Betting on India’s travel boom? Motilal Oswal sees TBO Tek and Ixigo as key beneficiaries

India’s travel and leisure sector is undergoing a structural transformation, with the online travel ecosystem emerging as a key beneficiary of rising travel demand, digital adoption, and changing consumer preferences.

The industry has evolved significantly over the past two decades—from a fragmented, offline agent-driven market to a digitally enabled ecosystem led by online travel platforms.The next phase of growth is expected to be driven by artificial intelligence, enabling hyper-personalized travel planning, dynamic packaging, and real-time decision-making.The travel distribution landscape remains inherently complex due to the diversity of traveler requirements and the highly fragmented global supplier base, comprising thousands of airlines and millions of accommodation providers.

This fragmentation continues to create inefficiencies across the value chain, reinforcing the importance of aggregators and digital platforms that simplify discovery, comparison, booking, and post-booking services.Several structural tailwinds are supporting long-term growth.

Rising disposable incomes, favorable demographics, increasing workforce participation, improving transportation infrastructure, and a consumer shift toward experience-led spending are expanding the addressable travel market.Easing international travel regulations and growing connectivity are further accelerating travel demand across both domestic and international segments.Against this backdrop, India’s online travel market is expected to outpace global growth trends.

The market is projected to expand from approximately INR 2.1 trillion in FY23 to INR 3.8 trillion by FY28, reflecting a CAGR of around 13%, significantly higher than the global online travel market growth rate.

Online channels are also expected to gain share, with digital penetration rising to nearly 65% of total travel bookings from about 54% currently.Scalability within the sector is increasingly determined by technological capabilities, supplier network depth, automation, customer acquisition efficiency, and the ability to cross-sell complementary travel services.

Margin expansion opportunities are also improving as platforms increase their exposure to higher-value segments such as hotels, holiday packages, meetings and events, and ancillary services.A notable trend shaping the industry is the growing use of mergers and acquisitions to strengthen technology capabilities, expand inventory, and deepen customer engagement.

This consolidation strategy mirrors global best practices and is helping travel platforms build more integrated ecosystems.While competitive intensity, supplier dependence, macroeconomic sensitivity, and technological disruption remain key risks, the medium-term outlook remains favorable.

The combination of underpenetrated online travel adoption, expanding digital infrastructure, and AI-enabled personalization positions India’s travel technology ecosystem as a compelling long-term growth theme.TBO Tek TP- 1765TBO Tek delivered a resilient performance despite geopolitical disruptions across key travel corridors.

Management expects travel demand to rebound as conditions normalize, supported by recovery in Middle East markets, strong momentum in Europe, increasing international travel, and ongoing integration of Classic Vacations, which should enhance scale and operating synergies.

Revenue grew 83% YoY in 4QFY26, aided by the consolidation of Classic Vacations, while organic revenue increased 21% YoY.

MTB grew 15% YoY, EBITDA rose 23% YoY, and PAT increased 2% YoY.

For FY26, consolidated GTV grew 19% YoY, reflecting healthy underlying demand despite temporary disruptions in key travel markets.

We maintain a BUY stance on TBO Tek, supported by its diversified travel platform, strong execution, and favourable industry trends.

We expect revenue/EBIT/PAT CAGR of 37%/35%/30% over FY25-28E, driven by increasing contribution from high take-rate hotel and ancillary segments, international expansion, and benefits from the Classic Vacations integration.Ixigo TP- 217Le Travenues Technology (Ixigo) is the second-largest online travel agency (OTA) in terms of FY26 gross transaction value of INR187b, (includes flight~75b, Train:83b, Bus:26b and others:3b), with a monthly active user base of 85m largely coming from Tier-2 and Tier-3 towns.

Notably, it is a market leader among OTAs in train ticketing with a market share of ~60% and is also consolidating its position in flight and bus ticketing.

Ixigo’s differentiated multi-app, multi-brand strategy has enabled it to strengthen consumer engagement at a structurally lower customer acquisition cost.

Its user base is widely distributed across lower-tier markets, with ~94% of bookings having either origin or destination in non-tier-1 cities, highlighting strong penetration beyond metro markets.

We estimate Ixigo to deliver a CAGR of ~23%/59%/51% in revenue/EBITDA/PAT and grow its overall GTV by 22% during FY26-28E and EBITDA margin is expected to improve by 400bp to 10% by FY28E on the back of operating leverage and potential reductions in operating expenses.(The author is Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd.)(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own.

These do not represent the views of the Economic Times) ...