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Better-than-expected H&P gross margin drives EBITDA beat

Yatra reported topline growth of 103% YoY in 4Q aided by improvement in its corporate travel and MICE businesses, along with contribution from Globe Travels. Air business, however, remained weak as domestic suppliers continued to promote direct bookings. Sequential improvement in Hotels and Packages business’ (H&P) gross margin (revenue minus service costs) and some revenue synergies from the M&A led to margin expanding sequentially to 7.8% from 5.8% in 3Q (3.3% in 4QFY24). Overall, on a low base, EBITDA/PAT grew 4.8x/2.7x YoY to INR 171mn/INR 152mn, respectively, ahead of JMFe by 3%/8%. While we continue to conservatively build topline estimates due to expected weakness in B2C bookings, we expect growing share of B2E business and operating synergies from the Globe Travels acquisition to ensure decent operating margin expansion over the medium term. Post the recent correction, the stock trades at lucrative valuations of FY26/27 PER of 33x/22x.

* Better-than-expected operating performance: Consol. gross bookings (GBR) in 4Q stood at INR 18.7bn (-6.4% YoY, +4.0% QoQ), behind JMFe by 1.3%. Air segment bookings declined 14.5% YoY (+6.0% QoQ) due to 30.7% decline in passengers booked, while realisation was up 23.3%. The decline was primarily due to reduced volumes in the B2C segment, which were once again affected by direct competition from domestic suppliers. H&P bookings grew 53.7% YoY aided by consolidation of Globe Travels (-5.9% QoQ due to high base of 3Q on account of favourable seasonality in corporate travel and MICE business). Consol. revenue grew 103.4% YoY (-6.9% QoQ) to INR 2.2bn, driven by 22.5%/218.5% YoY increase in the Air and H&P segments, respectively. Air segment saw sequential increase of 11bps in gross take-rates to 6.3% (-96bps YoY), whereas H&P segment take-rates were lower by 256bps YoY (-162bps QoQ) at 10.5%. The decline in take-rates was primarily attributable to the increase of MICE business in revenue mix. EBITDA margin expanded c.450bps YoY to 7.8% (+c.200bps QoQ), ahead of JMFe of 6.8% due to improved gross margin in the H&P segment. Adj. PAT stood at INR 152mn, ahead of JMFe of INR 141mn, due to higher-than-expected operating profit and lowerthan-expected tax rate.

* B2E contribution inches up to ~65%: B2B/corporate travel business now contributes ~65% to Consol. GBR (up from ~40% last year). B2E segment share is likely to inch up further due to the consolidation of Globe Travels (MICE business), with management expecting c.65-70% contribution in FY26. On the other hand, management noted slight stabilisation in retail bookings, amidst optimised spends on customer acquisition/discounts. Overall, the management expects c.20% growth in revenue less service costs in FY26 to be aided by 25% YoY growth in the H&P segment, while it expects Air Ticketing to grow at c.15%. Further, Adj. EBITDA is expected to grow at c.30%, driven by expansion of corporate travel and MICE, along with cross-sell opportunities. Accordingly, we forecast Consol. revenue less service cost growth of 20% in FY26, while building reported EBITDA margin of 6.6% vs. 5.6% in FY25. The company also suggested reduced working capital needs going ahead as it is moving corporate clients from direct credit to corporate credit cards (30%+ of bookings already happening through corporate credit cards). Accordingly, company expects to report positive OCF in FY26.

* New corporate client addition remains strong: Yatra added 35 new corporate accounts in 4Q with an annual billing potential of INR 1.4bn. Since listing, the company has added 230+ corporate clients with combined billing potential of INR 13bn. The customer base now spans over 1,300+ large corporates, with cross-selling opportunity to an employee base of 9mn+ employees of such corporates for their personal bookings. According to the management, it take 6-9 months for the company to realise the full billing potential of large new clients (billing potential of INR 500mn+), while smaller clients reach their billing potential in <6months. Overall, one can expect the company to realise 70-80% of the total billing potential after accounting for leakages. The company mentioned that it currently has a market share of 9%/11-12% in terms of number of corporates/amount of spends respectively.

* Globe Travels M&A benefit: Synergies from the acquisition of Globe Travels are expected to come from revenue and cost in the ratio of 60%/40% respectively. As per the company, while revenue synergies from combining of multiple suppliers have already started to kick in, the effect of cost synergies will be seen 1QFY26 onwards, once platform integration happens (approximately INR 10-15mn per quarter in terms of profit). Further, Globe Travels contributed c.10% to overall revenue less service costs in FY25.

* Slight tweaks on forecasts leads to revised TP of INR 135: We reduce our Consol. GBR/revenue estimates by 2-3% over FY26, but broadly maintain FY27 estimates. We however tweak our FY26/27 EBITDA margin forecasts by c.5-40bps as we prefer to conservatively build margins. As a result, our EBITDA and PAT forecasts over FY26/27 are lower 3-5%. We maintain our target PER multiple at 30x leading to a revised Mar’26 TP of INR 135.

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SEBI Registration Number is INM000010361