15 New Markets And Digital Integration Will Expand Future Horizons

Key Takeaways

• Expansion into new regions and strengthening of international sales teams are set to drive broader market reach and increase revenue per customer.
  
• Focus on high-margin services, digitalization, and value-added programs is improving profitability and supporting long-term earnings growth.
  
• Exposure to fierce competition, reliance on expansion, and volatile conditions may compress margins, heighten costs, and constrain long-term revenue growth for TBO Tek.

Catalysts

Operates travel distribution platforms in India and internationally.

• The company's ongoing expansion into new geographies-having entered 15 new markets in the last year and planning to add 20 more this year-positions TBO Tek to significantly expand its addressable market and drive sustained revenue growth as digital adoption and rising travel demand continue in emerging and developed regions.
  
• Increasing focus on higher-margin hotel and ancillary services, which now comprise 84% of gross profit and 59% of GTV, driven by digitalization and ongoing integration of AI/automation, is structurally improving take rates and setting up long-term margin expansion and higher earnings.
  
• Accelerated hiring of international sales and account management teams (adding 60+ last quarter and planning 100+ more shortly) is a strategy to drive deeper market penetration and agent engagement, which should increase revenue per agent and improve lifetime customer value over time.
  
• Early traction of value-added programs like the Platinum desk for luxury hotels, which unlocks incremental fee income and demonstrates the platform's ability to influence demand, hints at additional fee-based revenue streams and take rate improvement, supporting earnings growth.
  
• The company's strong balance sheet (₹1,450+ crores cash) creates optionality for acquisitions and technology investments, which can accelerate revenue scale, operating leverage, and further entrench TBO Tek's competitive moat in B2B travel, positively impacting both revenue growth and future profitability.

TBO Tek Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming TBO Tek's revenue will grow by 18.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 13.2% today to 17.1% in 3 years time.
• Analysts expect earnings to reach ₹5.0 billion (and earnings per share of ₹44.27) by about July 2028, up from ₹2.3 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 52.3x on those 2028 earnings, down from 66.7x today. This future PE is greater than the current PE for the IN Hospitality industry at 36.6x.
• Analysts expect the number of shares outstanding to grow by 2.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 15.01%, as per the Simply Wall St company report.

TBO Tek Future Earnings Per Share Growth

Risks

• Intensifying competition from larger B2B and B2C OTAs, as well as new market entrants, could lead to pressure on pricing and commission rates, potentially compressing net margins over the long term.
  
• Heavy dependence on continued international expansion, especially in high-cost developed markets like North America and Europe, exposes TBO Tek to higher customer acquisition costs, longer payback periods, and potential margin dilution before realization of operating leverage.
  
• Geopolitical and macroeconomic volatility-currency fluctuations, regional conflicts (such as Middle East tensions), and economic slowdowns-can disrupt travel flows and impact transaction volumes and revenues in TBO Tek's core markets.
  
• The company's revenue growth is increasingly reliant on the Hotels segment; any secular trend towards hotels and airlines driving bookings directly (bypassing intermediaries) or regulatory constraints on data sharing may weaken TBO Tek's role and pressure long-term revenue growth.
  
• The ongoing need for investments in technology, sales teams, and platform development raises the risk that future operating expenses could outpace revenue growth in a tougher market, limiting EBITDA margin expansion and potentially impacting earnings stability.

Valuation

• The analysts have a consensus price target of ₹1514.25 for TBO Tek based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹1720.0, and the most bearish reporting a price target of just ₹1380.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹29.0 billion, earnings will come to ₹5.0 billion, and it would be trading on a PE ratio of 52.3x, assuming you use a discount rate of 15.0%.
• Given the current share price of ₹1443.3, the analyst price target of ₹1514.25 is 4.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• 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.