Thomas Cook (India) Limited (THOMASCOOK) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Thomas Cook Ltd. Q1 FI27 Conference Call hosted by Systematic Share and Stocks. 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 this conference call, please signal an operator by pressing star, then zero on your touchtone phone. I now hand the conference over to Mr. Chaitan Mahadi. Thank you, and over to you, sir.

Yeah, thank you, Zania. Welcome, everyone, and thank you for joining us today on the Thomas Cook India Limited Q1 FY27 Earnings Conference Call. From the company, we have with us Mr. Mahesh Ayer, the 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 the initial remarks. Thank you and over to you, sir.

Thomas Cook for the Earnings Call Q1FI27 Financial and Operating Performance. Before we begin, I would like to introduce the management team joining me on the call today. I have with me on the call Vikram Lalwani, Managing Director and CEO of Sterling Holiday Resorts. K.S. Ramakrishnan, Managing Director of DEI, Vishal Suri, Managing Director of SOTC, Devesh Vishnandi, who is the Group CFO, Brijesh Modi, who is the CFO at Thomas Cook, India Limited, and Urvashi Bhutani, who has Investor Relationships. Now, coming to our performance, the first quarter of FY27 was, in many ways, a good test of the resilience of our business. We have reinforced that our performance is increasingly being shaped by decisions within our control, that is, where we choose to allocate our capital, the customer segments and market we prioritize, and our ability to execute with discipline while continuing to invest for future growth. I am pleased to share that this was reflected across almost every part of our portfolio. India businesses, led by foreign exchange, mice, and corporate travel, continue to deliver healthy momentum and stable operating performance. Sterling holidays delivered strong growth during the quarter, reflecting sustained demand, disciplined execution, and the strength of its leisure hospitality business. Importantly, the impact of the conflict in West Asia was limited to a few businesses with direct exposure to the region, primarily... Thank you. The revenue for the quarter stood at Rs 21,530 million, a decline of 12% year-on-year, excluding the business impacted by the geopolitical disruptions or India operations remain stable on a year-on-year basis. Excluding the GCC-based subsidies, i.e. DEI and Desert Adventures, the consolidated results of the group registered. Thank you. Business which delivered a positive performance during this year, with which segments revenue growing by 6%, EBIT by 8%, and EBIT margins at its head. If you look at the LRS data that was published by RBI for the period April 26 and May 2026, across the three relevant categories, that is education, travel-related foreign exchange and remittance, the education industry saw a decline of 27%, travel-related forex saw a decline of 8%, and remittance declined by 14%. Correspondingly, to give you a like-to-like comparison, our travel segment for the same period largely aligned with the industry trend, which is a decline of about 8%. However, our education portfolio, we actually grew by 17%. Our overall retail portfolio delivered an 8% YOY growth in turnover for the quarter, outperforming the underlying market. Following a relatively softer April and broadly stable May, June delivered a stronger performance than the previous year, reflecting improved business sentiments. Our education portfolio remained a key goal driver, with turnover increasing by 36% year-on-year. This performance was supported by continued investments in our distribution and stronger partnership across leading NBSCs. Our program launched in partnership with Visa during the quarter. and growth in turnover driven by higher wallet share from our existing relationships, new client acquisitions and continued expansion of our corporate relationships. Our digital channels continue to great traction during the quarter, reflecting our continued investments in strengthening our omni-channel proposition. Digital penetration improved to 23.5% compared to 20.4% last year. Supported by higher customer engagement across our website. Transaction increased by 38%. TP Pay app, where our bookings increased threefold, and WhatsApp channel, which saw a strong traction of 80% plus growth over the comparable period. We also continue to expand our digital distribution through kube commerce platform Blinket, enhancing convenience and accessibility for customers. We saw 34% increase in the number of cars sold via this platform and are now present in 12 cities. Our emphasis on customer proposition on the product front, too. We launched our one currency card with zero markup and zero cross-currency conversion charges, offering customers greater value and protection against currency volatility. We also expanded our borderless forex card portfolio to 28 currencies with the addition of 16 new global currencies and launched a 10% value-backed proposition for our customers. On the network side, we continue to optimize our retail footprint while simultaneously strengthening our presence at key travel hubs. During the quarter, we operationalize new foreign exchange counters at Delhi Airport, Terminal 1 and Terminal 2, while continue to optimize our branch network to enhance productivity and improve operational efficiency. Moving on to the travel segment, the travel business reported a revenue of $17,106 million During the quarter, a decline of 14% year on year. Having said that, our India B2B and B2C businesses continue to demonstrate healthy momentum with decline largely confined to business directly impacted by the conflict