Rategain Travel stock plunges 10% after Kotak downgrade amid lofty valuations

Kotak not just downgraded Rategain but also lowered its price target by 5 percent to Rs 800.

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26 Aug, 2025 12:21

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Rategain Travel Technologies shares took a beating on November 12, plummeting as much as 12 after brokerage firm Kotak Institutional Equities downgraded its rating on the stock to a 'reduce' from the previous 'add' call, citing lofty valuations.

At 11.19 am, shares of Rategain Travel were trading at Rs 753.50 on the NSE. Furthermore, the selloff in the stock today was also triggered by heavy trading volumes as 10 lakh shares already changed hands so far, higher than the one month daily traded average of three lakh shares.

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While Rategain reported a decent Q2, marked by positive revenue growth and margin expansion, the company still lowered its FY25 revenue growth guidance to 15 percent from the earlier 20 percent. The guidance cut reflects a mix of cyclical and structural factors, including the loss of a major mid-market hotel chain (~4 percent of revenues) in the MarTech segment due to M&A activities, weaker order bookings amid client decision-making delays, a normalization of travel demand in the US, and pricing pressures affecting large contracts in the DaaS segment.

However, the firm still retained its EBITDA margin outlook of 150-200 basis points on year expansion. In contrast, analysts at KIE believe the margin expansion in the second half of FY25 will depend on the degree of pricing pressures in the DaaS segment and a strategic approach to managing discretionary expenses.

Basis this, KIE also slashed its revenue estimates for the company by around 6-8 percent, resulting in a 7-11 percent lower earnings-per-stock. Accordingly, the brokerage also sees limited upside for the stock as it sees it trading at full valuations.

On that account, Kotak not just downgraded the stock but also lowered its price target by 5 percent to Rs 800, implying an over 4 percent downside from the previous closing level.

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