Thomas Cook (India) (NSE:THOMASCOOK) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to Thomas Cook Limited q two FY twenty seven earnings conference call hosted by three sixty one Capital Market. As a reminder, all participants will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to miss from three sixty one Capital Market. Thank you, and over to you, ma'am. Thank you,. Welcome, everyone, and thank you for joining on Thomas Cook Limited q two and h one FY twenty seven earnings conference call.

0:48 From the company, we have the mister Mahesh, 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 and a session. I would now like to invite Mr. Mahesh Syer to make initial remarks. Thank you and over to you sir. Thank you, Gurva. Good afternoon everyone and thank you for joining us as we discuss the Q2 FY 'twenty seven 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 of DEI Vishal Suri, Managing Director of SOTC Divasis Nandi, who is the Group CFO for Thomas Cook India Group Mr. Brijesh Modi, who is the CFO at Thomas Cook India Limited Krishna Kumar, who is the CFO at Sterling Holiday Resorts and Ulvashi Bhutani, who heads Investor Relationships.

1:56 Quarter two was a 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. But the quarter also showed us where the demand is holding up, where activity is picking up and importantly, how the cost agility we have built into our operations is helping us respond to changing business conditions. This flexibility allows us to better align cost 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.

2:42 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 Descended Ventures 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 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%.

3:33 Our international business continued to face a challenging environment, particularly given the geopolitical situation, which had a direct impact on the operations of Leatherd Ventures 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 FY twenty twenty seven. Our consolidated PBT before exceptional items stood at INR848 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 million in income from operations coming largely out of Descended Ventures 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.

4:27 On the distribution front, we continue to expand our reach with the branch network growing by 7% year on year via the franchisee route to three ten branches at the end of September twenty twenty six compared to two eighty nine 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 chatbot with the integration of DynaPAC, 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 continued to receive recognition for our efforts across our businesses.

5:16 During the quarter, Thomas Cook 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 was recognized as the most popular tour operator at the Milangie 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 Mid Excellence Awards twenty twenty six. With that context, let me take you through how the individual businesses have performed during the quarter, starting with financial services.

6:06 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 INR 39,000,000,000, driven by the retail segment. Our ETIT for the segment in Q2 improved by 10% Y o Y to INR452 million and margins are at a very 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% Y o Y to INR 72,000,000,000 with retail turnover increasing 10% to INR 55,000,000,000. Revenue from operations grew 14% to INR1918 million, while EBIT increased 9% to INR856 million with EBIT margin stood standing at 44.7%.

7:00 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 twenty twenty six shows that outward remittances under the Education category declined by 34%, while travel related foreign exchange remittance 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 students going abroad and remains an important part of our proposition for this segment.

8:02 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 transaction 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% Y o Y.

8:49 Extending the focus on convenience, we continue to strengthen our digital distribution through our GoodCommerce platform Blinkit. The number of ForEx cards sold through this platform grew 96% as compared to Q3 FY 'twenty six, 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 at Angamali, Kochin and Gubli, while closing branches in Sivantapuram as a part of our retail network optimization during the quarter. This also positions us to tap into the growing travel demand from Tier two and Tier three 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.

9:41 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 pace 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.

10:27 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 Allied T Pro continue to face challenges given the ongoing political disruptions in Middle East and softer inbound tourism into U. S. But like I said, this quarter has seen some degree of improvement from the June quarter and we have reduced our deficit in deferred ventures from 89% to 67% now and in the case of Allied Tea Pro from 40% to 22%. Consequently, the total EBIT for the business stood at $455,000,000 with a margin of 2.9%. For the first half, travel income from operations stood at 2,789 million, which is about 11% lower than last year. That said, I would like to point out that the second quarter has been encouraging.

11:20 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 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 Charda.

12:12 However, growth would have been higher, but for the cancellation on some of our Kailash, Mansoro, Yatra's following disruptions to the China visa process. Our cancellation on account of this was a tip worth to the tune of 185,000,000. Overall, digital adoption in leisure holidays 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 strong early results in an initial pilot with new agents booking up 85%, 70% on revenue and 52% compared to Q1.

12:58 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 enabling automated audits of 100% of customer calls exceeding two 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 experiential offerings to include iconic luxury rail journeys across South Africa, Canada, Australia, New Zealand and Egypt.

13:59 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, Arctic Adventures and Alpine experiences. We have also announced charter led departures from Bangalore to luxury and Mumbai to Bhutan giving customers more distinctive holiday options. Overall, our focus remains on building a broader and more differentiated 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.

