Ixigo posts record Q1 profit, but stock tumbles 9%. Here's what worried Dalal Street

Shares of Le Travenues Technology (Ixigo) came under pressure on Friday, July 7, falling as much as 9.40% to Rs 183.6 apiece despite the company reporting its highest-ever quarterly profit in the first quarter of FY27. The decline followed a cautious response from brokerages after the company reiterated its plans to continue investing in new growth initiatives.

Although the stock pared some losses, it remained under pressure during the session. At 11:22 AM, Ixigo shares were trading at Rs 185.32 apiece, down 8.56% from their previous close on the NSE.

Ixigo Q1 results

The online travel services provider reported a profit after tax (PAT) of Rs 34.24 crore for Q1FY27, up 81% year-on-year (YoY) from Rs 18.94 crore in the corresponding quarter last year.


Revenue from operations rose 13% YoY to Rs 356.75 crore from Rs 316.05 crore, while EBITDA increased 65% YoY to Rs 53.52 crore, according to the company's exchange filing. While revenue and profit grew during the quarter, adjusted EBITDA declined 7% YoY to Rs 29.24 crore as the company increased investments in hotels and artificial intelligence.

Gross Transaction Value (GTV) advanced 19% YoY to Rs 5,524.33 crore during the quarter, while Contribution Margin (CM) also rose 13% YoY to an all-time high of Rs 144.94 crore.

Separately, the company informed the exchanges that its board has approved an investment of €219,200 in IXIGO PTE through the subscription of 219,200 ordinary shares of €1 each. The board also approved the grant of an optionally convertible loan of €219,200 to Sqaas under the terms of the Convertible Loan Agreement entered into between IXIGO PTE and Sqaas, subject to requisite regulatory and corporate approvals.

Management commentary

"In Q1FY27, despite the challenging macro environment, we continued gaining market share and delivered resilient growth, crossing ₹5,524 crore in quarterly GTV with all-time highs in revenue and PAT. Our bus business was the hero, with 39% GTV growth YoY. This was also the quarter when Ixigo's hotels business shifted gears through the Brevistay acquisition, crossing the critical mass of direct supply and room nights. We are closer to product-market fit in hotels than ever before, and we are investing for growth and customer experience," said Aloke Bajpai, Group CEO, Ixigo and Rajnish Kumar, Group Co-CEO.

Group CFO Saurabh Devendra Singh said, "Q1FY27 saw much progress along with some challenges. We continue to execute and remain optimistic about the long-term trajectory. Until the Iran conflict is fully resolved, we expect some volatility. We are using uncertain times to strengthen our core, build market share, and invest in hotels and our AI-native future."

Brokerages turn cautious

Brokerages turned cautious on the company's outlook, citing continued investments in new initiatives that could weigh on profitability in the near term.

The management reiterated that operating leverage from its core OTA businesses would continue to be reinvested in scaling the hotels business and strengthening AI capabilities, indicating that margin expansion is likely to remain back-ended.

According to a JM Financial report, while Ixigo is likely to continue gaining market share across its established OTA businesses, the ongoing investments are expected to weigh on consolidated margins and earnings in the near term.

"As a result, we broadly maintain our topline estimates over FY27-29 but lower our profitability assumptions, leading to 5-9% cuts in EPS," the brokerage said.

While JM Financial broadly maintained its consolidated revenue estimates, it lowered its profitability assumptions following the Q1 results, factoring in higher investments in the hotels business after the Brevistay acquisition and continued AI-led product investments. Accordingly, the brokerage reduced its consolidated adjusted EBITDA margin estimates for FY27-29 by around 140 basis points and cut EPS estimates by 5-9%.

JM Financial also revised its June 2027 target price to Rs 200 per share from Rs 220 earlier, based on a target multiple of 50x NTM P/E, while retaining its 'Reduce' rating.

Meanwhile, Motilal Oswal Financial Services (MOFSL) expects revenue, EBITDA, and PAT to register CAGRs of 21%, 36%, and 35%, respectively, over FY26-28. The brokerage valued the stock at 65x FY28E EPS to arrive at a target price of Rs 215.

MOFSL, however, downgraded the stock to 'Neutral' from 'Buy', citing the likelihood of margin and profit pressure amid continued investments in new initiatives.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)