in West Asia. Coming to our B2C portfolio, Q1 is typically a peak period on the leisure holiday side. Demand for short haul and domestic destinations strengthened progressively as the quarter advanced. As seen in the month-on-month trend, both segments delivered a strong June highlighting improved travel sentiment and customers' continued preference for shorter and regional travel. Our domestic segments saw a 29% increase during the quarter. We continued to witness encouraging traction in the spiritual travel segment. Increasing demand for pilgrimage circuits, premium spiritual experiences and destinations such as Kailash Mansarovar reinforces our confidence in the fast-growing category. Through our Bhakti and Darshan platforms, we remain well positioned to capture this fast-growing segment. The short-haul business delivered a 6% growth, and if I have to exclude the Middle East, which was flat, or rather due to substantially during this quarter, the increase in our short-haul portfolio is 21%. Destinations such as Japan, Korea, China saw a combined increase of 38% year-on-year, while Vietnam and Cambodia delivered more than two-fold growth. On the long haul side, demand remains subdued during the quarter owing to the conflict in West Asia with sales declining 28% year on year. In fact, if you look at the monthly trend which we have presented this time, the performance was almost at par with the last year in April and improving in month on month in May. However, as the situation unfold, we could see a corresponding impact on the performance too. As we continue to scale our travel businesses, technology remains a key enabler of our customer engagement and operational efficiency. We continue to strengthen our digital ecosystem across both customer-facing and back-end platforms. Our AI-powered initiative, including conversational chatbots, AI-enabled quality monitoring, AI-assist solutions, and voice automation capabilities are helping improve customer engagement, enhance service quality, and drive productivity across operations. Reflecting the growing adoption of our digital platforms and AI-led journeys, digital penetration reached 21% in Q1 FY 2027. Coming to the B2B side of the travel business, which accounts 63% of the reported travel numbers, there was a decline of 13% to Rs. 11,192 million. Let me provide a more nuanced analysis of the B2B segment, starting with segments that performed well. Our MICE portfolio recorded a healthy 14% year-on-year growth and average turnover increasing to 5,420 million. As highlighted in our previous earnings call, we were seeing a robust pipeline building for the second half of the year, despite profits initially adopting a cautious wait-and-watch approach. We are now witnessing that deferred demand translating into business, which is clearly reflected in our current quarter's performance. The mice business witnessed a dynamic demand trend during the quarter. Thank you. The business continued to maintain a balanced portfolio with approximately 23% of the turnover generated from domestic mice and 77% from international, providing us a well-diversified demand base. Coming to our corporate travel portfolio, which I must highlight here, is reported on a net basis, saw an increase of 7% in revenue to 350 million rupees, with gross turnover crossing Rs. 7 billion with an increase of 15% YOY. Corporate travel maintained a consistent growth trajectory throughout the quarter following a stable April. Momentum strengthened in May and remained healthy in June, reflecting sustained business travel demand, higher wallet share from existing clients, and continued client execution. We added seven new accounts across sectors including financial services, automobile, IT, insurance, and education. Air transactions volume grew by 14%, international air volumes increased by nearly 17%, and hotel volumes grew by 33%, reflecting healthy business travel demand and continuous focus on customer acquisition. On the DMS portfolio, we reported a 31% decline to $5,422 million. Of this, the India DMS portfolio remained stable during the quarter. This period is a traditionally lean quarter for the India inbound business. On the International GMS slide, revenues declined by 33% for the quarter. Asian trails, which covered the Asia-Pacific region, delivered a stable performance supported by growth in China and improving contributions from Cambodia, Malaysia, and Singapore. Private safaris in Southern Africa and East Africa continued to grow, with revenue growing by 17 and 4% respectively. The broader decline in the performance was largely attributable. Two, the geopolitical disruption impacting desert adventures operations were revenue declined by 89%, coupled with softer inbound tourism trends in the U.S., which weighed on the overall performance of the Allied E-Pro, was a top-line decline by 40%. Total travel segment EBIT declined by 50% year-on-year to 405 million rupees. It is important to note that majority of the declines stems from the call. Before I hand over the call to Vikram for his comments on shirling holidays, I would like to conclude by saying that this quarter reaffirmed the resilience of our core India businesses and our strength of diversified portfolio. While geopolitical developments continue to influence part of our international operations, we remain encouraged by the momentum across our domestic and short haul business and by the strategic investments we have made over the past few years. As we move through the year, our focus remains on executing consistently, responding with agility, and continue to build a stronger, more resilient business for the long term. With this, I hand over the call to Vikram.

