TBO Tek Limited IPO Summary

About the Company: 

Founded in 2006, TBO Tek (formerly Tek Travels Private Ltd) is a travel distribution platform in the global travel and tourism industry providing a wide range of offerings operating in over 100 countries for travel agents and independent advisors (retail buyers) as well as businesses (enterprise buyers). Their platform connects travel suppliers (hotels, airlines, car rentals, transfers, cruises, insurance, rail etc.) with travel sellers such as travel agencies and independent travel advisors, making booking easier for everyone.

The Company’s platform allows the large and fragmented base of Suppliers to display and market inventory to, and set prices for, the large and fragmented global Buyer base. For Buyers, their platform is an integrated, multi-currency and multi-lingual one-stop solution that helps them discover and book travel for destinations worldwide.

As at December 31, 2023, the company had sold over 7,500 destinations in more than 100 countries and employed over 2,000 people.

Industrial Overview:

● In 2023 the Global Travel and Tourism Industry was US$ 1.9 trillion, and the same is expected to grow at a CAGR of approximately 8.2% to reach US$ 2.6 trillion in 2027. As a result, the need for aggregating the fragmented global inventory for hotels and airlines for travel buyers and resolving the travel buyers and suppliers’ concerns.

● Travel distribution platforms have built an ecosystem for addressing the needs and frictions faced by the highly fragmented base of the travel buyers and travel suppliers.

● Emerging economies, led by China and India, are leading this growth. According to World Data Lab, India and China are expected to add over half a billion new consumers by 2030 (representing 55% of the global total). As per Ministry of External Affairs, Government of India, over 12.9 million passports were issued during 2022 by the Passport Issuing Authorities in India, compared to 8.5 million in 2021.

● The Indian travel buyer market is highly fragmented, unorganized, and dispersed across the country. The travel buyer market in India is categorized by four major distribution channels:

Revenue Segmentation:

Hotels and ancillary GTV (Gross Transaction Value) grew from ₹ 739.47 crores for Fiscal 2021 to ₹ 9,963.11 crores for Fiscal 2023 at a CAGR of 267.06%. For Fiscal 2021, 2022 and 2023, hotels and ancillary GTV contributed 23.97%, 38.53% and 44.63% of the GTV, respectively

Financials of the Company:

1. Total Revenue

Over the recent 3 years, Revenue from operations have grown at a CAGR of 173.99%

2. EBITDA

3. Net Profit

Key Risks:

1. Company’s revenue is substantially dependent on the hotels and ancillary bookings whose contribution has significantly increased from 35.69% of the revenue from operations for Fiscal 2021 to 67.83% for Fiscal 2023.

The worldwide travel and tourism industry is highly sensitive to general economic conditions and trends. The overall impact on the travel and tourism industry is influenced by travelers’ perception of, and reaction to, the scope, severity and timing of many factors.

2. The Company generates 57.38% of its revenue from operations from its Top 5 Suppliers as of March 2023.

3. The Company and Joint Managing Directors, namely Ankush Nijhawan and Gaurav Bhatnagar, have received a show cause notice from the Enforcement Directorate and compounding applications are in the process of being filed with the Reserve Bank of India. Consequently, they may be subject to regulatory actions and penalties/compounding fees for such non-compliance which may adversely impact the business, financial condition and reputation.

4. A summary of outstanding litigation proceedings involving the Company may have a material impact on the Company.

IPO Objectives:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects:

1. Expansion of the Supplier and Buyer base;

2. Amplification of value of the platform by adding new lines of businesses;

3. Inorganic growth through selective acquisitions and building synergies with the existing platform; and

4. Leveraging data procured to offer bespoke travel solutions to the Buyers and Suppliers.

Valuation:

The PE ratio of the TBO Tek Limited is 65.4, while the industry average P/E is 118.3

Peer Comparison:

IPO Details: