Buy TBO Tek; Target Price Of INR 2,090: PhillipCapital

TBO Tek Shares Slip 6% During Morning Trade

SUMMARY

PhillipCapital reaffirmed its ‘buy’ call on TBO Tek with a target price of INR 2,090, signalling an upside potential of 29% from the stock’s previous close

The brokerage remains bullish on TBO Tek as the B2B travel tech company reported healthy growth in Q3 and continues to pivot towards the higher-margin hotels and ancillary business

TBO Tek reported a consolidated net profit of INR 50 Cr in Q3 FY25 on an operating revenue of INR 422.2 Cr

Brokerage PhillipCapital has reaffirmed its ‘buy’ call on B2B travel tech company TBO Tek, citing strong business growth in the December quarter and the pivot to the higher-margin hotels and ancillary segment.

The brokerage gave the stock a target price of INR 2,090, which implies an upside potential of 29% from its previous close.

Shares of TBO Tek were trading 0.93% lower at INR 1,603.80 apiece on the BSE at 1:12 PM today. While the stock has slipped a marginal 0.8% in the last 5 trading sessions, it has given an upward run of 15% since its public listing in May 2024.

In its latest research note, PhillipCapital said it believes that TBO Tek is a structural play on India and global outbound travel.

“Its strategic shift towards hotels and international markets should support blended take rates and margins in the medium term, with network effects likely driving operating leverage,” said the brokerage.

TBO Tek on Wednesday reported a marginal 2% dip in its consolidated net profit to INR 49.97 Cr in the third quarter of the fiscal year 2024-25 (Q3 FY25) from INR 50.79 Cr in the year-ago quarter.

While the company’s bottom line remained muted, its operating revenue jumped 29% to INR 422.18 Cr in Q3 FY25 from INR 326.85 Cr in the corresponding quarter last year.

The growth in the topline was driven by a 48% year-on-year (YoY) growth in gross transaction volume (GTV) in the hotels and ancillary business.

Analysts at PhillipCapital noted that TBO Tek’s GTV mix has shifted favourably towards the high-margin hotels and ancillary segment, which accounted for 60% of the company’s total GTV in Q3 FY25 against 51.4% in the year-ago quarter.

In its Q3 investor presentation, the company said that it continues to deliver strong double-digit growth in all international source markets, with Europe, the Middle East, and Latin America demonstrating strong traction. It is pertinent to note that during the December quarter, TBO Tek set up new subsidiaries in Indonesia, Greece, Australia, and the Canary Islands as part of a global expansion push.

While the management expects to see some softness in the March quarter on account of Ramdaan in the Middle East, it expects to bounce back strongly from Q1 FY26 onwards, it said in a post-earnings call.