Thanks, Mahesh. Good afternoon, everyone, and thank you for joining us today. My name is Vikram Lalwani. I'm the MD CEO of Sterling Holiday Results Limited, and I'm also joined by Mr. L. Krishchakumar, who is the CFO of the company, and we are based in Chennai. It is my pleasure to welcome you to discuss our Sterling performance for the first quarter of FY27. Q1 FY27 represents a defining milestone in Sterling's journey. It has been our best quarter ever across all quarters, and we've demonstrated 26 consecutive profitable quarters as well. While it is our strongest operating and financial quarter in the company's history, we believe its significance extends well beyond the numbers. It reflects the emergence of a business that has fundamentally transformed itself over the last couple of years into a scalable, profitable, and a resilient hospitality platform. Today, I would like to focus my remarks around seven keys. The first one being record operating and financial performance. Q1FI27 represents the quarter in Sterling's history where virtually every business metric improved simultaneously. Revenue from operations reached $1.7 billion, growing 21% year-on-year. EBITDA increased 21% to over $620 million while maintaining an industry-leading EBITDA margin of 37%. Profit before tax grew faster, 30% year-on-year, taking our PVT margins to 28% and expansion of 200 basis points over the same period last year. Operating cash-free cash flow also increased by 30%, reinforcing that our earnings are translating into strong cash generation and even hence a stronger balance sheet. Profitability continues to grow faster than revenue, demonstrating improving operating leverage, disciplined cost management, and increasing maturity of our business model. Our financial position is stronger today than any other time of the past. Sterling remains debt-free, with cash reserves exceeding 3.7 billion, providing significant strategic flexibility to invest in expansion, technology, leadership, guest experience, and future growth opportunities. A strong balance sheet is not an objective by itself, it's an enabler. It gives us the confidence to invest. These opportunities and create long-term shareholder value without compromising our financial discipline. Taken together, these results reinforce a simple but a powerful message, which we would like to tell you. This is not a quarter driven by one exceptional initiative. It was a quarter where every growth engine delivered. Point number two, quality of earnings continue to strengthen. Our occupancy improved 700 basis points to 77%. Despite a significant increase in available inventory year-on-year. At the same time, our average room rates also increased by 10% into an all-time high of 7,809. Together, this drove a 20% increase in total revenue. One of the clearest indicators of revenue productivity in our industry. Room revenues increased 29% and food and beverage continued to grow over 15%. Demand continues to outpace supply additions, supported by stronger commercial execution, disciplined revenue management. And an increasing influence. Thank you. Neuro-neur growth has been 28%. Thank you. Point four, customer excellence, our strongest competitive advantage. Our net promoter score remains above 81%. Sterling Kana has received Strip Advisor's prestigious Best of the Best Award for the fourth consecutive year, placing it amongst the very select group of resort properties globally, top 1%, and making sterling. The only resort brand to receive this distinction four years in a row and in succession. In addition, 28 Sterling resorts received Trip Advisors Traveler's Choice Awards, rating us in top 10% globally, amongst all accommodations. Even more encouraging is that 12 resorts have now earned this recognition for three consecutive years, while 21 resorts have been recognized for this. Point number five, responsible growth by creating shared value. At Stirling, we believe that business success and societal impact are not mutually exclusive. In fact, they strengthen one another. As we continue to scale Stirling, we are equally committed to building a stronger and healthier communities around us. Over the last two years, through our CSR initiatives, we have invested over two pros towards strengthening dialysis infrastructure across the country. We have installed 38 dialysis machines across seven Indian states, supported 19 hospitals, and created an annual dialysis capacity of approximately 57,000 life-saving treatments, as well as created local employment opportunities. This is what doing good by doing well truly means. Point number six. Strong tailwinds. Ava continues to benefit from powerful structures. Thank you. Thank you. Point number seven, our balance sheet is absolutely strong. Our development pipeline provides excellent visibility and we continue to invest in digital transformation, artificial intelligence and strategic enablers for the next phase of growth, as well as investing in leadership and the brand architecture as we scale. Combined with disciplined capital allocation and asset rights strategy, we believe Sterling is well positioned. Before I hand it over to Ram of DEI, I would like to state a few comments and my closing remarks. A few years ago, our objective was to transform the business. Today, our objective is to compound that transformation. With one of the strongest balance sheets in the sector, an expanding national footprint, a visible pipeline, industry-leading customer advocacy, disciplined capital allocation, We believe Sterling is excellent. Exceptionally well-positioned to deliver sustainable growth and enduring shareholder value. Over the last five years, Sterling has built the foundations of a high-quality hospitality company. Over the next five years, our ambition is to translate this foundation into superior growth, stronger returns, increasing cash generation, and sustained stakeholder value creation. We firmly believe that our journey has just begun. Thank you, and we look forward to some of your questions as we go along. Over to you, Ram.

