TBO Tek zooms 6% on Goldman Sachs buy call; stock up 82% from issue price

Shares of TBO Tek Ltd hit its 52-week high in Monday's intraday deals, up 5.7 per cent at Rs 1,679 per share. The positive momentum in the stock price came after the global brokerage firm Goldman Sachs initiated coverage on the company with a ‘Buy’ call. 

The stock of the company made its debut on the Indian bourses on May 15, 2024, since then the stock has surged 82.5 per cent till today’s intraday high. 

Goldman Sachs has an optimistic outlook on TBO Tek with a target price of Rs 1,970 per share. According to the brokerage, TBO Tek's revenue grew by a 26 per cent CAGR in FY19-24, and it expects a 22 per cent FY24-27E CAGR. 

According to the brokerage, TBO has been consistently profitable, and it expects the company's free cash flow (FCF) to profit after tax (PAT) ratio to stay higher than 100 per cent for the foreseeable future. It further predicted a 30 per cent and 33 per cent CAGR growth in Ebitda and net profits for the firm during FY24-30E on a 21 per cent revenue CAGR.

Highlighting TBO Tek's strategic positioning, Goldman Sachs pointed out the company's role in consolidating demand-supply within a sizable and fragmented market. The firm's distribution model was particularly noted for its favourable characteristics.

"We seeTBO’s business model as having multiple positive characteristics - exposed to a large and fragmentedTAM

with secular growth tailwinds, a strong execution track record, an asset light balance sheet, negative working capital, strong FCF

generation, and low competition/regulatory risks," the brokerage said in a note. 

Set up in 2006, TBO Tek operates as a travel distribution platform. It provides a comprehensive range of travel inventory services tailored to customer needs, including support for multiple currencies and forex assistance. 

TBO Tek streamlines travel operations for suppliers such as hotels, airlines, car rentals, transfers, cruises, insurance, and rail companies, as well as for retail and corporate customers. 

The company’s two-sided technology platform facilitates seamless connectivity between suppliers and customers, enabling sellers to showcase inventory and set prices while offering buyers an integrated, multi-currency, and multilingual one-stop solution for booking travel across various segments.

At 10:00 AM; the stock of the company was trading 3.36 per cent higher at Rs 1642.25. By comparison the BSE Sensex was down 0.26 per cent at 77,009 levels.