14:45 This is particularly encouraging given the elevated airfares and other input cost pressures. We are also seeing a rebound in our long haul travel, especially 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 twenty twenty seven provided there are no external shocks. Coming to the B2B 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 U. K, Germany, France, Portugal and Japan.

15:37 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 $446,000,000 and gross turnover rose 19% to around INR 8,000,000,000. Operationally, the business continued to see strong momentum. Air transaction volume grew 18% with India other the areas seeing business. Seeing expand our client base during the quarter, adding new accounts across pharmaceuticals, healthcare, auto components, fintech and digital payments.

16:25 These will strengthen our presence across a diverse range of corporate sector and support our growth ambitions. Moving to our overseas BMS 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 U. S. This was partly offset by growth in Asian trades and private safaris business across Asia and Africa. In the Asia Pacific, Asian trades grew by 9% supported by positive performance in China, Singapore and Thailand, although softer inflows from source markets moderated the overall growth. In The U. S, Allied Repro saw a 22% decline in sales amid continued weakness in international visitor arrivals. However, the extent of decline moderated compared with the previous quarter GAAP of 40%, which is an encouraging sign.

17:18 The Middle East remains the most impacted market with Dessalent Ventures recording a 67% decline in sales as geographical uncertainty continue to weigh on the travel demand and travel confidence. However, 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 market 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%.

18:07 This growth helped partly offset the weakness in The Middle East and U. S. 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 preconstant levels. We entered 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. Thanks, Mahesh. Good afternoon, everyone. Thank you for joining us today. I'm pleased to share Sterling's performance for the second quarter and the first half of FY twenty seven. The overarching message is that, Sterling's growth trajectory continues to strengthen.

18:55 The scale we have 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 'twenty seven, let me begin with the second quarter. First, Surly delivered its highest Q2 revenue of approximately $1,272,000,000 dollars registering a year on year growth of about 17%. This is a significant milestone because, as you aware, July to September is traditionally our weakest quarter, influenced by monsoon seasons and softer demand across several leisure and wildlife destinations.

19:47 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 Slurry'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 September 30. The room nights sold increased by approximately 23%, while occupancy improved by about 400 basis points. Average room rates in our own lease portfolio also increased by 12% approximately. This has resulted in a total RevPAR growth of 12%, demonstrating an improved revenue productivity.

20:40 This combination of volume growth, higher occupancies and improved pricing is particularly encouraging. It demonstrates that serving is not merely growing through the addition of new resorts, we are 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 pursued over the last couple of years. Q2 profitability, understanding the reported performance. On the profitability front, EBITDA increased to approximately INR $289,000,000 compared with INR $277,000,000 in the corresponding quarter last year. PBT also grew to approximately INR $140,000,000 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.

21:40 During Q2, we incurred approximately INR 40,000,000 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 costs for analytical comparison, EBITDA would have actually been approximately $329,000,000 representing a growth of around 19 to 20% over the corresponding quarter last year compared to a reported growth of approximately 4% to 5%.

22:28 This provides a more meaningful perspective on underlying earnings 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 of the performance of the business. We also received two significant recognitions during the quarter, our fastest growing leisure hotel chain at today's Traveler 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 and Awards.

23:23 Coming to H1 twenty seven, looking at the first half of the financial year, provides an even clearer perspective on the progress Praveen is making. For H1 FY 'twenty seven, the revenues grew approximately 19% to INR2971 million, EBITDA increased 15% to approximately INR910 million, while PBT grew 22% to approximately million. Dollars 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.

24:09 The room nights sold increased by approximately 24%. Our occupancy improved by 500 basis points, while the average room rates increased approximately 11. This resulted in a total RevPAR of H1 growing little over 15% year on year. A combination This we have consistently worked towards, a larger operating network, stronger occupancy, better realization and growing profitability. It also reinforces the operating leverage demonstrated in the first quarter, which EBIT at DVT grew faster than revenue. Our first half performance validates both the direction of our growth and the underlying earnings capability of the Sterling platform.

24:57 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 beyond traditional leisure destinations into other travel locations, 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.

25:52 Having established ourselves as a leading senior hospitality player, we see that this is a natural evolution towards a multisegment, 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 steadfast with net cash reserves of approximately 3,805 million dollars at the end of the quarter. Importantly, we have also completed twenty seventh consecutive profitable quarters, demonstrating the resilience of our business model across various demand cycles, seasons and phases of expansion.

