A new report from Thomas Cook India reveals that Tier-2 and Tier-3 cities now generate 53% of total foreign exchange demand, outpacing metropolitan areas. While this growth indicates a wider customer base, investors should consider the company’s recent Q1 FY27 financial performance, which showed a 12% revenue decline and 21% profit drop, partly impacted by geopolitical tensions.
Foreign exchange demand in India is shifting away from large metropolitan areas. According to the 'India Forex Report 2026' released by Thomas Cook India, smaller urban centers in Tier-2 and Tier-3 categories now account for 53% of the nation’s total demand. This change highlights that international travel and business needs are no longer confined to major metros, which now contribute the remaining 47% of the total market share.
The data, which tracks transactions from April 2025 to March 2026, shows that leisure travel is the biggest contributor to this demand, making up 57% of the total. Corporate travel follows at 27%, and overseas education accounts for 16%. A key demographic trend is that younger consumers, particularly Millennials and Gen X aged 25 to 60, are responsible for nearly three-quarters of all forex usage.
Digital Adoption and Changing Preferences
The report also points to a change in how customers handle forex transactions. While 75% of business is still handled through physical branches, digital channels have captured a 25% share of the total transactions. This shift toward digital, with a 50% increase in self-service platform usage over two years, is important for the company’s business model. Moving customers to digital platforms typically helps in reducing operational costs, though it requires constant investment in technology and infrastructure to stay competitive.
Regarding the currencies in demand, the US dollar remains the most sought-after, accounting for 49% of the total market. European currencies represent 23%, while Asian currencies make up 11%. The Middle East and Australia/New Zealand also remain relevant markets for Indian travelers.
Financial Context and Investor Monitorables
While the report highlights growth in demand from smaller cities, investors should also track the company's recent financial performance. In its Q1 FY27 results, Thomas Cook India reported a 12% decline in consolidated total income and a 21% drop in net profit. This performance highlights the challenges the company faces, specifically the impact of the West Asia conflict on its GCC-based subsidiaries, which has affected overall profitability.
For investors, the key factor to track is whether the company can sustain growth in these emerging Tier-2 and Tier-3 markets while navigating cost escalations. The business faces a dual pressure: it must continue to invest in digital technology to capture the rising online demand, while also managing a challenging operating environment due to regional geopolitical risks that affect international travel patterns. The future success of this strategy will depend on the company's ability to maintain profit margins and manage costs, especially in its international segments.