Thank you, Vikram. Good afternoon, ladies and gentlemen. My name is Pierce Ramakrishnan. I'm the MD of DEI. We've had a fairly challenging quarter, as you all have seen and heard. We've posted 1,307 million rupees of revenue in the quarter one for 27, as compared to 2,097 million in quarter one for 26. This has led to, obviously, from a positive EBIT of 106 in the last year's same quarter, we've gone to a 152 million negative EBIT for this quarter. Obviously, this has been directly related to our 50 percent dependence of our overall global business falls in the Middle East, which has been heavily impacted due to the ongoing geopolitical issues, which seems to have not improved during the quarter. We're hoping and praying that that gets better as we go along. This was also compounded by the revenue drop also has been compounded by a few other business decisions that we took of closing some non-profitable sites in China, namely Universal, and some end-of-contract terms in Bahamas that we saw. Given this as a challenge, we have the management of the EIS taking immediate action of working on cost optimizations. We have constantly reduced our losses by making sites, reducing sites that do not make profits to be completely closed. Labor control has been fully enhanced. And brought to a fairly reasonable optimization that we'll see in the coming quarters. The overheads have been strongly bettered. We've again worked strongly on getting some sustainable changes on the overheads from a long-term basis. This will help us when business comes back. We've also added to it, renegotiating some of the terms with the Middle Eastern partners due to the situation, and we have got some positive responses that helps us to optimize and makes our cost much better, hopefully to deliver better results in the coming quarters. We shall await the volumes for our tech to go in full steam.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Chetan Mahadik from Systematics. Please go ahead.

Yeah, hi. Thank you for the opportunity. A few questions. Firstly, on travel. So, say, excluding the impact of the geopolitical disruptions, how has the underlying demand trended in July and early August across the outbound leisure?

Chetan, any more questions or that's the only question you had?

On travel, I have one more. That is, say, customers, if you see, have shifted from Europe and westbound destination towards Japan, Vietnam, and China. So, do these newer destinations carry, say, comparable margins or does it change significantly? Please go on travel first. Yeah.

So, Chetan, let me address both the questions. Your first question on the long-haul trend. Thank you. Kind of a little early to say that we are seeing a shift in the trend as far as the long haul is concerned because the impact of the war is not fully absorbed. You know, what happens is there are statements that are made and there are these missiles that fly at odd days and that kind of makes it difficult for customers to make a decision or form up their decision on travel. What I can definitely confirm is that the desire to travel continues to be very, very strong, and the Europe and the westbound market is always going to remain stronger in times to come also. At this point in time, what we have witnessed in July and some of the trends in August are reflecting a better outcome in terms of conversion as compared to what we saw in the period April to June. So, yes, that trend is definitely looking better. Whether this will all translate into a higher outcome as compared to what we had on the comparable period last year, it's a little too early days to say. To a second question on the shortfall side, yes, what we are also witnessing is the demand from the Westtown West. Let me continue to do it. Margin perspective, they are very similar to the kind of margins we make on the long haul products. It is only important to mention here that the average ticket price differs. On the long haul side versus short haul, the delta between the two will be anywhere between 20% to 25% in terms of average ticket value for a transaction.

Understood. And next on the forex part, so we recently operationalized the Delhi airport counters while optimizing some branch locations. So going forward, do we strategize to acquire more airport counters than say more traditional kind of branches?