26:42 This has aid 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 discipline and 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 is the outlook 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 the holiday season, while January to March typically offers another strong period for travel, leisure, mice and wedding demand.

27:29 What makes the quarter particularly interesting for Sterling is that we entered 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, strengthened our ability to address different customer segments. We expect the contribution of these additions to build progressively as the properties mature, the market presence strengthens and the commercial performance ramps up. We also expect the GST cost comparability to behave more 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.

28:22 Our focus will remain on translating this opportunity into higher result productivity, stronger management fee contributions, improved operating profitability and sustained cash generation. To conclude, I believe sterling is 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 a mixed phase of earnings growth.

29:12 We are entering the stronger second half with considerable momentum, larger operating REPRESENTATIVE:] footprint, a stronger balance sheet and confidence in the opportunity ahead. Thank you. Hi. Thanks, Vikram. Good afternoon, everyone. This is K. S. Ramakrishnan from DG photo and ten Imaging. Going right on the quarter two financial year twenty twenty seven, as compared to financial year to quarter one financial year twenty twenty seven, we had done a better job. We closed at $1.47 crores against a 130 crores in the last quarter. Whilst on... Comparing to the same quarter last year, it's still about 22% down from $1.95 crores to this and $1.47 crores. That's on the top line revenue. On the EBIT margin, fortunately, we've done a much better job. From a recovery perspective, we have been on a recovery quarter.

30:10 So we've lost about 1.2 crores as compared to making INR 2.3 crores the same quarter last year. From a comparison of last quarter, from losing INR 15 crores, we're now at INR 1.2 crores. We've got all of this strongly by redirecting our management focus to the Far East markets, maximizing the revenue at all the existing sites through events and new content. UAE itself, in spite of the 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 work post optimization, which has given us the maximum benefit and contribute towards better EBIT margins now.

31:01 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 sizable benefit out of that. We've also... The team has done a very strong work on the cost renegotiations to better understand terms both from partners and working more aggressively on reviewing and renegotiating material and service contracts. Last but not the least, our IT consolidation now with VC being completely our primary system. We removed all the overlapping costs from IT in this quarter, which was past... Was bringing us in the past. All of these are gonna be sustainable for the future.

31:47 So we'll write a little bit on VC. What we've done is we've activated post visits sales across 45% of our portfolio in terms of the number of sites. In terms of revenue, we've implemented the post sales, business 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 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 end generation and above all better margins.

32:34 We have the testing of the... We're also testing of WhatsApp journey to lift up pre lift... Pre visits past conversion. Overall, both we maximize on our VC implementation very well across the sites that we could, although all these sites are still not at full monthly. Throwing some light on the existing business itself, We've had some... We we have some... We have we have had five new partners in the quarter signed up in Malaysia, Modi's in Singapore and India. We renewed all... Most of our key partners, over 20 partners were renewed during this quarter. And we have launched three new partnerships in Indonesia, China and Maldives. Going forward, new opportunities, we just signed up the Warner Brothers Harry Potter exhibit in Shanghai, and we're very optimistic that that will bring us a sizable recovery on our revenue in the coming quarters.

33:27 We are also anticipating partnerships with Hong Kong Disney and Petronas Malaysia to get in soon. Overall, looking forward, we're expecting a steady middle digit as you know further trading disruption happens. And above all, we definitely anticipate a much better quarter. The last quarter of the third quarter twenty twenty twenty seven is supposed to be our largest quarter of the year. So we're very optimistic barring any trading disruptions due to any other unforeseen circumstances. We see... We stay very optimistic in our recovery. Thank you. Youssef, we can go ahead with the q and a, please. Thank you very much. We will now begin the question and answer session.

34:15 Anyone who wishes to ask a question, may press star and 1 on the touch tone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of from Systematic Group. Please go ahead. Hi. Thank you for the opportunity. Few questions. Firstly, on Sterling. So I believe that a newly added resource typically take over three to four months to say ramp up. With seven resource added during the quarter and the portfolio continuing to expand, could you share how long does it take for a a new property to, say, achieve mature level profitability?

