Buy TBO Tek; target of Rs 2070: Anand Rathi

Anand Rathi's research report on TBO Tek

TBO Tek’s H1 FY25 revenue grew ~24.7% y/y to ~Rs8.7bn (organic growth ~17.1% y/y). The overall take rate rose from ~5.2% in H1 FY24 to ~5.5%, with monthly transacting buyers growing ~6.8% y/y to 28,252. EBITDA grew ~18.3% y/y to ~Rs1.6bn, with the margin at ~18.6% (~19.6% in H1 FY24), down ~100bps y/y, as the company is prioritizing GTV and buyer-base expansion over margins in the near term. On the hotel front, management expects the growth momentum to continue (~33.1% y/y growth in H1). However, in airlines, it expects flattish or low single digit growth in GTV, as the company’s focus is largely on India outbound. Outside India It plans to treat airline as a complimentary service, along with hotels to sell the entire package. Factoring in low H1 margins, we cut our FY25e/26e earnings 12.8%/8.3% and introduce our FY27e.

Outlook

We retain a Buy rating, with a 12- mnth TP of Rs 2,070 (earlier Rs2,150), ~48x FY27e EPS (60x FY26e EPS).