YATRA - YATRA ONLINE LIMITED Share Price

Yatra Online Limited provided an optimistic outlook for fiscal year 2027, emphasizing a return to growth following recent disruptions. Management highlighted a medium-term growth expectation of 20% CAGR for revenue less service costs (RLSC) and 30% for adjusted EBITDA. Despite headwinds in the previous year, they recorded revenue growth of 27% year-over-year to INR 10,065 million and a 24.5% increase in gross margin to INR 4,824 million.

Key forward-looking points included:

1. Corporate Client Growth: Yatra added 163 new corporate customers in FY26, with an annual billable potential of approximately INR 9,568 million, up from INR 7,475 million in FY25. This highlights the continued strength of their enterprise travel business, with a customer retention rate of nearly 97%.

2. Market Position: Management asserted that the online penetration in corporate travel is less than 25%, suggesting significant growth potential as the market shifts toward digital platforms. They anticipated a meaningful recovery in corporate travel demand in the second half of FY27, drawing parallels to post-COVID trends.

3. Headwind Impact: The ongoing geopolitical conflict impacted their MICE business and international travel, leading to cancellations and deferrals. Despite this, management expects demand for MICE and international travel to rebound as normalcy returns.

4. Financial Performance: Cash flow from operations increased nearly tenfold year-over-year to INR 761 million, showcasing improved operational efficiency. Adjusted EBITDA reached INR 917 million, aligning with revised guidance, reflecting strong operating leverage.

5. Technological Advancements: Yatra is investing in AI and automation to enhance customer experience and operational efficiency. They believe these technological improvements will bolster growth and mitigate potential economic disruptions.

Overall, Yatra's leadership remains confident that the structural drivers of travel demand in India will support their growth strategy moving forward.

1. Question: "How much of the MICE business is driven by international travel and how has this impacted your quarterly performance?"

   Answer: The MICE business has a roughly 1:3 ratio of domestic to international transactions. This quarter, disruptions in key international destinations, particularly after significant events like Eid, impacted us greatly. Additionally, rising airfares due to geopolitical conflicts affected margins. However, we expect recovery as corporate customers shift to alternative destinations and domestic programs.

2. Question: "What percentage of your B2B business comes from IT services companies and how has that evolved?"

   Answer: Historically, IT services made up about 20% of our B2B business. As of now, that figure is down to around 10%, thanks to diversification. We're seeing strong contributions from consulting, pharma, and automotive sectors, which reduces our reliance on IT services and mitigates potential downturns in that segment.

3. Question: "What can you tell us about your corporate credit card initiative and its potential impact on receivables?"

   Answer: The corporate credit card initiative is a priority for us, with plans to market it soon. The transition will require careful customer engagement and airline partnerships to ensure we aren't burdened with extra costs. It aims to streamline our receivables, but we need to align costs with airlines to avoid impacting margins.

4. Question: "Can you elaborate on your hotel business average realizations and how it affects gross margins?"

   Answer: Recently, average realizations dropped due to a shift towards domestic and affiliate business, which typically results in lower transaction values than MICE. Gross bookings grew, but the mix affected margins. As MICE recovers, we anticipate realizations to normalize, improving profitability in our hotel segment again.

5. Question: "What is your guidance for revenue growth in the current financial year considering current demand?"

   Answer: Our medium-term CAGR guidance remains at 20% for revenue-less service costs and 30% for adjusted EBITDA. While Q1 may be muted due to current conditions, we are optimistic that the second half will see recovery as travel conditions normalize, balancing out initial downturns earlier in the year.