35:10 Any color on this? Yeah. Hi. Thanks. This is Vikram here. Very good question. Now, way I would put it is, it also depends on the kind of property or the kind of location that we open in. For example, in this quarter, we opened about three wildlife destinations, and we opened them in September, knowing fully well that Namba onwards is the high demand for the Safaris. So there we could potentially get a better and a quicker ramp depending on the timing in which we open as well. So if we, for example, open a wildlife in April, then you know that it will take six months, seven months to ramp up. But as we opened it in September, it could take about two and a half months. Technically, in any any given property on an average, after ninety days of the operation stabilizing and the distribution channels getting a complete know how of your property with the first few guests going in and experiencing it, the real ramp will start actually from post ninety days. So I would always look at the first ninety days as the baby phase and the post ninety days, they'll start the actual ramp.

36:37 Within a year, if you see, take for example, it completes two or three quarters or seasons or sees two or three seasons, I think that's when the ramp is complete. Got it. Got it. Next question is on DEI. So you have carried out site rationalization. They closed around thirty thirty two nonprofitable sites during the quarter. So if you can highlight how many of these two thirty site sites we currently have are EBITDA positive, or how many more sites do we plan to close down during this year? So this is a cycle process.

37:22 Cutting down of EBITDA, negative sales is a cycle process first and foremost, and it's done in a very, very scientific manner. The intent is never to have EBITDA negative sales on our portfolio, unless it's linked with another side, which is more high positive. If you're asking me a question of how many of them are EBITDA negative, not more than eight to 10% of our sites can be hovering around the EBITDA negative sites. So that is... But an accurate number, I wouldn't be able to give you because it's not measured on a day to day basis. But historically, we've been holding sites which will make money. Our site level, we... At one basic service, are always site level positive on our gross margins. Then what is attributable towards the overall cost of IBC. So we are conscious of keeping every site at gross level margin positive.

38:14 Got it. And just just one last clarification on the travel part. So we have indicated that the India leisure forward bookings for q three are trending somewhere around 30% higher year on year. So so is it in value terms or number of passenger booking? Oh, sorry. Sorry. Did you hear me? Sorry. I missed it. Sorry, Chetan. This is Manish here. Yes. Our forward booking numbers that we have quoted is a 30% value growth compared to the same quarter last year, which is o n d twenty five compared to o n d twenty six.

39:07 Okay. Understood. Yeah. Yeah. Thank you. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participant in the question queue, Please limit yourself to two question only. Should you have a follow-up question, please rejoin the queue. Next question is from the line of Anil Shah from Insightful Investments. Please go ahead. Hi. Good afternoon. The question is more on the Sterling side. I did hear the fact that there's an impact of some of 4 crores on the GST inputs. If you could just elaborate a bit on that because while all the other parameters in terms of ARR, in terms of number of rooms, in terms of occupancy, the guest ratios, all of them are in favor of much better revenue growth and EBIT growth. We have seen revenue growth at 21%, but 9% EBIT growth.

40:04 I was just wondering if there's anything more to it and if you could just elaborate a little more on the GST part, number one. My second question is, again, related to Sterling. Where do we see ourselves, say, by 2013 in terms of... Or '28, if not '30, let's say, FY twenty eight in terms of revenue, EBITDA, in terms of percentage, what is it that you would like us to track you on in terms of performance? Okay. Let me answer both those questions. And if we see, yes, a seasonally weak quarter and 4,000,000 I'm sorry, 40,000,000 coming out in a seasonally weak quarter, it reflects a little it reflects far more.

40:51 But I've actually made this point, given the fact that last year, same time in quarter two, the government or the ruling was not where we had the IFC or the input tax credit benefit that time. It's actually kicked in somewhere around 09/23/2025, if I remember that date correctly. So it actually impacted the Q3 numbers and thereafter. So, therefore, the Q2 of last year, we never had the GSE ITC cost, which actually impacted us this quarter. But if you have to actually not factor or add that back, actually, our EBITDA grew closer towards 19 to 20%, which is in line, if not actually slightly more than that of the revenue growth that has taken place. If there is inflationary cost pressures, which are continuously there, like the LPG, diesel, but we are managing those through efficiencies in a far better manner because the consumption then starts because you can't decide the price, then you have to start managing the consumption.

42:10 So that's how we are managing efficiencies at our results. But having said this, this is an item which was not there last year, which is there this year, which has impacted the overall number. But from a business perspective, it has not. Now, what is this GST input tax credit? Previously, we could take an input tax credit irrespective of the rate of rate type that was sold. Now you cannot take the input tax credit for all the rates that are sold, 7,500 and under. And if you know, in the seasonally weak quarter, you could tend to sell more rates above 7,500, at least you go actually empty or you go weighted. So therefore, and but yet we premiumize, we still increase our average rates by 12%, closer towards INR 1,500.

