lower GTV and margin assumptions.
Despite these near-term pressures, TBO Tek’s long-term CAGR projections remain robust:
- GTV CAGR (FY24–27): ~18%
- Revenue CAGR: ~23%
- EBITDA CAGR: ~22%
Such consistent growth in both top and bottom lines supports the rationale behind the 40x FY27E P/E multiple used for target valuation.
Valuation & Investment Rationale
Even with the trimmed estimates, JM Financial sees considerable upside potential. The new target price of INR 1,400 is built on sound valuation principles:
- Target Based On: 40x FY27E Price-to-Earnings Ratio.
- Upside Potential: 31.5% from the current market price of INR 1,044.75.
- Rationale: Despite macro softness, TBO Tek’s unit economics, margin profile, and digital moat remain impressive.
Moreover, the brokerage expects operating leverage to kick in from FY26 onward, as customer acquisition costs stabilize and platform scale improves.
Ownership & Institutional Confidence
As of 31 December 2024:
- Promoter Holding: 44.41%
- FII Holding: 38.05%
- DII Holding: 11.78%
High promoter and institutional participation signals a strong vote of confidence in management and future prospects. The company’s board features a notable roster of industry veterans, including Ravindra Dhariwal, Bhaskar Pramanik, and Anuranjita Kumar, while audits are conducted by Price Waterhouse Chartered Accountants LLP, ensuring governance credibility.
Risks & Red Flags
Despite its bright outlook, TBO Tek is not without risk. The company remains sensitive to international travel trends, currency fluctuations, and macroeconomic shifts in key global markets.
The Hotels & Packages (H&P) international segment, in particular, has underperformed relative to earlier expectations. This prompted JM Financial to trim GTV projections, serving as a reminder that TBO’s fortunes are partly tethered to external demand cycles.
Additionally, ongoing investments in technology, partnerships, and geographic expansion may weigh on margins in the short term. However, these are seen more as strategic outlays than cost overruns.
Final Word
In a market often distracted by quarter-to-quarter volatility, TBO Tek stands out as a company executing on a long-term vision. With a powerful blend of technology-driven scalability, diversified global exposure, and a rising digital-first travel wave, the company remains structurally well-positioned.
While near-term recalibrations may temper exuberance, the stock still offers strong upside potential for patient investors, especially those seeking exposure to India’s emerging travel-tech vertical.
JM Financial’s ‘Buy’ call, even after a 25% cut in the target price, is a testament to the enduring appeal of the TBO Tek story. For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.
Disclaimer: This article is for informational purposes only. Please consult a financial advisor before making any investment decisions. Invest responsibly.