India's Travel Boom: Why Motilal Oswal is Bullish on TBO Tek and Ixigo

India's travel and leisure sector is undergoing a massive structural transformation, shifting from a fragmented offline market to a sophisticated digital ecosystem. As rising disposable incomes and improved infrastructure drive demand, online travel platforms are positioned to capture significant value in this expanding market.

A Massive Market Expansion on the Horizon

The Indian online travel market is poised for explosive growth, significantly outpacing global trends. According to industry projections, the market is expected to expand from approximately INR 2.1 trillion in FY23 to INR 3.8 trillion by FY28, representing a compound annual growth rate (CAGR) of around 13%.

A key driver of this evolution is the increasing digital penetration, which is expected to rise from the current 54% to nearly 65% of all travel bookings. This shift is being fueled by structural tailwinds such as favorable demographics, increased workforce participation, and a consumer shift toward experience-led spending. Furthermore, the integration of Artificial Intelligence (AI) is set to redefine the industry through hyper-personalized planning and dynamic packaging.

TBO Tek: Leveraging Global Scale and Synergies

Motilal Oswal maintains a "BUY" stance on TBO Tek, highlighting its ability to remain resilient despite geopolitical disruptions. A major catalyst for the company is the integration of Classic Vacations, which is expected to enhance operating synergies and scale.

The financial trajectory for TBO Tek remains robust. In 4QFY26, the company reported an 83% YoY revenue growth, bolstered by the Classic Vacations consolidation, while organic revenue grew by 21% YoY. Looking ahead toward the FY25-28E period, analysts expect a significant CAGR in revenue (37%), EBIT (35%), and PAT (30%). This growth is expected to be driven by higher-margin segments like hotels and ancillary services, alongside aggressive international expansion.

Ixigo: Dominating the Tier-2 and Tier-3 Markets

Le Travenues Technology (Ixigo) has carved out a unique niche by capturing the "Bharat" traveler. With a monthly active user base of 85 million, Ixigo enjoys deep penetration in non-metro areas, with approximately 94% of its bookings having an origin or destination in Tier-2 or Tier-3 towns.

Ixigo holds a commanding market position, particularly in train ticketing, where it maintains a ~60% market share. Its FY26 Gross Transaction Value (GTV) stood at INR 187 billion, spread across flights (INR 75b), trains (INR 83b), and buses (INR 26b). The company’s multi-app strategy has allowed it to maintain lower customer acquisition costs. Analysts project a massive EBITDA CAGR of 59% for Ixigo through FY26-28E, with margins expected to improve by 400 basis points to reach 10% by FY28E.

Key Takeaways

  • Rapid Market Growth: India's online travel market is projected to grow at a 13% CAGR to reach INR 3.8 trillion by FY28, fueled by rising digital adoption.
  • TBO Tek’s Global Edge: Through the integration of Classic Vacations, TBO Tek is positioned for high revenue and profit growth driven by high-take-rate hotel and ancillary segments.
  • Ixigo’s Regional Dominance: Ixigo is a market leader in train ticketing with a massive footprint in Tier-2 and Tier-3 cities, driving efficient customer acquisition and high growth potential.