TBO Tek Q1FY27 growth beats estimates as Middle East recovery supports margins

Investment View and Valuation

Anand Rathi Research retained its BUY rating on TBO Tek in its July 30, 2026 result update and raised the 12-month target price to Rs2,200 from Rs2,000. The target price is based on a valuation of about 40 times FY28E EPS.

The broker views TBO Tek as a modular, asset-light travel-distribution aggregator connecting travel suppliers with buyers. It considers the platform scalable, capable of launching new solutions and benefiting from network effects.

Q1FY27 Operating Performance

TBO Tek delivered steady Q1FY27 operating performance despite geopolitical disruption in the Middle East. Consolidated gross transaction value (GTV) rose about 37.4 per cent year-on-year, or 30 per cent in constant currency, to approximately Rs111,540 million. Hotels and Ancillaries GTV increased about 49.8 per cent, while Airlines GTV grew about 16.9 per cent.

The organic business recorded GTV of Rs99,180 million, up 22 per cent year-on-year, or about 15 per cent in constant currency. Consolidated total income increased 81 per cent year-on-year to Rs9,258 million, gross profit rose 66 per cent to Rs5,524 million and adjusted EBITDA increased 77 per cent to Rs1,499 million.

The report separately states that EBITDA grew about 84.2 per cent year-on-year to roughly Rs1,400 million, around 15 per cent above Anand Rathi estimates and 16.9 per cent above Street estimates.

Take Rates, Margins and Geographic Mix

The overall take rate expanded to about 8.3 per cent in Q1FY27 from 6.3 per cent in Q1FY26, principally because Classic Vacations carries a higher take rate and delivered its strongest quarterly performance. Organic take rate, however, declined to about 6.0 per cent from 6.3 per cent.

Airline take rate fell about 40 basis points year-on-year to 2.2 per cent, while Hotels and Ancillaries take rate declined about 50 basis points to 7.9 per cent. Anand Rathi attributes these declines largely to the Middle East conflict.

Consolidated EBITDA margin improved about 27 basis points year-on-year to roughly 15.5 per cent, while organic margin improved to about 16.8 per cent from 15.2 per cent. International revenue contributed about 87.9 per cent of Q1FY27 revenue. Monthly transacting buyers were 45.7 per cent international, and India represented 35.9 per cent of GTV.

Regional Performance and Middle East Disruption

The Middle East and Africa account for roughly 18-20 per cent of Hotels and Ancillaries GTV. In Q1FY27, Hotels GTV in the region grew only 1 per cent year-on-year in constant currency amid disruptions across key global air-transit hubs, with an estimated 20 per cent of relevant travel corridors affected.

Despite the disruption, the diversified demand and supply network supported organic Hotels and Ancillaries GTV growth of about 27.3 per cent and Air growth of about 13.7 per cent. Europe and APAC led growth, with Hotels and Ancillaries GTV increasing about 37 per cent and 56 per cent, respectively.

Management Outlook and Growth Strategy

Management said its organic strategy remains focused on more than 20 per cent topline growth and margin expansion when the Middle East and Africa conflict normalises. Europe and APAC are currently leading growth, while a key account manager typically delivers four to six quarters of increasing growth before maturing.

North America may require several quarters to achieve a breakthrough, although enterprise-level growth would be significant. Integration across platform, supply, commercial and talent workstreams was on track, with completion expected by the end of Q3FY27.

Earnings Outlook and Estimate Revisions

Anand Rathi expects a strong recovery from 2HFY27E, supported by pent-up Middle East demand and TBO Tek's diversified platform. It expects operating leverage as SG&A growth moderates and gross profit scales, noting that the global hiring spree was largely completed in Q3FY26.

The broker raised FY27E and FY28E revenue estimates by 10.2 per cent and 16.0 per cent, respectively, and EBITDA estimates by 10.2 per cent and 16.4 per cent, respectively.

Key Risks

• Inability to retain buyers and agents.
• Changes to supplier terms or discontinued supply.
• External factors that curb mobility or travel.