Goldman Sachs Initiates Coverage on TBO Tek, Shares Hit Lifetime High
In a significant development for TBO Tek, a global B2B travel distribution platform, the share price surged by 11% in today’s intraday trade, reaching a new all-time high of ₹1,764 per share. This spike came after the renowned global brokerage firm, Goldman Sachs, initiated coverage on the stock with a target price of ₹1,970 per share.
Goldman Sachs outlined three key reasons for its positive outlook on TBO Tek:
1. Large and fragmented Total Addressable Market (TAM): TBO Tek currently holds less than 0.1% of the massive US$1.9 trillion global travel TAM. With a strategy focused on consolidating both supply and demand through mergers and acquisitions, the brokerage anticipates a robust 21% Compound Annual Growth Rate (CAGR) in revenues from FY24 to FY30.
2. Strong presence in the hotel segment: Approximately 75% of TBO Tek’s revenues come from hotels, a sector characterized by high supplier fragmentation. Platforms like TBO Tek play a crucial role in aggregating demand in this segment.
3. Advantageous sales model and growth prospects: Goldman Sachs views TBO Tek’s feet-on-street sales model as advantageous, providing visibility into its ability to onboard buyers and create demand for suppliers. The brokerage also expects TBO Tek to benefit from the ‘Affluent India’ theme, with an anticipated 15% CAGR leading to around 40 million new outbound travelers from India by FY30.
Moreover, TBO Tek’s strong Free Cash Flow (FCF) generation and clean balance sheet were highlighted as additional strengths. Goldman Sachs forecasts steady earnings growth for TBO Tek, with a projected 30% to 33% CAGR in EBITDA and net income from FY24 to FY30.
The brokerage also emphasized the low competitive intensity in the B2B travel industry, driven by scale-driving network effects and a fragmented market landscape. With a negative working capital cycle and consistent FCF to net income ratio, TBO Tek is poised for strong financial performance in the coming years.
Investors are advised to conduct thorough research and seek advice from certified experts before making any investment decisions.
