Anand Rathi Initiates Coverage on TBO Tek with a Buy Recommendation, Targeting Rs 2000

TBO Tek Sees Steady Growth in Q4FY26, Despite Disruption in March

TBO Tek's organic business maintained a steady trajectory in Q4FY26, with Gross Travel Value (GTV) rising by approximately 16% year-over-year (y/y) to Rs 90 billion. The company's GTV growth was led by a strong 27% y/y increase in January and February, but was disrupted in March due to conflicts in the Middle East. As a result, Hotels & Ancillaries/Airlines GTV growth was 20.4% and 9.4% y/y, respectively.

Key Performance Indicators

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The company's EBITDA grew 47.14% y/y to Rs 1.05 billion, in line with street estimates. However, the EBITDA margin fell by 311 basis points y/y to 12.9%, due to the integration of Classic Vacation, which has a lower margin compared to TBO Tek's organic business. Notably, the adjusted EBITDA as a percentage of revenue is lower than TBO Tek's organic business, at around 10% compared to 15.4%.

Outlook and Recommendations

We expect TBO Tek to maintain a steady performance in the first half of FY27e and a strong recovery in the second half of FY27e, driven by pent-up demand and the company's diversified architecture. Operating leverage is likely to expand further, as Selling, General and Administrative (SG&A) growth continues to moderate and Gross Profit (GP) scales. As a result, we have trimmed our earnings estimate by 2.6% for FY27/28e, and maintain a BUY rating on the stock with an unrevised Target Price of Rs 2,000, valuing it at around 42x FY28e Earnings Per Share (EPS).