Skip to content

    TBO Tek

    TBOTEKGood
    Consumer Services·12 Feb 2025
    Management Summary

    TBO Tek delivered a strong Q3 FY25, characterized by robust top-line growth and significant expansion in the high-margin Hotels and Ancillary segment. While international markets like Europe and LATAM are growing at a rapid clip, the company is aggressively reinvesting its operating leverage into geographic expansion and technology, particularly AI. Despite a minor PAT dip caused by currency headwinds, management remains confident in achieving 25% EBITDA growth for the full year.

    Highlights

    8

    • Revenue from operations reached ₹422.2 crores, representing a 29.2% YoY growth.

    • Gross Transaction Value (GTV) grew 26.2% YoY to ₹7,166 crores, driven by a 9.2% expansion in monthly transacting buyers.

    • Hotels and Ancillary segment GTV surged 48% YoY, now contributing 60% of total GTV compared to 51% last year.

    • Adjusted EBITDA stood at ₹75 crores, up 26.1% YoY, with a margin of 17.77%.

    • Profit After Tax (PAT) saw a marginal drop of 1.6% YoY to ₹50 crores, primarily due to a ₹12.48 crore forex loss.

    • International business showed exceptional strength, with Europe growing 90% YoY (60% organic) and LATAM growing 34% YoY.

    • The company expanded its sales presence to 15 new countries and 40 new cities during the year.

    • AI initiatives are yielding results: a voice bot is 5x faster than humans at 50% of the cost for hotel calling processes.

    Concerns

    1

    • Foreign Exchange Volatility

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue from Operations₹422.2 Cr+29.2%YoY
    2. 02GTV₹7,166 Cr+26.2%YoY
    3. 03Adjusted EBITDA₹75 Cr+26.1%YoY
    4. 04PAT₹50 Cr-1.6%YoY
    5. 05Adjusted EBITDA Margin17.8%

    Segment breakdown

    Hotels and Ancillary
    48% GTV Growth7.8% Take Rate52% Gross Profit Growth
    Air
    2.6% Take Rate
    List

    Guidance & targets

    4
    CategoryTargetPriority
    Profitability
    Adjusted EBITDA Growth
    25%
    		High
    Margin
    EBITDA Margin
    19% plus
    		Medium
    Margin
    Hotel Take Rate
    7.2% to 7.6%
    		High
    Other
    Effective Tax Rate
    16.5% to 17%
    		High

    Risks & concerns

    4
    RiskSeverity

    Foreign Exchange Volatility

    A ₹12.48 crore forex loss was triggered by sharp USD movement against GBP, Euro, and BRL post-US elections. — Management acknowledged

    high

    Seasonality (Ramadan)

    Ramadan falls in March (Q4) this year, which is traditionally a low season for key markets like the Middle East and Indonesia. — Management acknowledged

    medium

    Domestic Competition in India

    Management stated they focus on premium outbound and organized 5-star chains, making them less susceptible to domestic budget hotel competition. — Analyst downplayed

    low

    Areas of Evasion(1)

    • Specific regional profitability numbers (cited accounting complexity and common supply).

    Q&A highlights

    3

    “Our belief is that the TAM is very large and the runway and headroom for growth is also very large... when you go to 40 new cities now, within those cities you have absolutely no base today.”

    Investors were concerned if the high growth in Europe and LATAM was sustainable or just a low-base effect.

    asked by Manish Adukia, Goldman Sachs

    2 min read5 chapters

    Detailed Narrative

    01

    International Markets Drive Hyper-Growth

    TBO Tek's international expansion is the primary growth engine, with Europe now contributing 33% of Hotels and Ancillary GTV. The region grew 90% YoY, and even excluding the Jumbonline acquisition, organic growth exceeded 60%. LATAM also showed resilience with 34% growth despite currency headwinds. Management highlighted that their 'homogeneous playbook' allows them to enter new markets like Australia, France, and Japan with low operational costs, primarily requiring only local sales personnel.

    02

    Strategic Pivot to Hotels and Ancillaries

    The company is successfully shifting its mix toward the higher-margin Hotels and Ancillary segment, which now accounts for 60% of GTV, up from 51% a year ago. This segment's GTV grew by 48% YoY, significantly outperforming the overall enterprise growth. This shift is a key driver for the improvement in the enterprise take rate, which rose to 5.89% from 5.76% YoY, despite a drop in the Air segment's take rate to 2.57%.

    03

    AI Integration Enhances Unit Economics

    TBO Tek is aggressively deploying AI to decouple operational costs from revenue growth. A newly implemented voice bot for hotel calling is already live for 16% of the workflow, operating 5x faster than human callers at 50% of the cost. Additionally, an email bot is automatically closing 45% of supplier notifications with 99.5% accuracy. Management expects these initiatives to eventually lead to margin expansion as operations costs (currently 5-6% of revenue) grow slower than the top line.

    04

    India Business Focuses on Premium Outbound

    The India market GTV grew 5% YoY to ₹3,200 crores, but the Hotels and Ancillary segment within India grew much faster at 18%. Management clarified that they are not competing in the crowded domestic budget hotel space. Instead, they are doubling down on the 'premium outbound' story, launching a 'Platinum desk' for top travel agents to drive share-of-wallet in luxury hotel bookings and complex international itineraries.

    05

    Reinvestment Strategy Over Immediate Margins

    Despite generating significant cash, TBO Tek is choosing to reinvest operating leverage back into the business. This has kept EBITDA margins relatively stable (17.77% in Q3) rather than showing sharp expansion. Management defended this 'happy compromise,' stating that as long as they see a massive runway for growth in the global travel distribution TAM, they will prioritize top-line scale and market share over maximizing short-term bottom-line margins.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.