Chetan, I think I have alluded to this at some point in time in my previous conversation. Look, airport is not a focus strategy per se, but we are very opportunist in that market. If there is a counter where we can be present at a price point that is, you know, I would say rewarding. From a commercial perspective, we will go into it. We don't step into airports for brand visibility or advertising because that's not the model we operate in. I think we have a very good brand, well-reckoned, trustworthy in the market, so we don't need to really go out there and put those monies at airports to advertise. So we take a very calibrated, calculated move in terms of the airports that we enter. So if you look at our entry into Delhi airport, this is something that we thought it fits the commercial construct that we have and made commercial sense for us to remain invested. That's why we went into Delhi airport. But otherwise, as a model, we are not going at it. Yes, if there are airports that come at terms that are mutually beneficial to us.

Okay. And lastly, on our hospitality business, so our ARR has seen a healthy growth of around 9 to 10%. So apart from any real rate growth, was it driven by a geographic mix shift in any of us, a slightly premium theme-based restaurants or something else?

So, one, let me take that. See, the average room rates grew by 10%, but simultaneously even the volume grew to almost 77%. One, it obviously was the summer period, and domestic as our key source of business, and we leveraged the domestic as a key source of business as well. Over a period of time, as we kept expanding as well, Sterling has added different, I would say, in a simple form, different classes of hotels. So it has different levels or different segmentation. So we've moved away from just being a mid-scale player towards upper-upscale and upper-mid-scale as well. So what happens in such situations, your ability to expand the rates as and when the demand is increasing. Actually, that enables us to do so in a much more fungible manner. So, that's how we've actually managed to leverage and get this average rate growth simultaneously with the volume growth. So, both of them actually grew simultaneously, and that's why the total revenue per available group also grew by almost 20%.

Got it. Thank you, and all the best.

The next question is from the line of Anil Shah from Insightful Investments. Please go ahead.

My question is on digital imaging. What a period of time last quarter, whether, you know, our EBITDA or EBIT loss at peak. On a more sustainable basis, my question on digital imaging is given, you know, A, what's the capital employed in this business? And the OPEX involved and the management bandwidth, what is the best case ROC that we can really make and what's the best EBIT that we can make on a normalized basis? Because obviously, from what I understand, there is a lot of capital. Also, involved in this particular business, and so is a lot of OPEX. So, if you could just throw some light more on a medium to longer term perspective on digital imaging as such.

Okay, I'll take one part of it and ask Dibashi to help me with the roles, etc. From a capital perspective, our biggest, largest capital that we've deployed in the last five years probably is only on our technology upgrade that we've gone through. All right, so on a regular day-to-day basis, the capital requirement is not so large, if I may address that. And the logistics that we put is on the technology upgrade that's going to be sustainable and delivering more than required in the next five to seven years. That's one piece of it. So it's not intensive that way. From a day-to-day operation level, we spend less than about, probably say, It's not very large from an operational level on the CAPEX, because most of our contracts are such that we go and operate in a premise which is already ready and done by our partner. There's no large setup cost, etc., except for some hardware and the software that's already invested. Devashish, you can fill me up with the rest if you want to.

Yeah, yeah, sure. So Anil, if you look at the segment results, you'll see that the net assets employed in DigiPhoto Imaging Services, which is... So, we can do a math on that and figure out what's the sort of return on capital that we can...

I mean, in terms of what we have, 243 crores is the net capital that we're deploying on this business. Obviously, a reasonable large part of that was upgradation, which we did in the last few years. Is there a lot of spend on CAPEX or on upgradation that is yet to happen? Because this part of technology is constantly evolving, and you need to be right up there. So is there a constant spend that we need to do there?

So the business that we are in, the business we are in is in imaging, and we capture emotions of guests and deliver that. We are not a technology company per se, okay? We have only built technology that helps us deliver that seamlessly. If for whatever number that devices put, more than 50, 60% of that amount has been just in the, not just the upgrade, but the revamp of that, that will last for the next 5 to 10 years. So there won't be any ongoing costs of any substantial in nature near to what's already been done so far.

So, Ram, if I may add to that. So, Anil, you know, DEI has been in existence for more than 20 years now. For the first about 15 years of its life cycle, it worked on a particular technology which it had obtained from a third party. There were some updations on that, but not an upgradation, so to say. Only in 2020 or 2021, we realized that we are falling behind and we need to develop a new technology. Which, as Ram pointed out, would last for another at least about 10 years or so. So, there will be periodic sort of inputs to be given into technology, but that is not every year or every few years. It's probably every 10, 10, 12 years that we need to probably upgrade the technology.

And what would be a target, you know, IRR or ROCE that we really want to generate? Because at peak EBIT that we've done in the last six years is, you know, around 50 crores or something. And I'm presuming that was, you know, one of the more normal year in the world.

