TBO Tek IPO to open next week; Anand Rathi highlights key strengths and risks

Anand Rathi Research, decoding the DRHP of TBO Tek said that the leading global travel distribution platform is not a disruptor of travel suppliers/buyers but a synergistic enabler. The company, whose IPO is likely to open on May 8, has a robust business model.

An aggregator, Travel Boutique Online (TBO Tek) helps travel distribution between suppliers (airlines and hotels globally) and buyers (travel agencies, independent travel advisors). Travel suppliers need a way to market their inventory efficiently to buyers, who in turn need access to these to meet their customers’ travel requirements, said Anand Rathi.

Being modular and asset-light, this platform is scalable with the potential to launch new solutions, thereby creating a network effect. Over FY19-23, revenue and Ebitda clocked 24.7 per cent and 43.7 per cent CAGR, respectively, the brokerage's report said.

Established in 2006, TBO Tek, formerly known as Tek Travels, is a travel distribution platform that offers travel inventory according to the needs of its customers and supports a wide range of currencies along with forex help. The company's platform enables sellers to show and market their inventory and set prices for buyers.

The New Delhi-based company simplifies the travel business for suppliers such as hotels, airlines, car rentals, transfers, cruises, insurance, rail companies, and others, as well as for retail customers such as travel agencies and independent travel consultants, and corporate customers

Its business solution addresses travel industry challenges by consolidating global supply and demand on a single platform. It facilitates seamless transactions between buyers and suppliers in a highly fragmented market, encompassing various travel services beyond just hotels and airlines, said Anand Rathi's DRHP decoder note.

"Airlines and hotels view the company as an extended distribution arm, helping deepen their penetration in fast-growing but smaller markets, and not as competition," said the brokerage. "On the other hand, its offerings allow travel agents to digitize operations, facilitating inventory visibility and helping unlock deals on par with larger companies," it added.

As per the RHP filed by the TBO Tech, the company is looking to raise 400 crores via fresh issue with an offer-for-sale of up to 1,25,08,797 equity shares by its promoters and existing shareholders. However, the company will announce the price band for the issue later this week.

However, Anand Rathi has raised some concerns as well. The top-five suppliers contributed 60.5 per cent of Gross Transaction Value (GTV) in Q1 FY24; high concentration risks in the hotels segment, with a single customer accounting for a 36 per cent segment revenue, it said.

The company will reserve shares worth Rs 3 crore for its eligible employees, while 75 per cent of the net offer shall be reserved for the qualified institutional bidders (QIBs) and 15 per cent shares shall be allocated towards non-institutional investors (NIIs). Retail investors will have only 10 per cent of the allocation in the issue.

Axis Capital, Goldman Sachs (India) Securities, JM Financial and Jefferies India are the book running lead managers of the TBO Tek IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE.