Motilal Oswal initiates coverage on TBO Tek with 'Buy', sees 28% upside

MOSL said TBO Tek offers a structural play in the B2B global outbound travel market, enabling offline travel agents and enterprise buyers across geographies to access airlines, hotels, and ancillaries

TBO Tek share price today: Motilal Oswal Financial Services has initiated coverage on TBO Tek Limited, an online travel agency, with a 'Buy' rating, saying that the company has built strong competitive moats in the global B2B travel distribution ecosystem through deep supply aggregation across airlines, hotels, and ancillary services, catering to a highly fragmented base of around 2 million travel agents worldwide.

 

According to MOFSL, TBO Tek is expected to deliver revenue, EBIT, and PAT CAGRs of 35 per cent, 37 per cent, and 32 per cent, respectively, over FY25-28, driven by a higher contribution from high take-rate hotel and ancillary segments in the GTV mix, rising from 59 per cent to 70 per cent. The company’s Classic Vacations (CV) segment, focused on luxury and premium hotels, is likely to support profitability.

 

 

The brokerage expects Ebitda margins to expand from FY27 onwards, supported by operating leverage and easing SG&A expenses, with margins rising from 13.7 per cent in the October-December quarter of fiscal 2026 (Q3FY26) to around 18 per cent by Q4FY28. Analysts added that a structurally negative working capital model should drive strong free cash flow growth of over 40 per cent CAGR during FY25–28.

 

The brokerage has valued the stock at 28x FY28E EPS of ₹48.7, arriving at a target price of ₹1,360. The target price implies an upside of 28 per cent from Tuesday, March 24, closing price of ₹1,059 on the NSE. Around 09:45 AM, shares of TBO Tek were trading at ₹1,108, up 4.6 per cent. The stock touched an intraday high of ₹1,110.60 on the NSE. In comparison, the benchmark NSE Nifty 50 was quoting at 23,2650 levels, up by 353 points or 1.54 per cent. 

Here's why MOFSL is bullish on TBO Tek:

Asset-light B2B model drives scale

According to MOFSL, TBO Tekd’s B2B model offers structural advantages over OTAs, allowing travel agents to access highly fragmented inventory at competitive B2B pricing with lower mark-ups, while still maintaining healthy margins.

 

The company’s asset-light and scalable model has supported its global expansion, with presence across more than 15 countries and 40 cities in FY25. Its cost-efficient India-based backend, along with localised frontend operations and local support in over 55 countries, has improved agent stickiness.

 

The brokerage said offline agents continue to play a key role, especially for first-time international travellers from Tier-2 and Tier-3 cities who rely on assistance for forex, itinerary planning, and on-trip support. Platforms like TBO Tek enable agents to manage these operational hurdles more effectively.

Acquisition strategy to drive premium growth

The brokerage also said that acquisitions are strengthening the company's premium supply and expanding wallet share in the fragmented global travel market. Notably, the acquisition of CV provides entry into the large US luxury outbound market, adding around 1,500 premium hotel contracts and a network of nearly 10,000 advisors.

 

While CV currently operates at lower margins, the company expects to unlock synergies through cross-selling premium global destinations, integrating luxury inventory into its platform, and reducing costs via technology integration and offshore operations. The brokerage noted that this approach is in line with global OTA leaders like Expedia Group and Booking Holdings, which have historically used acquisitions to scale supply, enter new markets, and drive platform growth.

Focus on high-margin hotels

The company is shifting its business mix from low-margin air ticketing to higher-margin hotels and ancillary services, including luxury hotels, cruises, car rentals, and Eurorail products. Hotel GTV contribution has increased from 45 per cent to 59 per cent over FY23–25, the brokerage said in its note.

 

Analysts believe the company offers a structural play in the B2B global outbound travel market, enabling offline travel agents and enterprise buyers across geographies to access international airlines, hotels, and ancillaries. Additionally, the global B2B travel distribution landscape includes nearly 2 million travel agents, freelancers, home-based consultants, small independent agencies, and full-time professional firms. By targeting this full spectrum, TBO Tek taps a large addressable market with significant potential for wallet share gains, deeper penetration, and geographic expansion over time.

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