Yeah. So, I mean, from the time we have acquired DEI, honestly, there have been only two normal years in the world. We acquired them in late 2019, and only two normal years was about, I think, about 23 and 24. Those were the two normal years that we found. But to come back to your question. Yeah, what kind of returns? Yeah, yeah, coming to that, exactly. Sure. We go by the overall target of delivering a 20% ROE. That's a long-term goal. It is true that every business has to deliver at least that much because it cannot be that one business delivers more and one business delivers less. So that's the sort of return that we're looking for.

And, you know, this EBIT, obviously, does not, you know, you've not reduced the corporate overheads in this EBIT because it's a segmental EBIT.

Yeah, but the segment doesn't have much. So, DEI has no common expenses or support expenses. Everything is absorbed in the segment. The DEI, the structure that we have for DEI is that it is headquartered in Dubai and spread across Asia and a bit of US and stuff like that, but we do not ascribe any of DEI expenses as common expenses. Okay, so entire expenses of DEI is absorbed in that particular segment.

And, you know, just coming to the travel part of the business, somebody asked you about, you know, July, etc. So from a full year perspective, assuming, you know, things, I mean, even as we speak, things are not really absolutely normal. Assuming that we assume this to be normal, you know, what kind of growth in travel are we looking for from a FY27?

I mean, maybe this is not the right time for me to give you a guidance on what will be the FY27 outcome. As you rightly said, we are still in the midst of the war, and we see new statements emerging every day, which determines which way the flow of traffic or aircraft will fly. Just alluding to the point that I made previously to the question that was asked by Chetan, I think from a long-haul perspective, we are seeing some positive shift in the... The deficit that we were seeing previously, the deficit percentages have come down. So if you were looking at a 28-30% deficit on the long haul side, now currently they are trending slightly lower than that kind of levels. Obviously, we are also seeing momentum or growth on the short haul on the domestic side of it. But as I qualified and said, the short haul average ticket price or the average value of a package is lower than that of a long haul. So there is that mixed impact that will come into play. Currently, very difficult for me to give you Your forward-looking statement as to what my exit FI27 will be, but reasonable to expect that if the situations remain constant. We should be better in H2 as compared to H1.

Thank you. The next question is from the line of Madhurati from Counter Cyclical Invertments. Please go ahead.

Sir, thank you for the opportunity. Sir, I wanted to understand regarding our travel segment. If I look at the past two years, we've grown cumulatively between FI24 and FI26 by 20%. And I think a lot of that would be also price increases, not the long or short of mix, but just the price increases of the end packages that we are providing. But our margins have declined at the same rate. So, how should I look at the margin of the segment and what will drive either improvement in the take rates or EBIT margins of the segment going forward? And so, second question was how with the TCS rate reduction, how are we, is the pricing more, so if you could help us understand how the pricing scenario, are customers more accepting our,

So, Mahur, let me try and break this question into two parts and try and respond to you. Question one was in terms of our revenue growth. You know, if you look at our revenue growth, the nature of the business is very cyclical, it's seasonal by nature, so there's no straight line. If you look at the gross output for a full year and compare it, you will see the growth. But you must also keep in mind that we never had a good stable year where all cylinders are fired, which means all geographies are operated at the same level. We had some of the other disruptions in some market. So an overperformance in one market is kind of underpinned by underperformance in some other market. So that has been the situation that we are currently in. And if you look at the case in point in the current quarter also, while the India business have remained fairly stable, we were impacted largely by the Middle East markets. We had a 200 crore shortfall in our top line sales, which has kind of impacted our overall profitability for the quarter. To your reference on take rates, I'm presuming you're talking about gross margins. I think gross margins across the travel portfolio has remained stable. In fact, it's grown in some of our outbound segments from the comparable period and for the financial year FI26. And currently, if I look at FI27, the margins are actually looking better. From an EBIT margin point of view, again, slightly uncertain at this point to give you a guidance on what kind of margins, but internally, we are working in a range of about 4 to 5%. That's the kind of range of EBIT margin that we are working with. Thank you. Thank you.

Sir, so how can we expect to see an improvement? I understand that our gross margins are stable right now, but how do we improve this going forward on a mid-term basis? Are there any drivers or this will become a stable and based on whatever geography or whatever there is, ups and downs seasonality in whichever geography, our EBIT margins would go up and down. So I am trying to understand on that.

