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TBO Tek Limited (Travel boutique online), is a travel distribution platform that offers travel inventory according to the needs of its customers and supports a wide range of currencies along with forex help. The IPO aims to raise ₹1,550.81 Cr and comprises a fresh issue of equity shares totaling up to INR 400 Crore (and an offer for sale of up to 15,635,996 Equity Shares.

About TBO Tek:

• TBO Tek, formerly known as Tek Travels Private Limited, is a major player in the Indian travel technology sector.
• Travel Distribution Platform: TBO Tek operates an online platform that connects travel suppliers (hotels, airlines, car rentals, etc.) with travel buyers (travel agencies, independent consultants) . They essentially act as a middleman, facilitating travel bookings for various segments like leisure, business, and religious travel.
• B2B Focus: TBO Tek primarily caters to business-to-business (B2B) transactions, unlike travel booking platforms aimed directly at consumers (B2C).
• Global Reach: Their platform offers travel options across more than 100 countries, making them a prominent player in the global travel and tourism industry.

Financials: TBO Tek IPO

TBO Tek IPO: Anchors

• A total of 75,70,807 shares were allotted to a total of 47 anchor investors.
• Key investors included Abu Dhabi Investment Authority, Government Pension Fund Global (Norges), ICICI Prudential Mutual Fund, Kotak Mahindra Mutual Fund, Neuberger Berman, Nippon Mutual Fund, Nomura, SBI Mutual Fund,Blackrock Global Fund, Axis Mutual Fund,Eastspring Investments, Fidelity funds, Franklin India, Goldman Sachs, HSBC Global Investments, Invesco, Mirae Asset, SBI General and SBI Life Insurance, Tata Digital India fund, White Oak Capital fund, Aditya Birla Sun Life, Bandhan Large Cap, CANARA Robeco, Carmignac Portfolio, Dsp Multicap Fund, Edelweiss Mutual Fund, Kotak Mahindra Life, Max Life Insurance, Motilal Oswal, RBC Asia Pacific, Optimix Wholesale , The Prudential Assurance etc.

TBO Tek IPO: Salient Points

• Currently, promoters hold 51.26% stake in the company.. TBO ESOP Trust, commands a 2.31% stake. . Among public shareholders, Augusta TBO is the largest with a 19.53% followed by PE firm General Atlantic with 15 % and TBO Korea with 11.06%.
• Promoters Gaurav Bhatnagar, Manish Dhingra, LAP Travel, and other selling shareholders like TBO Korea and Augusta TBO will be offloading their shares under the offer for sale.
• 75% IPO is reserved for QIBs and 10% for retail, as its cash balance exceeds net worth
• From the net IPO proceeds:
  • INR 260 crore towards growth and platform enhancement, including the addition of new buyers and suppliers. ( Rs 135.0 crore will be used for investment in technology and data solutions, Rs 100.0 crore towards investment in subsidiary, Tek Travels DMCC, for on-boarding platform users through marketing and promotional activities, Rs 25 crore towards building sales and marketing infrastructure).
  • INR 40 crore will be earmarked for unidentified inorganic acquisitions,
  • remainder reserved for general corporate purposes.
• The table below provides details of their take rate made on transactions for airlines and hotels and ancillary and their contribution to the revenue from operations for nine months ended December 31, 2022 and December 31, 2023:

• Increased revenue from Hotel sector is contributing to significant boost in profitability.
• Hotel business, being fragmented, is more profitable than airlines, with 7%-8% and 2.5%-2.6% take rate (margins) respectively
• This platform’s ability to introduce new offerings leads to a network effect, enhancing its market presence, revenues and efficiency.

• Awards won

• Track record of creating value through acquisitions.
  • In 2019, the company acquired Island Hopper, a destination management company with access to island inventory in the Indian Ocean, including Maldives.
  • In May 2021, the company acquired Gemini, an India-based destination management company, to further consolidate its position in the Indian outbound market and, particularly, Maldives.
  • In dec 2023, company entered into a share purchase agreement with Jumbo Tours Espana S.L.U. (Jumbo).
•  TBO tek has a presence in several countries, most of its revenue concentrated in Indian and Dubai operations. In FY2023, TTL earned 60%(PY: 66%) of its consolidated GMV from operations in India. Other than this the company has presence in Dubai, Saudi Arabia, UAE,Kuwait, Qatar, Brazil, Egypt, China, and the USA. Take rate (i.e. the commission on gross transaction value / GTV or revenue) is much higher in international market (8% over 3% for India).
• TBO Tek provides a wide range of offerings and operates in over 100 countries by providing buyers with a comprehensive travel inventory according to the needs of their customers and supports a wide range of currencies along with forex assistances.
•  The company offers over 7,500 destinations and facilitates 33,000 bookings per day through their platform.
• Between fiscals 2019-2023, Travel Boutique Online (TBO Tek) achieved impressive compounded annual growth rates (CAGRs) of 24.7% in revenue and 43.7% in EBITDA.
• It does not have a exact peer but compares favorably with listed peers like Rategain, Yatra online etc.
• TBO Tek IPO is coming at a PE of 67x (Fy23 earnings) and 48x ( FY24 annualized earnings). I
• I am likely to apply in the TBO Tek IPO. Increasing share of Hotel pie which has higher margins is likely to drive its profitably. Further  Due to the company’s technology platform, the cost to serve a new transaction is low thus, enabling the company to drive its revenue and profit. Add to this favorable trends in the travel industry.
• on the flip side , side in Feb ,2024, TBO Korea and Augusta TBO transferred 28,25,400 and 49,92,597 equity shares respectively to General Atlantic at a premium of Rs 574.49 per share which is much lower than current IPO price.
• GMP as reported on social media has been Rs. 530.
• Please take a decision based on your risk appetite.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.