Thomas Cook (India) Ltd (THOMASCOOK) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator (361 Capital Market): Ladies and gentlemen, good day, and welcome to Thomas Cook India Limited Q2 FY27 earnings conference call, hosted by 361 Capital Market. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Purva Jhaveri from 361 Capital Market. Thank you, and over to you, ma'am.
Purva Jhaveri (361 Capital Market): Thank you, Yusuf. Welcome everyone and thank you for joining on Thomas Cook India Limited Q2 and H1 FY27 earnings conference call. From the company, we have with us, Mr. Mahesh Iyer, Managing Director and Chief Executive Officer, and the senior management team. We would like to begin the call with brief opening remarks from the management and following which we will have the forum open for an interactive Q&A session. I would now like to invite Mr. Mahesh Iyer to make initial remarks. Thank you, and over to you, sir.
Mahesh Iyer (Thomas Cook (India) Ltd): Thank you, Purva. Good afternoon everyone and thank you for joining us as we discuss the Q2 FY27 financial and operating performance. Before we begin, I would like to introduce the management team joining me on the call today: Vikram Lalwani, Managing Director and CEO of Sterling Holiday Resorts; K.S. Ramakrishnan, Managing Director and DE of DEI; Vishal Suri, Managing Director of SOTC; Debashis Nandy, who's the Group CFO for Thomas Cook India Group; Mr. Brijesh Modi, who's the CFO at Thomas Cook India Limited; Krishna Kumar, who's the CFO at Sterling Holiday Resorts; and Urvashi Butani, who heads Investor Relationships. Quarter 2 was the quarter in which we began to see recovery with momentum improving across parts of our business, although at varying levels. The external environment continues to be uncertain, and some of our international operations are still working through the effects of the geopolitical disruptions.
Mahesh Iyer (Thomas Cook (India) Ltd): This flexibility allows us to better align costs with business volumes, manage the impact on profitability, and protect our underlying performance even as we navigate an uneven recovery. The quarter's performance reflects two things. First, the strong recovery and growth in parts of our India portfolio. Second, the impact of conflict in West Asia, which is largely limited to a few business with direct exposure to the region. That is Desert Adventures and DEI and parts of our long-haul outbound portfolio. These businesses are still not where we would like them to be, but they are clearly better than they were three months ago. Some of the key performance highlights for the quarter, our consolidated total income stood at 20,030 million, shows a 5% decline over the same quarter last year. Our India travel segment saw clear signs of recovery, and I will detail this in a little more when I talk about the segments. We ended the quarter just 6% below last year with EBIT margins holding a healthy 3.8%. Our international business continued to face a challenging environment, particularly given the geopolitical situation, which had a direct impact on the operations of Desert Adventures and DEI. Overall EBIT margins for the travel segment has shown an improvement on a sequential basis from 2.4% to 2.9% in Q2 of FY2026. Our consolidated PBT before exceptional items stood at 848 million, which was broadly at the same level as last year, despite the reduction in overall income. This is particularly noteworthy given the shortfall of almost over 1,036 million in income from operations coming largely out of Desert Adventures and DEI. What is also encouraging is that we have actually managed to improve our PBT margin to 4.2% compared to 4% last year despite the pressure on top line. On the distribution front, we continued to expand our reach with the with the branch network growing by 7% year-on-year via the franchisee route to 310 branches at the end of September 2026 compared to 289 branches. This takes our network to its highest ever level, further strengthening our presence and accessibility across markets. In terms of technology, we have further enhanced our AI-powered chat bot with the integration of DynaPack, our dynamic inventory customization feature. While still it is in the initial phase, this enables the bot to generate personalized travel itineraries with real-time pricing, allowing customers to explore holiday options based on their individual preferences. We have also We have also continued to receive recognition for our efforts across our businesses. During the quarter, Thomas Cook (India) Limited's corporate travel team was recognized as the best corporate travel management company for the year at the India Travel and Technology Summit. Our bhakti business won the best spiritual and pilgrimage tour operator award at the India Travel Awards, while we also received the ET MarTech Award for the use of generative AI in MarTech and were recognized as the most popular tour operator at the MILANGE Awards. SOTC also had a strong showing winning Best Travel Agency of the Year and Best Omni Travel Agency of the year at the India Travel and Technology Summit Awards. Its MICE and Travel Team was also recognized as the MICE and Travel Team of the Year at the MILT Excellence Awards 2026. With that context, let me take you through how the individual businesses have performed during the quarter, starting with financial services. The segment has continued its upward trajectory and reported a strong revenue increase of 21% during the quarter, which is backed by a 7% increase in gross turnover to Rs. 39 billion, driven by the retail segment. Our EBIT for the segment in Q2 improved by 10% YoY to 452 million, and margins are at a very healthy of healthy percentage of 44.1%. From an H1 lens, our financial services business continued to deliver healthy growth across key operating parameters. Gross turnover grew 4% YoY to Rs. 72 billion with retail turnover increasing 10% to 55 billion. Revenue from operations grew 14% to 1,918 million, while EBIT increased 9% to 856 million with EBIT margin stood standing at 44.7%. The retail portfolio in the quarter grew 12% year-on-year, driven largely by the education segment, which delivered a strong 33% growth. The corporate portfolio also recorded an improvement of 10%, while the travel segment saw a decline of 6%. The performance of our education business is particularly noteworthy when viewed against the broader industry environment. RBI data for April to August 2026 shows that outward remittances under the education cat-
