Yatra Online's stock experienced a nearly 4% drop amidst broader market gains, following a 1.8% stake sale by a promoter and a 17% year-on-year decline in Q3 FY26 net profit. Despite a deferred MICE segment impacting margins, revenue grew 9%. Keynote Research maintains a 'Buy' rating with a ₹236 target, pointing to expected Q4 margin recovery, significant corporate client acquisition, and the operational efficiencies from AI integration as key catalysts for future expansion.
The Core Catalyst: Navigating Short-Term Headwinds
Yatra Online shares faced notable selling pressure, declining nearly 4% in Monday's trading session even as broader market indices saw modest gains. The stock opened higher but reversed course, trading 3% lower by mid-afternoon and marking its third consecutive session of decline. This downward movement was preceded by a 1.8% stake sale by promoter THCL Travel Holding Cyprus on February 17, which appears to have amplified investor caution. The recent Q3 FY26 financial disclosures revealed a 17% year-on-year drop in consolidated net profit to ₹8.3 crore, despite a 9% rise in revenue from operations to ₹256.8 crore. Technical indicators, such as a 14-day Relative Strength Index (RSI) of 34.255, suggest a 'Sell' signal, reinforcing the bearish sentiment in the immediate trading environment, with some analyses rating the stock as a 'Strong Sell' based on technicals.
The Analytical Deep Dive: Growth Engines and Market Positioning
Despite the short-term turbulence, analysts like Keynote Research remain bullish, maintaining a 'Buy' recommendation with a price target of ₹236, implying over 50% upside potential from recent trading levels. This optimism is anchored in Yatra's strategic initiatives and market outlook. The company added 40 new corporate clients in Q3 FY26, projecting an annual billing potential of ₹202 billion, and anticipates a churn rate below 3%, ensuring stable revenue streams and cross-selling opportunities. The integration of DIYA AI is projected to optimize workforce headcount, potentially reducing costs by up to 200 employees long-term, which is a significant driver for margin expansion. While Q3's EBITDA margins of approximately 17.6% saw a quarter-on-quarter decline due to deferred MICE segment revenue (around ₹30 crore) caused by aviation regulatory shifts, a recovery is anticipated in Q4 FY26, historically the strongest quarter for MICE business. The India online travel market itself presents a robust growth narrative, valued at approximately USD 51 billion in 2024 and forecast to reach USD 124.1 billion by 2033, growing at a compound annual growth rate (CAGR) of 9.30%. Yatra's long-term projections for FY27 and FY28 include a 20% Gross Booking Value (GBV) growth, aiming for an EBITDA margin of 1.5% of GBV by FY28, up from 1.2% in 9M FY26 [cite: provided news].
The Forensic Bear Case: Margin Pressures and Competitive Landscape
Concerns linger regarding Yatra's profitability and valuation compared to industry peers. The company reported a negative trailing twelve months (TTM) P/E ratio of -66.08 as of mid-February 2026, indicating current losses relative to earnings, a stark contrast to some competitors. While Yatra's market capitalization hovers around ₹2,300 crore, larger rival MakeMyTrip commands a market cap of approximately $5.31 billion (around ₹44,000 crore), suggesting a significant scale advantage. EaseMyTrip, another competitor, has a market cap of roughly ₹3,382 crore. Yatra's P/E ratio figures have been inconsistent, with some sources showing a positive P/E of 42.9 and others a more current negative TTM P/E, highlighting volatile earnings. The MICE segment's susceptibility to disruptions, as seen in Q3, poses an ongoing risk, and the company’s historical performance shows a mixed pattern, with a 5-year ROE of -27.61%. The significant decrease in net profit in Q3 FY26, despite revenue growth, points to potential cost pressures or an inability to fully pass on costs in a competitive environment. Furthermore, while Yatra aims for an EBITDA margin of 1.5% of GBV by FY28, its current operational efficiency is being scrutinized, especially when benchmarked against the robust revenue growth and established market presence of competitors like MakeMyTrip.
Future Outlook: Rebuilding Momentum
Management has guided for FY26 Revenue Less Service Cost (RLSC) growth of approximately 22-23% and Adjusted EBITDA growth of around 37.5% year-on-year, with the company having already achieved 78% of its RLSC target and 82% of its adjusted EBITDA target for the full year. This suggests confidence in meeting annual goals even with a moderate Q4 performance [cite: provided news]. The long-term vision focuses on a 20% CAGR for Gross Booking Value through FY27-28, driven by consistent growth in air ticketing and hotel/holiday packages. The strategic focus on corporate client acquisition and AI-driven operational efficiencies are critical elements expected to support margin expansion and sustainable growth, providing a foundation for analysts' optimistic outlooks, such as Keynote Research's target price of ₹236.
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