So, Madhur, I think there's no one-size-fits-all kind of an answer to it because we are looking at different... Business models in the one is a B2B business, other is a B2C business. You can extract some amount of pricing. We are competing with other operators in that same space. So yes, wherever it's a B2C bend, we have some leverage on the market. But please also be mindful that input costs have gone higher because the airline costs are higher. Forex rates have changed on the side of being expensive. We have to be competitive in the marketplace and some of the tactical scores that we keep taking from time to time to keep the demand cycle going because there is a capacity that we've invested in and you have to keep the capacity engaged. So that's what we do. So again, you know, just to give you a long, long answer in a short word is that our focus is to keep ourselves true to the margin that that I mentioned, which is the range of four to five percent. There will be this quarterly seasonal variations that you will see. The long-term strategy is to ensure that our pay crates across B2B and B2C over around the 14-15% range.

Got it. And sir, on the TCS reduction, how is the impact of the same, like, on the pricing and customer acceptance? Are customers more accepting?

So, honestly, to be very frank, I haven't seen a big impact coming out of the TCS. Yes, it's been bought down to a stable 5%. It's a cash outgo, not necessarily a price, because that is going to be claimed by the customer by filing his returns and stuff like that. So, I think people have taken it that side. Is there a positive impact of it? I can't put a finger on it and say yes. But yes, it does help because 5% seems lower as compared to the previous trades that we were operating at.

Got it. Sir, I wanted to understand that if we see our travel segment, it is by and large flat since FY19, and I do understand that there have been disruptions, but even so, it seems that there is some challenge in growing this division. So, what are, in your best judgment, minus once all the geopolitical issues stabilize? What is the expectation from this division? At what rate can this business grow over the next five years?

So, Madhur, again, I'll come back to the point that I made. You know, again, it's not about one-size-fits-all here because there are multiple parts to this business. There is a B2B and a B2C side to the business. Again, within the B2B, there are DMS, which are inbound-focused business, and then I have India-focused B2B business, which is corporate and mice. So, if you look at our corporate and mice business, they have been registering a 12-15% growth year on year. If I look at the B2C businesses, and again, post the pandemic, I think there is a shift in terms of how customers travel. The long haul side of the portfolio, which used to be a larger portfolio, has shrunk. And what we are seeing is the growth coming in the short haul and the domestic side of it. Obviously, because the ATVs on these domestic and short haul are lower, they don't reflect as growth on the overall portfolio. I mean, that's one of the reasons why the overall growth when you compare to 2019 to 2025 or 26, you don't see that kind of number. Again, keep in mind that when you look at 2019, most of the DMS companies that we acquired were loss-making then. Over the last three, four years and post-pandemic, more specifically between 23, 24 and 25, a lot of these businesses have undergone transformation. Their revenue have been growing at about 8% to 12% YOY, and we are seeing some of those benefits actually to flow down. I mean, if you look even at the current quarter, with the exception of the Middle East markets and the US market, the other three units actually fired well. Their revenue actually grew by 8% and 12% respectively. So we have seen growths that have come in, but there are pockets where there has been impact. So overall, when you start looking at the overall pocket, you don't see the comparison in terms of growth. But if I have to plot each of that and put a 5-year graph to it, you will actually see the growth trends.

So just to add to that, if you look at FI-19, the travel services stop line was 6,000... We actually entered a period of degrowth because of COVID. And so that impacted the next three years. So we actually went down from 6060 growth in FY19 to, in FY22, the number had gone down to, I'm not even talking about FY21, which is a peak period, but FY22 was 1047. So we de-grew by more than 80%. And then we sort of climbed back.

And if I look at FY21, Basically, to be reasonable to compare a normal year which FY19 was to FY26, which again was a normal year by and large, is more sensible than to basically compare a normal year.

I'm sorry, I have to interrupt. FY26 is the no-space of human nature normal year. The disturbances in the Middle East, and airspace issues, and of course, So, FY26 is one of the worst years we face in terms of disturbances, in terms of geopolitical disturbances.

Understood, sir. Now, sir, lastly, sir, in our financial services segment, sir, now many new online technology-based disruptors have come up, book my Forex, and so on. So, do you, is there any threat of disruption in the Forex booking side of the business?

