Q3FY24 Review: Rategain Travel Technologies: Strong execution, guidance raised again!

5 Feb 2024 , 11:38 AM

RateGain Travel Technologies (RATE) reported Q3 revenue of ₹2.5 Billion, growing 7% sequentially and 82% over the year-ago quarter (~30% year-on-year organic growth) in line with IIFL estimates. Growth was driven by continued momentum in Adara and DaaS, while distribution was muted. EBITDA margins increased to 20.3% (up 50 basis points sequentially) — in line with IIFL estimates. New contract wins increased 71% over the year-ago quarter to a record ₹844 Million (up 29% sequentially); pipeline was also at a record of ₹4.2 Billion (up 57% over the year-ago quarter). RATE increased its FY24 revenue growth guidance to ~69% (was ~65%) over FY23 and EBITDA margins guidance to ~19.5% (was 19%). Additionally, it reiterated its aspiration to double its revenues over FY24-27. RATE’s M&A pipeline continues to be robust and management is confident of closing an acquisition in the near-term. 

Analysts at IIFL Capital Services have increased their FY24-26 EPS estimates by up to 8% on higher revenue and margin forecasts. Their 12-month Target Price increases to ₹950 (was ₹740), based on 2YF P/E of 40x (was 35x) on continued strong execution. Key risks include impact of macro events on travel, M&A integration and competition.