Digital Transformation And Rising Demand Will Reshape India's Travel

Key Takeaways

• Digital transformation and product innovation enable lower costs, higher-margin revenues, and stronger market positioning across both leisure and business travel segments.
  
• Asset-light growth and expanding partnerships drive recurring, resilient earnings while capturing India's surging demand for organized travel experiences.
  
• Persistent geopolitical and regulatory risks, modest digital adoption, and reliance on volatile income streams threaten revenue stability, core margin strength, and long-term earnings resilience.

Catalysts

Offers integrated travel services in India and internationally.

• Accelerated digital transformation-including AI-powered assistants (Tacy, Ezy, Dhruv), enhanced WhatsApp and app-based services, and Google Pay-integrated forex cards-positions Thomas Cook (India) to capture a growing share of India's fast-digitizing travel market, supporting lower customer acquisition costs and higher digital revenue streams, which should improve EBITDA margins and overall earnings.
  
• Rising disposable incomes and an expanding middle class continue to drive strong structural demand for leisure and outbound travel; the reported double-digit growth in international travel, coupled with significant forward bookings, points to substantial upside for revenue and net earnings as travel sentiment recovers and secular demand resumes.
  
• Strategic expansion and innovation in the forex business-such as partnerships (e.g., with Muthoot), digital adoption (20%+ of transactions), and product integration (prepaid cards with Google Pay)-will help Thomas Cook (India) gain non-cyclical, recurring revenues with resilient EBIT margins, thereby supporting stable overall company earnings.
  
• The company's emphasis on the growing Meetings, Incentives, Conferences, and Exhibitions (MICE) and corporate travel segments, enabled by proprietary tech platforms (Travel One, Dhruv) and new in-house applications, will increase exposure to higher-margin revenue streams, boosting net margins and long-term profitability.
  
• Asset-light expansion of Sterling Holiday Resorts, with a robust pipeline of new resort openings (20+ over the next year) and focus on upper mid-scale/upscale positioning, taps into India's surging preference for organized, quality leisure travel-supporting higher occupancy, strong ARR, and scalable, more profitable revenue growth.

Thomas Cook (India) Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Thomas Cook (India)'s revenue will grow by 11.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 3.0% today to 4.1% in 3 years time.
• Analysts expect earnings to reach ₹4.9 billion (and earnings per share of ₹10.23) by about August 2028, up from ₹2.5 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 32.2x on those 2028 earnings, up from 28.5x today. This future PE is lower than the current PE for the IN Hospitality industry at 35.2x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 15.52%, as per the Simply Wall St company report.

Thomas Cook (India) Future Earnings Per Share Growth

Risks

• Heightened geopolitical risks (e.g., Iran-Israel tensions, domestic cross-border incidents, and aviation mishaps) led to significant cancellations and deferments in both domestic and international travel, highlighting persistent vulnerability to global and regional instability-this could increase future revenue volatility and earnings unpredictability.
  
• The travel and foreign exchange businesses experienced sharp declines during periods of uncertainty (as seen with reduced ForEx demand from lower Hajj travel, education segment contraction, and regulatory constraints like the RBI 75-25 rule), implying that ongoing or frequent disruptions could structurally suppress growth in core revenue streams and net margins.
  
• Segment growth remains heavily dependent on travel-related cycles and consumer sentiment, with management explicitly noting that visibility on forward bookings is now shorter and less predictable post-pandemic-this reduces long-term revenue predictability and may impact earnings resilience.
  
• Rising digital adoption, while a strategic focus, remains modest in some segments (digital ForEx transactions only ~20%), potentially exposing Thomas Cook (India) to intensified competition from online-first and do-it-yourself travel platforms, threatening future revenue growth and margin compression if technology adoption lags.
  
• Elevated "other income" and interest gains inflate near-term profitability but are inherently volatile and not sustainable drivers; core operating margins remain low (PBT margins around 5–6%), and without significant structural improvements, sustained earnings growth may be difficult, especially if cost pressures or external shocks increase.

Valuation

• The analysts have a consensus price target of ₹218.0 for Thomas Cook (India) based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹118.0 billion, earnings will come to ₹4.9 billion, and it would be trading on a PE ratio of 32.2x, assuming you use a discount rate of 15.5%.
  
• Given the current share price of ₹153.9, the analyst price target of ₹218.0 is 29.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.