43:03 So therefore, those rates that have gone below INR 7,500, you cannot get that benefit of an income tax that we got until 09/23/2025, right. So that is where the comparative statement is number one. Number two, if we see to answer your second question, if we see the trajectory of Sterling in the last four to five years and how the trajectory has really fueled and changed, our attempt is to continuously scale the company in terms of number of hotels, but to scale them with value, so that your revenue growth and your profitability growth on a capital light basis at a price basis. We are yet debt free. We have cash in the bank. We will do it prudently and we will do it systematically.

44:00 So if you have to take the trend in the last couple of years, we expect that same trend to continue in the next two or three years. So I think that's the kind of growth metrics that we are looking at. So some numbers would really help, sir, to be qualitative remarks that you made. Just some ballpoint in terms of how one would like to see the, you know, the business improving in terms of whether it's... Of course, we can see in terms of the new results opening. We can see in terms of how number of rooms are going up, ARR, etcetera. But from an internal perspective, there would be some benchmark that we would be looking at. Whether it's So I I would whether it's absolute EBITDA, whether it's EBITDA margin, whether it's PBT, you know, what exactly? Because we will soon be a separately listed company as far as part of the FY '28 is concerned.

44:52 And, you know, to begin that journey, it will be good to just have some starting point there. See, what I've always maintained even in my previous discussions with all of you is that as and when we keep scaling, the healthy EBITDA margins that we will maintain depending on the seasonality is between 32% to 37%, right? And a good running hotel company will have a better margins in that range. We will continue some quarters maybe less, some quarters maybe more, but this is the range at which we will play with. We are also scaling up number of resorts and increasing our occupancies.

45:38 I would not be able to give you an exact number per se for what is going to happen, a crystal ball three, four years down the line. But I can safely tell you that the growth momentum that we have maintained in the last three to four years, we will continue to maintain that as we keep going along. We will continue to evolve as we keep going along. As I said, even in the past, which was a vacation ownership led company has been swiveled towards a leisure hospitality company. We succeeded in that. And in today's statement I have made that we are now progressing towards a multi format, multi destination hospitality network, I think that should give us the next momentum of growth to keep us... To keep the momentum of what we had for the last three to four years.

46:44 Mister, Okay. Does that answer your question? Yes, sir. Thank you so much. Thank you. Next question is from the line of from three sixty one Capital Market. Please go ahead. Yeah. Thank you for the question, Adi. So my question is on the financial service segment. We we have seen a strong growth in the quarter in this segment. So what led to this, and are there any one off in this? And what kind of sustainable growth rate should we look for the segment going ahead?. Hi. This is Mahesh. Thank you for that question. I think, yes, you are right. You must seen a very strong growth in the current quarter, it's at 21.

47:29 And as I alluded to that in my opening remarks, this is led by a strong growth coming out of the Retail segment. The Retail segment growth was about 12%. A large part of it is coming from the education segment that grew by 33% and the corporate segment that grew by 10%. On the education side, the key drivers for that has been some of the partnerships that we have entered into with the NBFC segment, the new relationship that we have signed on the student counselor side of it and the expansion of our market share in the overall student segment. You'll also appreciate the fact that if you look at the LRS data, the student segment has actually fallen off and there has been a bit of a softness in demand as far as that segment is concerned.

48:14 Despite that, we managed to grow our share of the market and that's reflected in the overall performance for the business. Now to your question on will this be sustained, I don't think anything should take that growth away from it, but will we see the high 20% kind of a growth? Look, it's very difficult for me to kind of comment on that one. But my expectation, as we have said before, we should expect a double digit growth on this business for some time to come because that's the kind of trajectory we are seeing both from a travel perspective, from a student perspective, from a corporate perspective, and I believe the business will continue to deliver double digit growth. From a margin perspective, we already guided the market before. We are expecting the range between that 40% to 45%, and I think we've been consistently delivering that 45% EBIT margin on the business.

49:09 Thank you. Next question is from the line of from Choice Institutional Equities. Please go ahead. Hi. Thank you so much for the opportunity. Just one question from my end. The cash and short investments of around 28,000,000,000, how do we plan to deploy this capital across business expansion, any positions that we are planning? What is the strategy here? Ashish, you want to come in or you want me to take that one? No. No. I can I can come in? Thank you. Thank you, Harish. So thanks for the question. Yes. We have a good amount of cash, but you you you must also admit that a a good amount of that.

