Motilal Oswal has maintained a 'Buy' rating on Yatra Online with a target price of Rs 135. The firm anticipates a turnaround in the second half of fiscal year 2027, despite a challenging first quarter where net profit fell by 97.9% year-on-year.
Motilal Oswal has maintained its 'Buy' rating on Yatra Online, setting a target price of Rs 135 per share. The brokerage firm is looking past a difficult start to the 2027 fiscal year, betting on a recovery in the company's business performance in the second half of the year.
This positive outlook comes despite a weak performance in the first quarter of fiscal year 2027. Yatra Online reported revenue of Rs 1,879 million, which represents a 10.4% decline compared to the same period last year. The impact on the bottom line was even sharper, with net profit falling by 97.9% year-on-year to Rs 3 million. Additionally, adjusted EBITDA, which measures operational profitability, dropped by 39.4% to Rs 151 million.
Growth Drivers and Strategic Moves
Despite the decline in revenue and profit, the brokerage highlights that the company is showing signs of volume growth. Yatra Online’s gross bookings increased by 16.5% year-on-year to reach Rs 21,007 million in the first quarter. This indicates that the company is successfully booking more travel business, even as high airfares and other market factors squeeze the current profit margins.
Management also added 53 new corporate clients during the quarter, which the company estimates have an annual billable potential of Rs 2,223 million. Furthermore, Yatra Online is looking to expand its reach through a new seven-year strategic partnership with Kanoo Travel, aimed at growing its international presence. These additions are part of a strategy to move toward higher-value products and strengthen the company’s position in the competitive travel booking market.
Risks and Market Headwinds
The brokerage's optimism relies on the assumption that the company will overcome several ongoing pressures. The travel sector is currently facing significant headwinds, including geopolitical disruptions that have negatively impacted the Meetings, Incentives, Conferences, and Exhibitions (MICE) segment. Additionally, there has been a noticeable pullback in corporate spending on travel, combined with lower airline incentives, which directly hurts the company's profitability.
For investors, the key monitorables moving forward will be whether the company can successfully navigate these challenges to improve its profit margins. The success of the planned recovery in the second half of the fiscal year depends on a rebound in corporate travel demand and the effective integration of the new corporate clients. Any continued weakness in corporate spending or further geopolitical tension could pose a risk to these growth projections.