Mahesh Iyer (Thomas Cook (India) Ltd): declined by 34%, while travel related foreign exchange remittances declined by 1%. Against this backdrop, our education forex business grew by 33%. This reflects our ability to gain traction in a challenging market and leverage the strength of our distribution, our relationships with NBFC and overseas education counselors, and our student-focused product offering, our Study Buddy forex card, which is designed around the needs of student students going abroad and remains an important part of our proposition for this segment. Our corporate business also performed very well with turnover increasing by 10% driven by higher wallet share from existing relationships as well as new client acquisitions during the quarter. From a distribution standpoint, supporting our growth has been a continued focus on strengthening our distribution reach and digital capabilities. Digital adoption remains an important part of this strategy, helping us improve customer convenience and making forex transactions more accessible. Our digital channels kept gaining ground during the quarter, with overall digital adoption increasing to 22.4% compared to 21.5% in the corresponding period last year. This was supported by strong customer engagement across our app, WhatsApp channel, which grew fourfold and 3% YoY. Extending the focus on convenience, we continue to strengthen our digital distribution through our quick commerce platform Blinkit. The number of forex cards sold through this platform grew 96% as compared to Q3 FY '26. Not an entirely like-to-like comparison, but it gives you a sense of the growth. Alongside our digital expansion, we continue to optimize our retail footprint while strengthening our physical presence in key markets, operationalized retail counters under at Angamaly, Cochin, and Hubli, while closing branches in Thiruvananthapuram as a part of our retail network optimization during the quarter. This also positions us to tap into the growing travel demand from Tier 2 and Tier 3 markets, as travel activity expands beyond larger metros. Moving on to the travel segment, Q2 brought clear signs of recovery, with improving momentum across parts of our India portfolio. We are also seeing gradual improvement in some of our international businesses, as they work through the impact of geopolitical disruptions. On a consolidated basis, the travel business reported a revenue of 15,683 million during the quarter, a decline of 7% year-on-year. Our India travel business saw a phased recovery through July and August, with momentum picking up more sharply in September 2026. We ended the quarter just 6% below last year, with EBIT margins holding healthy at 3.8%. Due to the agility in our cost functions, we were able to narrow the EBIT deficit in the India business from 31% to 22%. This is encouraging, particularly given the challenges we faced on the long-haul side of our outbound business, and here also, on a sequential basis, we have been able to reduce the volume deficit by about 50%. On our international operations, Desert Adventures and AlliedTPro continue to face challenges given the ongoing political disruptions in Middle East and softer inbound tourism into US. But like I said, this quarter has seen some degree of improvement from the June quarter, and we have reduced our deficit in Desert Adventures from 89% to 67% now, and in the case of AlliedTPro, from 40% to 22%. Consequently, the total EBIT for the business stood at 455 million with a margin of 2.9%. For the first half, travel income from operations stood at 32,789 million, which is about 11% lower than last year. That said, I would like to point out that the second quarter has been encouraging. Our Q2 performance has helped us recover a good part of the ground we lost earlier in the year because of geopolitical volatility, and we have been able to narrow that gap quite efficiently, as I just mentioned. Let me know Let me now go deeper into the travel business starting with the B2C side. Within B2C, the business recorded a decline of 17% largely due to lower activity on the long-haul outbound segment. Geopolitical uncertainty affected flight connectivity on certain routes and pushed up airfares, impacting travel plans and booking conversions. High visa rejection rates for China, traditionally, one of our leading destinations, affected booking conversions and travel volumes, weighing on the segment's overall performance. Our domestic business grew by 8% during the quarter, led by destinations such as Ladakh, Kerala, Sri Lanka, Bhutan, and the Bhakti and Darshan portfolio, especially Char Dham. However, growth would have been higher