49:57 Well, balance is also on account of the float that we have on the prepaid for his cards. That's a well known fact. Now as as as far as the balance, so out of the out of the total cash that you have, there is... Obviously, we we look at it on a net basis. So that we have a net debt of about $10.16 on a gross basis. And only the balance is really available as a sort of completely free cash. Our strategy with that cash is to deploy it in deploy it in obviously for growth of the business. One of the areas obviously is automation where we have been focusing a lot. We we have spent a good amount of money on AI. We are doing it very judiciously, though not throwing any money after it. We are also modernizing our our applications including the back end executive applications, so we are spending some money on that.

50:52 We also want to keep some amount of liquidity with us because COVID taught us that in in times of uncertainty, which comes very often nowadays, it's good to sit on cash because then it helps us to tide over that uncertain period. And we do live in volatile terms. At the same time, we are also looking at, you know, we are looking at possible acquisitions. We share the right fit. We don't want to go out and buy something that's completely different from what we do, but something in our line of business, we are willing to look at only if it makes sense in terms of the price vis a vis the returns. And so we'll work on that. And if if we do not find such opportunities over the next couple of years, obviously, there are very many ways of returning cash to a shareholder.

51:42 The fact that we are demerging Sterling, which is also holding 380 crores of cash to the shareholders is one of the ways of rewarding the shareholder. Does that answer your question? Oh, yes. It does. Thank you so much, and all the best. Thank you. Thank you. Thank you, mister Gupta. Thank you. Next question is from the line of Nagaraj Singh from Banyan Capital. Please go ahead. Hi, thank you. Just could you give a sense of the trajectory of recovery within the various travel segments on Slide 12 of the presentation? The one forward guide you've given is that India travel bookings for the O and D quarter are up, forward bookings were up 30% Y o Y.

52:30 So which of those segments would that be applicable to? And your forward bookings would make up what part of that overall quarterly revenue either for the hand bucket or for the travel segment as a whole?. S. Nadaraj, thank you for that question. This is Manish again. I think it's a very important question that you asked, and I'd like to clarify that a little in detail. So as I said before, this 30% growth that we are seeing quarter on quarter for the O and D quarter is largely on the India outbound side of the business. It also includes the B2B holiday side, which is the MICE segment. So overall, we are looking at about a 30% improvement in the portfolio.

53:18 This is driven by long haul, which sits within that portfolio of India, which is growing at double digits in short haul as well as domestic. In fact, all the three segments within that is actually growing at a double digit, obviously, in different proportions in that sense. This India business contributes roughly about 51% of our overall Travel segment's revenue for the respective quarter. So since the reference is to the O and D quarter, this is roughly about 51% of the portfolio. As far as the balance 49% of the portfolio is concerned, that consists largely of our international DMS operations. Over there also from a recovery trajectory point of view, I mentioned this in my opening remarks, if you look at Q1, the shortfall was 37%, whereas in Q2, we recovered it to negative 24%.

54:12 So, the recovery has been about 13% on a quarter on quarter comparison. But if I look at Q3, which is the quarter that we are going forward with, my belief is that this should be better than the 24% shortfall that we saw. So overall, our expectation is that for the OND quarter, we should see a slightly better trajectory coming out of the B2B international businesses also. Hopefully, that answers your question. Hi, sir. Thank you. And just a follow-up, that 30% forward booking, what I understand it's a very normally business, but what percentage of bookings for the following quarter are made in the prior quarter? And what percentage are usually made in the quarter itself? So again, Nagaraj, the trends are slightly different for different segments within the business. So if you look at long haul, typically the booking pipeline is anywhere like d minus 60, d minus 90 or d minus 120 depending on the visa complications and stuff like that. Because if it's a long haul travel, need to touch multiple countries that much more time for visa posting and stuff like that. So typically that would be a d minus 90 or a d minus 60. If you look at short haul, it will be more like D minus 30 and domestic would be D minus seven or D minus 15. So they have different trajectories in that sense.

55:31 Thank you. Just and then in Sterling, just wanted a few questions on Sterling, an update on the merger process timeline and also an understanding of its P and L structure. Now when we are replacing room nights, which are occupied by members over time with free independent travelers, that's gone to 79% of room nights occupied this half year. That replacement would broadly be accretive to RevPAR per occupied room. Is that correct? Because you are replacing a member who's paid an upfront figure long back and an annual subscription fee with somebody who's paying $800,910,000 cash per room night. So would that broadly be correct?

