RateGain growth outlook supported by Sojern recovery, pipeline momentum and debt reduction

Investment View and Valuation

In its November 6, 2026 results update, ICICI Securities maintained its BUY recommendation on RateGain Travel Technologies. The broker views the seasonal Q2 FY27 revenue decline as temporary and remains confident in the company’s FY27 guidance, cross-sell opportunity and deleveraging trajectory.

ICICI Securities reduced its target price to Rs 1,150 from Rs 1,350 after lowering the valuation multiple to 30x from 35x FY28E EPS. The lower multiple reflects limited visibility on normalisation in the Middle East and recovery in Sojern’s corporate business.

Q2 FY27 Financial Performance

RateGain reported Q2 FY27 net sales of Rs 7,454 million, down 5.0 per cent QoQ but up 152.6 per cent YoY. EBITDA declined 10.8 per cent QoQ to Rs 1,530 million, while increasing 185.4 per cent YoY. EBITDA margin declined 132 basis points QoQ to 20.5 per cent. Net profit was Rs 747 million, up 46.5 per cent YoY but down 21.3 per cent QoQ.

Management attributed the sequential revenue decline to a Rs 2.5 million FIFA World Cup one-off in Q1 and normal Q1-to-Q2 seasonality of 5 to 10 per cent in destination marketing organisation spending. The broker did not explicitly classify the reported result as a beat or miss against its estimates.

Organic Growth and Business Performance

Organic growth was 14 per cent YoY in Q2 FY27 and 15.7 per cent in H1 FY27, above management’s guided range of 12 to 15 per cent. Properties and Destinations each delivered organic growth of more than 20 per cent.

The key weak area was Sojern’s corporate vertical, which covers airlines, cruise, car rental and travel brands. This business declined around 14 per cent organically in H1 and around 20 per cent in US dollar terms. Management is resetting the business through vertical sales teams, new leadership, a TikTok agreement and connected TV initiatives. It expects the corporate business to improve from a decline in H1 FY27 to flat performance in H2 FY27.

FY27 Guidance and Margin Outlook

Management retained FY27 revenue guidance at the upper end of Rs 30,000 million to Rs 31,000 million and adjusted EBITDA margin guidance of 22.5 to 23.5 per cent. A sequential recovery in destination marketing organisation spending during Q3 and Q4 FY27, when new budget cycles are deployed, is expected to support this outlook.

H1 adjusted EBITDA margin was 23.7 per cent, aided by Sojern-Adara single-platform savings, shared services and AI productivity. Management indicated that margin above 20 per cent could be reinvested.

Bookings, Pipeline and Cross-Sell Opportunity

RateGain’s new contract wins rose about 54 per cent YoY to around Rs 1,400 million in Q2 FY27, while the total pipeline increased about 12 per cent YoY to around Rs 6,600 million. Net revenue retention recovered to 103.5 per cent in H1 FY27 from 99.6 per cent in FY26.

• APMEA new sales grew more than threefold YoY.
• More than 50 properties were signed on Direct Stack during the quarter.
• Management plans to use Sojern’s commission model to win hotel customers before upselling the UNO platform.

Segment Outlook and Deleveraging

DaaS is expected by management to grow at a double-digit rate in FY27, supported by AI-led airline pricing demand and AirGain wins. Distribution is guided for single-digit FY27 growth, with a potentially significant acceleration in FY28 as Smart Distribution scales.

Management expects RateGain to become net debt-free by FY28E after repaying US$53.75 million, or about 43 per cent, of the acquisition-related loan.

Broker Forecasts

Key Downside Risks

• Slower travel demand.
• In-house solutions developed by large online travel agencies or hotels.
• Weakness in the Distribution business.