Mahesh Iyer (Thomas Cook (India) Ltd): was around 20%. I have discussed our approach towards AI integration across many layers on our business in the previous calls. Like I mentioned earlier, a quick update. Stacy, our AI powered chatbot and voice platform is now integrated with dynamic packaging capabilities. Agent Assist is showing tra- strong early results in an initial pilot with new agents' bookings up 85%, 70% on revenue, and 52% compared to Q1. Higher adoption on Agent Assist will keep contributing to improvements in frontline productivity. At the same time, our QC bot has significantly strengthened service quality and governance by enable- enabling automated audits of 100% of customer calls exceeding 2 minutes compared to only 3% to 5% that were reviewed manually earlier. Together with Agent Assist and QC bot have translated into stronger conversion performance, with conversion rates on offered calls per agent improving from 2.15 to 3.40% post deployment during the quarter. These initiatives reflect our continued focus on leveraging AI and automation to enhance customer experience, improving productivity, and build a scalable growth platform for the business. On the product offering side, we kept adding new offerings to our holiday portfolio for the upcoming season. We expanded our expan- experime- experiential offerings to include iconic luxury rail journeys across South Africa, Canada, Australia, New Zealand, and Egypt. We also added our luxury cruise portfolio with curated experiences across Antarctica, the Arctic, the Mediterranean, and Europe. As we look ahead, we have broadened our fall and winter holiday offerings to include Northern Lights, arc- Arctic adventures, and alpine experiences. We have also announced charter charter led departures from Bengaluru to Lakshadweep and Mumbai to Bhutan giving customers more distinctive holiday options. Overall, our focus remains on building a broader and more differentiated ho- holiday portfolio, responding to evolving customer preferences and converting the recovery in demand into sustained business growth. Looking ahead, we remain optimistic about the momentum in our leisure travel business with forward bookings currently trending at a healthy 30% growth over last year. This is particularly encouraging given the elevated airfares and other input cost pressures. We are also seeing a rebound in our long haul travel specially to Europe and Australia, which is another positive indicator for the business. On the short haul side, Japan continues to trend well after the cherry bloom season into the autumn months, which is another good sign reflecting Japan's confidence as a year-round destination. Thus, the forward bookings trends give us confidence in the demand outlook for the current quarter, and we expect some of this to flow through in the last quarter of FY '27, provided there are no external shocks. Coming to the B2B's businesses, the India DMS business grew by 16% during what is typically a softer quarter seasonally. This was supported by steady business inflows from key source markets including UK, Germany, France, Portugal, and Japan. Our MICE business reported a stable performance during the quarter with outcome largely reflecting the timing of execution of certain group engagements, and you can see the pattern in the monthly movement too. Moving on the corporate travel side, revenue grew by 11% to 446 million and gross turnover rose 19% to around 8 billion. Operationally, the business continued to see strong momentum. Air transaction volume grew 18% with India and international air volumes increasing by 23 and 15% respectively. Hotel volumes grew 81%. Also, the adoption of our online booking tool was an heal- was a healthy 32%. We continue to expand our client base during the quarter, adding new accounts across pharmaceuticals, healthcare, auto components, fintech, and digital payments. These wins strengthen our presence across a diverse range of corporate sectors and support our growth ambitions. Moving to our overseas DMS business, revenue declined by 7% year-on-year primarily due to the continued impact of geopolitical disruption in the Middle East and softer inbound tourism in the US. This was partly offset by growth in Asian Trails and Private Safaris business across Asia and Africa. In the Asia-Pacific, Asian Trails grew by 9% supported by positive performance in China, Singapore, and Thailand, although softer inflows from so- from from source markets moderated the overall growth. In the US, AlliedTpro saw a 22% decline in sales amid continued weakness in international visitor arrivals. However, the extent of decline moderated compared with the previous quarter gap of 40%, which is an encouraging sign. The Middle East remained the most impacted market with Desert Adventures recording a 67% decline in
Mahesh Iyer (Thomas Cook (India) Ltd): This marks an improvement from the 89% decline we recorded in Q1, indicating a gradual recovery. We also saw early signs of improvement in September with some recovery in demand from key source markets and expect the business to see a 50% recovery in the current quarter. The business has continued to focus on cost optimization and operational readiness, while encouraging forward bookings provide some cautious optimism for the coming quarter. On a more positive note, our private safaris business in South and East Africa continued to perform well, with South Africa growing by 31% and East Africa by 14%. This growth helped partly offset the weakness in the Middle East and US. Overall, the travel segment continues to show a positive trend while the India business leading the recovery, whereas the international operations are slowly limping back to pre-conflict levels. We enter the second half with cautious optimism and remain hopeful that there will be no major geopolitical disruption that could derail customer confidence. With that, I hand over to Vikram for his comments. Thank you.
