Downgrade to Neutral Le Travenues Technology Ltd for the Target Rs 215 by Motilal Oswal Financial Services Ltd
Revenue in line; miss on margins; rating changes to Neutral
* Ixigo’s 1QFY27 revenue rose 13% YoY to INR3.6b (est. 3.6b), with EBITDA at INR0.24b (est. INR0.3b) and margin at 6.8% (est: 9.4%), led by strong GTV and revenue performance in the Bus and Flight segments. EBITDA margin was impacted by higher advertisement and branding expenses.
* PAT at INR0.3b rose 6.3% QoQ (est. INR0.3b) due to higher other income.
* GTV stood at INR55,244m, rising 19% YoY and 15% QoQ, while contribution margin expanded 13% YoY to an all-time high of INR1,449m in 1QFY27.
* We expect a CAGR of 21%/36%/35% in revenue/EBITDA/PAT over FY26-28. We value the stock at 65x FY28E EPS to arrive at a TP of INR215 and change our rating to Neutral from BUY on the back of likely margin and profit pressure amid continued investments in new initiatives.
* According to management, mature businesses such as Trains, Flights, and Buses are already generating operating leverage, but those gains are consciously being reinvested into future growth opportunities instead of immediately expanding EBITDA margins
Accelerating AI-led innovation, platform expansion, and ecosystem growth
* In 1QFY27, Ixigo significantly accelerated its long-term strategic initiatives across AI, Hotels, B2B distribution, and ecosystem expansion.
* Management reiterated that AI is now a core strategic pillar, with continued investments in Ixigo NEXT, its AI-native travel platform, proprietary Small Language Models (SLMs), and TARA, which now handles 57K+ customer interactions daily, autonomously resolving 81% of voice and 92% of chat queries, while generating valuable customer intent data to improve personalization and product development.
* The company strengthened its hotels strategy by acquiring a 54.66% stake in Brevistay, expanding its direct hotel network to 10K+ properties across nearly 700 towns, and continuing to scale its AI-powered hotel partner platform.
* In the Bus segment, Ixigo launched BusBiz for offline travel agents and BUSGDS.AI, an AI-powered operating system for bus operators, while expanding its industry-first Roadside Assistance feature to cover nearly 95% of bookings.
* It also launched Bharat Darshan rail tourism packages with IRCTC, expanded Metro ticketing to five cities, introduced the Student Pass membership program, and strengthened distribution partnerships with SBI Cards and HDFC SmartBuy, while continuing collaborations with ChatGPT, Uber, and CRED.
* Despite volume pressure, Ixigo increased its OTA Train market share to 63%, while preserving margins and focusing on profitability.
* Food-on-Train crossed 1.7m meals during the quarter, while Metro ticketing is now live in five cities.
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