So, Madhur, I won't comment on any of the competition. I can only comment on what we do. I think if you look at our commentary to the market, we've said our digital adoption is close to about 24%. So, we are present in all the digital channels that a customer wants to access our services, and 24% of our transactions today are done digitally, whether it's a WhatsApp journey, whether it's an app journey, or it's a website journey. The customer can seamlessly interact with us. You know, for us, competition was there yesterday, it's going to be there today, and it's going to be there tomorrow. I think we've stood our ground in terms of the product and offerings that we bring, and we've always been, I would say, market makers than followers. So some of the things that we bring to the market, the market actually follows us. So I think we have an edge there. We are one of the oldest companies in this space, one of the most trusted brands. The product portfolio that we have is... The most robust that we have, and we keep innovating in our product portfolio also, which kind of keeps us ahead of the market. So, I think that's where I will mark my statement. I wouldn't make any comparison to competition.

Right. Sir, thank you so much and all you guys.

Ladies and gentlemen, before we take the next question, we would like to remind participants that you may press star and want to ask a question. The next question is from the line of Shivam Gupta from Trinitra Asset Managers. Please go ahead.

Hi, sir. In the last call, hello, am I audible?

Shivam, can you speak a little louder, please?

Hello. Yeah. Is it good now? In an earlier call, management has guided like double-digit earning growth in FI27. Was Ashiva under normal condition? After the Q1 decline, do you still believe this is possible?

Shivam, I wish I could answer that question to you at this point in time. It's just one quarter in FY27. You know, despite the headwinds that we saw, we've had a good set of numbers, a stable set of numbers in some of our markets. Difficult to gauge that at this point in time, but our endeavor will be to still deliver a good outcome for the full year. That's what I can tell you. I really don't have an answer to say what will be my full year forecast at this point in time, given the environment which we operate in currently.

Okay, and second, like excluding DEI and Desert Adventure, the group EBIT grew by 8%. Could you sell the revenue and EBIT impact from these two GCC business separately?

Yeah, can you reach out to Urvashi, who is the head of our investor relationship, and she will share all those details with you. But just to give you a broad number, I think Ram alluded to it when he spoke about his drop in EBIT. That was a 10 crore profit last year. We have dropped to 15 crore loss this year. So that's a delta of 25 crores. As far as Desert Adventures is concerned, I don't have the exact number. Ballpark, I guess it's about 8 or 9 crores. That's about 90 million. But anyway, sir, Urvashi, we'll share the final numbers with you.

Okay, sir. Thank you.

Thank you. The next question is from the line of Soumya S. from Insightful Investments. Please go ahead.

Hi, thank you for the opportunity. So, my question was regarding DEI. As you've seen that the EBIT for this quarter has, you know, reduced on a Q-on-Q basis, and the management has spoken about cost optimization measures as well as closing certain parks which were non-profitable. In the last call, it was told that the cost optimization gets implemented with a lag of around 30 to 60 days. So I was just wondering if it will be possible to see an impact in the Q2 results that will be coming up in a few months.

Ram, you want me to take the question, or you want to come in?

Yeah, I can tell. You will definitely see some difference in the Q2, for sure. You're right. The lag takes about a month or two, and absolutely correct. That's what I said in the last quarter, and you will see that difference. We also must keep in mind that the revenue has to go up. It's going up, but it's a little slow. But to answer you in a nutshell, yes, you will see differences in the cost of provision. Drastic corrections you will see on that one. Ah, I think you can add to it if I miss something.

So, Swamya, just to add to what Ram just said, I think we have implemented some of those cost measures or cost prudence measures and some cost optimization measures also. We expect some of those benefits to come in Q2 and Q3 of FY27. But I think the more important aspect is while the cost is one side of it, the business is built on revenue. And 50% of the dependency is on the Middle East market. So, if you look at the Middle East market, currently, you know, during the period which is April-June, our recovery on that market was sub-20% or so. July is slightly better. We are looking at more like a 30%, 35% recovery, and the recovery in the revenue will largely determine as to how the quality of the earnings will look in the subsequent quarters. So we are focused on, while the cost is one side of it and we would have done most of what we need to do, I think the revenue side of it has to fire, and that's currently our focus.

Yes, and just to add.

As there are no further questions from the participants, I now hand the conference over to Mr. Mahesh Iyer.

Thank you, ladies and gentlemen, for joining this call of Thomas Cook, India Limited Group. As I said, the quarter was kind of marked with a lot of events that happened around us. As our hospitality business did exceedingly well during the quarter, we remain quite hopeful of the resilient nature of our business model and continue to do prudent capital allocation and management of our business to ensure that we maximize shareholder value.

On behalf of systematic share and stocks, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.