56:20 Okay. Let me just clarify and also correct you on one aspect of it. We've not replaced the member in the sense that it's not that we are taking away the room from the member and giving it to what we call the nonmember. We are also servicing the members, right? It's just that we have stopped selling the membership or what we call membership acquisition. I think in 2023 is when I announced it, is when we stopped selling that. And we will continue with the continuing to service the existing base of the members that we have. And even the question of how many members, we have approximately about 55,000 to 70,000 members, and of which about, say, 35,000 carry in a year. Now having said that, we accommodate them based on the rules of the membership and which is why we also report what is known as a guest ratio.

57:23 So that means out of every 100 rooms that are sold in the guest ratio, assuming it's 80%, that means 80% of those 100 rooms have gone to a traditional resort sale and the 20% is with the members. So the RevPAR is actually calculated keeping that 80% in mind and does not keep the remaining 20% in taking that into account. It takes into account the resort business, that is a room revenue plus the F and B revenue and plus all the other revenue. That actually is taken into account in as a total revenue per available So, okay, okay. So, sorry, the first question is, obviously, procedure is right now.

58:21 It is at the NCLT stage as on November 2. And we've... And it's following a due process to actually come alive. So maybe I can just expand on that, Vikram. So we have received we have we have received the permission or the approval from the NSE and the BSE as well as the city. We have filed with NCLT. We had one hearing with NCLT, so our our papers are with NCLT. We are expecting them to issue us for that directive in the next few days to open the shareholders meeting, and we'll get sixty days to hold that. So that will possibly held by end of December, early January.

59:07 We are on on the track on the... That we promised you, and we are expecting this entire process to get over. That is, in other words, get the NCLT approval by end of March or early April. Understood. Thank you. Just a follow-up on the earlier question on Sterling. So is it fair to assume that the existing members will roll off over the next ten, fifteen years? And as you add room nights, that guest ratio will keep going up. And over time, what you're practically doing is replacing a guest that pays an ESS of maybe 1,002 thousand per room night with a few guests that's paying 8,009 thousand per room night. So, on a cash basis, the amount you get per room is much higher over time.

1:00:05 Okay. So, let me again explain this in a probably a simple illustration. If I have 10 rooms and seven rooms are occupied, my occupancy is 70%. Now in that seven rooms, say, rooms goes to a typical resort guest. So five divided by seven is actually my guest ratio. And that five divided by seven, it's a 72%, right? So that's my guess ratio. But in this case, it's not that and as in when you're increasing the supply and the very fact that the member base is not increasing, it's and you're offering them more opportunities to experience new destinations when compared to what it was even five years ago, you're actually not displacing, you're dispersing them, right? So that they are able to experience new destinations and you're able to actually sell it to any other resort company or hotel company.

1:01:13 And if you also see, for example, every most of the hotel brands also have an loyalty program, right? So, is akin to a loyalty program. And if you've gone and stayed if you accumulate points and stay in a particular hotel x and burning those points, that particular room will actually... You're not going to get an ER out of that out of that room. So so, you know, this is also akin to that where you can also see this membership into what a loyalty program is being built. But the very fact that it is about 10% to 12% will be the base as and when you keep increasing the supply and giving them opportunities to experience more destinations without the number of memberships going up, we are only disposing them and having opportunities to actually increase the occupancies beyond the 70% even further.

1:02:16 I think that clarifies. Line for the current question now got disconnect. We'll move to the next question from the line of Madhu Rathi from Counter Cyclical Investments. Please go ahead. Sir, thank you for the opportunity. Sir, I wanted to understand what what is the gross spread that we make on our financial services business? And how much of the income would be to the float income that we earn on this money or the transaction? Madhur, hi. Again, Mahesh. So first part of your question, the gross margins on the ForEx business, it's a blended gross margin because we're looking at retail, corporate, wholesale and different models like that. That's roughly between 1.6% to 1.8%.

1:03:06 That's the kind of gross margins that we look at that business. From a float yield point of view, again, it's different class of assets where the floats are parked. Some are foreign currency deposits, some are INR deposits and we look to optimize our earnings on that because the regulator also requires us not to keep idle funds on the accounts. We kind of try to optimize it. I think the blended average return is close to about 7.5 to 8%. Got it. No, sir. So I want... Sir, sir, EBIT margin and business business have improved from, I think, due to be less than 40% to more than 40% right now. So what has led to this improvement? And this business was kind of stagnant for the past eight or quarters, but we've seen a jump during the past two quarters.

