IGI Logo

Leading Travel Platform: TBO TEK (TTL) is one of the leading travel distribution platform with presence over 100 countries, providing Buyers with a comprehensive travel inventory and forex assistances. It connects (i) suppliers such as hotels, airlines, car rentals, transfers, cruises, insurance, rail, etc, (ii) retail buyers such as travel agencies, independent travel advisors; and (iii) enterprise buyers like tour operators, travel management firms, online travel firms, super-apps, etc; with Buyers through its two-sided technology platform. The platform handled 44,592 bookings/day - >3x growth from 13,396/day as of FY21.

High buyer stickiness and rising share of wallet: TTL enjoys high stickiness with 37% of clients onboarded in FY17 continued to transact in FY23. Further the GTV/buyer grew 5.29x from ?8.8L in FY17 to ?46.6L in FY23. High buyer retention and increased wallet share along with Global Network Effects is leading to transaction growth outpacing buyer growth. Moreover there is Zero marginal cost of serving new transactions because of technology automation which is leading to high operating leverage.

Large growing & fragmented Market: The travel industry is large and fragmented with limited technology adoption. It is expected to grow at 8.2% CAGR to reach $2.6tn in 2027. While Online channel is crowded; there is a large opportunity in offline travel as it consist of >1.5 million players with no dominating player, thus allowing for high-rate flexibility. TTL is thus well positioned to capitalise on such market opportunities and meet specific demands of these booking channels

Financials: TTL’s revenue grew by 1.7x over FY21-23. It turned EBITDA/PAT positive from FY22. Margins are now stable at 18%. Its return ratios are robust with RoE/RoCE at 49%/42% for FY23.

Issue Size: Rs 15.5bn IPO consists of fresh issue of Rs 4bn and OFS of Rs11.5bn by promoters & investor selling shareholder. The proceeds from the fresh issue will be used for growth and strengthening of the platform by adding new Buyers/Suppliers, inorganic aquisition and general corporate purpose. The market cap post listing would stand at ?99.9bn.

View: TTL is a one-stop shop for global travel supply. Its global foot print, high buyer rentention and strong operating leverage make them a unique play. The IPO is valued at 46.4x 9MFY24 P/E (on an annualized & diluted basis). TTL is well positioned to capitalise on industry tailwinds and gain market share though business diversification and strategic acquisition. We recommend Subscribe to the IPO. Investors could see listing gains as well due to the market fancy for such high-growth niche business.

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html

SEBI Registration number is INH000000412