Summary
Thomas Cook (India) Limited - Q3 FY26 Earnings Call Summary Friday, February 6, 2026, 4:00 PM IST
Event Participants
Executives 6 Amit J. Parekh, Brijesh Modi, Debasis Nandy, K.S. Ramakrishnan, Mahesh Iyer, Vikram Lalvani
Analysts 3 Anil Shah, Haard Joshi, Mukul Varma
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income (9M FY26) | ₹6,752.3 crores | +8% YoY; driven by steady performance across segments despite macro headwinds. |
| Total Income (Q3 FY26) | ₹2,186.6 crores | +5% YoY; impacted by a shift in festival demand (Durga Puja) to Q2 and domestic air turbulence. |
| Other Income (Q3) | ₹40 crores | +81.8% YoY from ₹22 crores; 60% derived from FD yields on Forex float; reflects treasury efficiency. |
| PBT (Q3 - Reported) | ₹89.7 crores | +20% YoY (normalized); excludes ₹17.1 crore one-time charge for new Labour Code/retirals. |
| Forex EBIT Margin | 41.5% | +280 bps YoY; driven by Retail segment growth (+25%) and disciplined execution. |
| Travel EBIT Margin | 3.1% | +20 bps YoY; improved from 2.9% despite lower volumes in Middle East and USA. |
| Sterling Revenue (Q3) | ₹156.8 crores | +10% YoY; highest ever quarterly revenue for the segment. |
| Sterling EBITDA Margin | 36% | Sustained high margins; +400 bps over H1 FY26 average. |
| Sterling Inventory | 3,705 keys | +20% YoY room supply; network expanded to 75 resorts across 63 destinations. |
| DEI EBIT | ₹33.7 crores (est) | +42% YoY; driven by record Dubai performance (₹56.5 cr revenue in Dec) and cost efficiencies. |
| Cash & Investments | ₹2,500 crores | Gross cash includes ₹1,500 crores float; Net cash (ex-float/debt) stands at ₹780 crores. |
Geographic & Segment Commentary
- Foreign Exchange: Retail sales grew 25% YoY, significantly outperforming the RBI LRS industry trend (Travel -6%, Study Abroad -22%). Digital adoption reached ~21% with app transactions growing 2.7x YoY to 835.
- Sterling Holidays: Recorded its 25th consecutive profitable quarter with a 17% YoY increase in RevPAR (₹4,743). Occupancy improved to 68% as demand absorption outpaced a 20% growth in room supply.
- Travel Services (B2B): International DMS portfolio grew 9% YoY, led by South Africa (+41%) and East Africa (+20%). Performance was tempered by the Middle East and USA markets due to geopolitical tensions and soft inbound sentiment.
- Travel Services (B2C): Revenue declined 6% YoY due to Durga Puja shifting to Q2 and domestic air disruption. However, short-haul international travel (Vietnam, Japan) remains robust, with Vietnam growing 30% YoY.
Company-Specific & Strategic Commentary
- Digital Transformation: Launched ‘TACY’ (AI-powered avatar) and ‘Rahi’ (AI travel automation) to streamline holiday design and quotations.
- Strategic Partnerships: Collaborated with Blinkit for 10-minute forex card delivery (expanded to 8 cities) and partnered with Cinnamon Life (Sri Lanka) to market “City of Dreams” casino-integrated resorts.
- Cost Management: Implemented “WeC” (Workforce Efficiency) across 80% of DEI sites, with full implementation expected by Q1 FY27 to drive further operational leverage.
- Asset-Light Expansion: Sterling continues to focus on managed resorts (management fee income +60% YoY) while selectively upgrading owned assets like Munnar and Puri.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Consolidated Growth | Double-digit growth | Management targets 10%+ growth for FY27 assuming steady 7-7.5% GDP and currency stability. |
| Tax Rate | Lower Tax Regime | Transitioning to new tax regime in FY27 to utilize entire MAT credit, positively impacting EPS. |
| Travel Margins | 4%+ Trajectory | Aiming to maintain/improve margins through product recalibration and yield optimization. |
| Sterling Margins | 32% - 35% EBITDA | Expected to hold steady despite rapid scaling through asset-light additions. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Tensions | Ongoing instability in Middle East affects Desert Adventures volumes; air space sensitivities impact India inbound (SITA/TCI). |
| Currency Volatility | Sharp Rupee depreciation against Euro has made long-haul European packages “sluggish” and expensive for Indian travelers. |
| Regulatory/Labour Code | One-time impact of ₹17.1 crores this quarter due to retiral provisions; further shifts in statutory codes may create non-recurring P&L pressure. |
| Competitive Intensity | Low entry barriers in travel agency business and high competition in Middle East DMS impacting tactical margins. |
Q&A Highlights
Forex Float vs. Cash
- Question: Clarification on total cash versus customer float. (Anil Shah)
- Answer: Total cash is ₹2,500 crores. Excluding the ₹1,500 crore forex float and ₹220 crore debt, net company cash is ₹780 crores, up from ₹405 crores last year. (Debasis Nandy)
Travel Segment Headwinds
- Question: Why was travel revenue growth only 3% despite a strong macro? (Anil Shah)
- Answer: B2B saw growth in 3 of 5 units, but USA and Middle East were subdued by geopolitics. B2C saw a value shift from long-haul (₹2.5L/pax) to short-haul (₹1.25L/pax). Inbound India was flat due to residual effects of travel advisories. (Mahesh Iyer)
Budget Impact (TCS)
- Question: Impact of TCS reduction from 5%/20% to a flat 2%. (Mukul Varma)
- Answer: Effective April 1, 2026, it leaves more cash with travelers and helps cushion rupee depreciation. Too early for Q1 FY27 booking data, but positive for discretionary spend. (Mahesh Iyer)
Capital Allocation
- Question: Priorities for the ₹1,000 crore house cash. (Mukul Varma)
- Answer: No immediate M&A or dividends planned. Focus remains on tech investments for “customer obsession.” Debt repayment is restricted by COVID-era ECLGS lock-ins for the next 2 years. (Mahesh Iyer, Debasis Nandy)
Key Takeaway
Thomas Cook India delivered a resilient Q3 FY26, with normalized PBT growing 20% YoY to ₹106.8 crores (excluding statutory labour provisions). The Foreign Exchange segment remained a primary driver, with 41.5% EBIT margins and 25% Retail growth despite industry-wide LRS declines. Sterling Holidays achieved record quarterly revenues and 36% EBITDA margins, benefiting from a 20% inventory expansion and strong RevPAR growth. Strategically, the firm is pivotting toward AI-enabled tools (TACY, Rahi) and asset-light hospitality while optimizing its tax structure for FY27 to enhance EPS. While geopolitical tensions in the Middle East and Rupee weakness against the Euro pose near-term headwinds for long-haul travel, management remains confident in a double-digit growth trajectory for FY27, supported by fiscal relief in TCS rates and a robust domestic demand environment.
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