Vikram Lalwani (Sterling Holiday Resorts): Thanks, Mahesh. Good afternoon, everyone. Thank you for joining us today. I am pleased to share Sterling's performance for the second quarter and the first half of FY '25. The overarching message is that Sterling's growth trajectory continues to strengthen. The scale we built over the last couple of quarters is increasingly translating into higher revenues, stronger operating metrics and a broader platform for sustainable earnings growth. What is particularly encouraging is that this growth is not coming from just adding new properties, but also from improving the performance of our existing portfolio. Q2 FY '25, let me begin with the second quarter first. Sterling delivered its highest Q2 revenue of approximately 1,272 million, registering a year-on-year growth of about 17%. This is a significant milestone because, as you're aware, July to September is traditionally our weakest quarter, influenced by monsoon seasons and softer demand across several leisure and wildlife destinations. Despite these seasonal conditions, we continue to see strong underlying demand and healthy growth across our operating metrics. Q2 saw the highest-ever quarterly expansion in Sterling's history as well, with seven resorts opened during the quarter to increase the portfolio to 83 properties and having crossed a key milestone of 4,000 keys as on 30th of September. The room nights sold increased by approximately 23%, while occupancy improved by about 400 basis points. Average room rates in our owned/leased portfolio also increased by 12% approximately. This has resulted in a total RevPAR growth of 12%, demonstrating an improved revenue productivity. This combination of volume growth, higher occupancies and improved pricing is particularly encouraging. It demonstrates that Sterling is not merely growing through the addition of new resorts, they're also improving our ability to attract guests, optimize pricing and monetize our existing and growing hospitality network. For us, this is an important validation of the growth strategy we've pursued over the last couple of years. Q2 profitability, understanding the reported performance. On the profitability front, EBITDA increased to approximately INR 289 million compared with INR 277 million in the corresponding quarter last year. PBT also grew to approximately INR 140 million. While the reported EBITDA growth was more moderate than the revenue growth, there is an important factor to consider when comparing the quarter with last year. During Q2, we incurred approximately INR 40 million of GST input tax credit related costs, which were not present in the corresponding quarter last year. This GST-related cost treatment fully impacted in Q3 of the previous financial year. Consequently, from Q3 onwards, the year-on-year comparison would become more consistent. Excluding this incremental GST cost for analytical comparison, EBITDA would have actually been approximately 329 million, representing a growth of around 19% to 20%
Vikram Lalwani (Sterling Holiday Resorts): learnings conversion of the business. Importantly, our commercial fundamentals remain healthy through the quarter with stronger room night volumes, occupancy and average rate growth. We therefore view the reported Q2 margin improvement in context of this GST related cost impact rather than a change in the underlying direction or the performance of the business. We also received two significant recognitions during the quarter, Fastest Growing Leisure Hotel Chain at Today's Traveller Awards 2026 for the third consecutive time and the Smart Tech-Enabled Platform of the year 2026 for Sterling ONE at the Indian Travel and Technology Summit & Awards. Coming to H1 '27, looking at the first half of the financial year provides an even clearer perspective on the progress Sterling is making. For H1 FY27, the revenues grew approximately 19% to INR 2,971 million, EBITDA increased 15% to approximately 910 million, while PBT grew 22% to approximately 623 million. This is particularly encouraging performance because it demonstrates that increasing our scale of our business is translating into meaningful earnings growth over longer operating periods. Operationally, the first half was equally encouraging. The room nights sold increased by approximately 24%, occupancy improved by 500 basis points, while the average room rates increased approximately 11%. This resulted in the total RevPAR of H1 growing a little over 15% year on year. This is a comp this is a combination we have consistently worked towards, a larger operating network, stronger occupancy, better realizations and growing profitability. It is also It also reinforces the operating leverage demonstrated in the first quarter when EBITDA and PBT grew faster than revenue. Our first-half performance validates both the direction of our growth and the underlying earnings capability of the Sterling platform. On the portfolio development and how we are evolving in the hospitality opportunity, our portfolio continued to grow during the quarter with seven new resorts opening, the highest number of openings we've done in a single quarter, comprising six management contracts and one revenue share property. This is consistent with our asset-right, capital-light approach to growth, allowing us to expand our network while maintaining capital discipline. At the same time, Sterling is progressively broadening its presence through, you know, beyond traditionally leisure destinations into other travel occasions, including business destinations and destinations having a flavor of both business and leisure, apart from continuing to strengthen our leisure DNA, including spiritual, wildlife and destination-led hospitality. Having established ourselves as a leading leisure hospitality player, we see that