1:03:56 So is this a jump more related to the FX price... The foreign exchange increase... The rates increasing, or is it that we have been able to... You... As you mentioned, we've been able to get market share in education segment, but the volume number of actual prepaid cards seem to be all flattish. So I'm... Can you just point me out to where should I? So, Madhu, you're looking at multiple data points. I'd rather request you to go through slide number eight of our investor deck, which kind of clearly shows the trajectory of the business. And if you look at it, the gross turnover for the business is showing a CAGR of 22% from FY 'twenty two to FY '6, moving from 60,000,000,000 rupees to 133,000,000,000 rupees. And if you were to just compare it for H1 of FY 2026 and compare to H1 of FY 2027, you will see a 4% increase. So, from a gross volume point of view, the business has been growing.

1:04:57 From a revenue perspective to the point you said it's been struggling, and I kind of disagree with that statement. If you look at it, our CAGR on that has been improving from INR110 crores to INR326 crores. That's a CAGR of 31% for comparative period of FY 'twenty two to FY 'twenty six. And if you were to just compare that number for H1 'twenty six and H1 'twenty seven, the growth is 14%, reflecting from INR168 crores to INR191 crores. So obviously, the health of the business has improved. And what as we've been saying, we've also moved a lot of our business digital, which means that while we are continuing to invest in our physical distribution, we have also grown the business digitally, which comes with limited incremental cost. We have also built efficiencies in the business, which has actually helped improve our EBIT margins, which is also visible in the same slide, which is Slide number eight, which I request you to kindly refer to.

1:05:56 No, sir. I was my I think the growth starting point was coming from, if I look at between FY 'twenty four and FY 'twenty six on a quarterly basis, we did close to 80 odd crores of revenue per quarter in the business, but that has improved closer to 100 crores in the past two quarters. So what has led to this improvement, if you can help me understand? So if you look at from a quarterly perspective, that's because we this business has suffered. That You what has happened in the offline business, which is rather when I say the travel business, I mean that impact of it also comes on foreign exchange. So there has been a little bit of an up and down that has happened. But clearly, some of the drivers has been the focus on our retail business, which has been growing double digits for the last few quarters.

1:06:41 And within that retail segment, our corporate and student market has been growing. And while we've seen a 33% growth in the current quarter, again, if you go back to my commentary and look at our previous presentations, we've spoken about how we build the portfolio around the student segment, how we build our portfolio in the corporate segment and how we manage to increase our digital penetration. I think it's a combination of these three, which has held our retail portfolio hold good, which has affected positively not only the overall revenue, but also the margins in the business. So are we targeting student education platform like that that might have agent network who who are just facilitating students who are going from India to abroad to study? So are we targeting those kind of customers or, like... And if you can help me understand on that.

1:07:35 So from a from a segment, how we look at it is we have customers who are looking to... Or students who are looking to go abroad. This could... These students could directly come to a Thomas Cook outlet and do those business. We also have tie ups with multiple educational counselors who actually provide services to student in terms of guiding them the kind of universities they should look for and and give career counseling and stuff like that. We also work with NBFCs and banks who provide education loan assistance to students. And we have a full bouquet of product that we call as Study Buddy, which encompasses not only foreign exchange services, but also special ticket fares, special baggage elements and stuff like that. So we kind of created a proposition for the customer, which we believe is very compelling and that's kind of driving the growth that we are seeing in this segment.

1:08:29 Sir, the line for the current participant has been disconnected. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Ladies and gentlemen, I just want to reiterate what I said in my opening remarks. Despite difficult operating circumstances, we delivered a steady set of numbers. Our PBT remained at 48,000,000 for the current quarter, which I believe is a good set of numbers given the difficult environment that we operated in, supported by a very strong performance from financial services, India outbound or the India based travel services and sterling holiday resorts. While some of the pain in our international markets remain, but we are seeing a steadfast improvement in recovery and we remain optimistic about how the subsequent quarters will pan out, notwithstanding any uncertain events that could change this trajectory.

1:09:28 On that note, I want to thank each one of you and thank the management for their continued support and wishing all of you a very happy Diwali. Thank you. Thank you very much, sir. On behalf of three sixty one Capital Markets Private Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.