Detailed Narrative
Robust FY25 Performance Driven by Diversified Portfolio
Thomas Cook (India) Limited delivered a strong full-year FY25, with income from operations growing 12% to INR 8,140 crores and profit before tax (PBT) increasing 12% to INR 385 crores. The Q4 FY25 PBT saw a significant 51% jump to INR 92 crores, marking the highest ever for this quarter. This performance was attributed to strong contributions from travel, financial services, and Sterling Holiday Resorts, demonstrating the resilience of the company's diversified business model amidst some segment-specific challenges.
Financial Services Segment Shows Strong Margin Expansion and Volume Growth
The financial services segment reported a 14% revenue growth in Q4 FY25 with EBIT margins of 43%. For the full year, EBIT improved 21% to INR 150 crores, with EBIT margins expanding from 41% in FY24 to 46% in FY25, exceeding the guided range of 40-45%. Retail volumes grew 11%, driven by a 26% Y-o-Y increase in the education segment and 5% in the holiday segment. The prepaid card business also saw volumes grow 5% to nearly $1 billion, with float nearing INR 1,325 crores.
Sterling Holiday Resorts Achieves Record Revenue and Strong Margins
Sterling Holiday Resorts closed FY25 with a 10% revenue growth from operations and a 34% EBITDA margin, reaching INR 5,200 million (INR 520 crores) in total revenue for the first time. The company expanded its room inventory by 21% to 3,254 rooms across 61 resorts, selling over 600,000 room nights, a 14% Y-o-Y increase, at an average rate of INR 6,200. F&B revenue also crossed INR 1,000 million (INR 100 crores) with a 16% Y-o-Y growth, contributing INR 1,164 million in Q4 FY25.
DEI Segment Navigates Challenges with Strategic Adjustments
The DEI segment experienced a challenging FY25 due to external factors like adverse weather, geopolitical issues in the Middle East, and the impact of two Ramadans. Despite a 10% revenue drop in Q4 FY25 compared to Q4 FY24, EBIT remained flat at INR 7.8 crores, indicating improved cost control. The company achieved a 100% renewal rate for over 50 accounts ($34 million value) and acquired 30 new accounts ($11 million / INR 90 crores revenue), with management expecting a robust FY26 and a long-term compounded growth of at least 12%.
Strategic Investments in Digitalization and Distribution Expansion
Thomas Cook is actively investing in technology and expanding its distribution network. The company launched AI-powered voice bots (Tacy and EZY) for its holiday business and is developing Dhruv AI for corporate travel, with a commercial rollout planned for Q2 FY26. In FY25, the B2C distribution network expanded by 21 new locations, focusing on Tier 2 and Tier 3 markets, while digital adoption in forex reached 21.5%. These investments aim to enhance customer experience and operational efficiency.
Positive Outlook for FY26 with Double-Digit Growth Expectations
Management expressed confidence in a 'good outcome' for FY26, similar to FY25, despite potential headwinds. Forward bookings for Q1 FY26 are strong, with expectations of double-digit business growth aligned with industry trends. Sterling plans to open another 14-15 resorts in FY26, aiming to cross 4,000 rooms, and expects Q1 FY26 to track double-digit growth. The DMS business is projected to achieve a long-term growth of over 15%, reinforcing the positive outlook.