this is a natural evolution towards a multi-segment, full-format hospitality company, building on our existing capabilities in distribution, revenue management, network of existing guests, channel partners and our operations. A little bit on the financial strength, our growth continues to be supported by a strong balance sheet and a consistent track record of profitability. Sterling remains debt-free with net cash reserves of approximately 3,805 million at the end of the quarter. Importantly, we have also completed 27 consecutive profitable quarters, demonstrating the resilience of our business model across various demand cycles, seasons and phases of expansion. This sustained profitability together along with a strong cash position gives us the financial flexibility to continue investing in our network, technology, products and people while maintaining disciplined in capital allocation. Our growth has been supported by the strength of our own operations and cash generation, and we intend to maintain that financial discipline even as we scale further. Now, what does the outlook look like? As we look ahead, we enter what are traditionally two strong quarters of the financial year. October to December benefits from the festive and holiday seasons, while Jan to March typically offers another strong period for travel, leisure, MICE and wedding demand. What makes the quarters particularly interesting for Sterling
Vikram Lalwani (Sterling Holiday Resorts): is that we enter this period with a materially larger hospitality network than we had a year ago. This, the expansion undertaken over the last couple of quarters has added new destinations, increased room capacity, strengthen our ability to address different customer segments. We expect the contribution of these additions to build progressively as the properties mature, their market presents strengthen, and the commercial performance ramps up. We also expect the GST cost comparability to behave more consist-, to become more consistent from Q3 onwards. Taken together, these developments provide a favorable platform for a stronger revenue growth and earnings conversion in the second half. Our focus will remain on translating this opportunities into higher resort productivity, stronger management fee contribution, improved operating profitability and sustained cash generations. To conclude, I believe Sterling is in an important phase or important stage in its growth journey. We have built a larger and a more diverse hospitality network. We are seeing the commercial benefits of that scale through stronger room-night growth, improved occupancy, higher average room rates, apart from scaling supply. Our first half performance demonstrates that this growth is translating into increasing strength and, importantly, the expansion undertaken over the last couple of quarters again is progressively creating a platform for our next phase of earnings growth. We are entering the the stronger second half with considerable momentum, larger operating footprint, a stronger balance sheet and confidence in the opportunity ahead. Thank you.
K.S. Ramakrishnan (DEI): Hi, thanks Vikram, good afternoon everyone. This is K.S. Ramakrishnan from Digiphoto Entertainment Imaging. throwing light on the quarter two financial year 2027 as compared to financial year quarter one financial year 2027 we have done a better job. We closed at 147 crores against 130 crores in the last quarter whilst on comparing with the same quarter last year there's been about 22% down from 195 crores just 147 crores. That's on the top line revenue. On EBIT margin, fortunately we've done a much better job. From a recovery perspective, we have been on a recovery quarter. So, we've lost about 1.2 crores as compared to making 2.3 crores the same quarter last year. From a comparison of last quarter from losing 15 crores, we're now at 1.2 crores. We've got all of this strongly by redirecting our management focus to the Far East markets. Maximizing revenue at all the existing sites through events and new content. UAE itself, in spite of the geopolit- geopolitical scenario around the place, is back to about 40% to 50% of the prior year revenue. This has helped us with higher productivity. Coming to the margins and the profitability, our focus has been on strongly on workforce optimization, which has given us the maximum benefit and contributed to better EBIT margins now. The full quarter benefit in Middle East from a direct staff reduction to a flatter operation structure in other markets and support functions being streamlined through technology, we've got sizeable benefit out of that. We've also the team has done a very strong work on the cost renegotiation through better revenue share terms, both from partners and working more aggressively on reviewing and renegotiating materials and service contracts. Last but not the least, our IT consolidation now with VC being completely our primary system, we've removed all the overlapping cost on IT in this quarter which was past, was plaguing us in the past. All of this are going to be sustainable for the future. Going light a little bit on VC, what we've done is we've activated post-visit sales across 45% of our portfolio in terms of the number of sites. In terms of revenue, we've implemented the post-visit sales across 35% probably of the portfolio. The good news is within this last quarter itself, we've seen 1,200 plus transactions, which is nearly at, in certain sites, about 2% to 5% higher on conversion as compared to the previous years of operation. We would see maximization of this when the full business comes through. We still are on the recovery mode, so that will help us better conversion and better revenue generation, and above all, better margins.
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