TBO Tek: organic margins expand as gross profit outpaces costs in Q1 FY27

TBO Tek filed a shareholders' letter alongside its unaudited standalone and consolidated financial results for the quarter ended 30 June 2026, disclosed under Regulation 30 of the SEBI Listing Regulations. The letter, signed by co-founders Ankush Nijhawan and Gaurav Bhatnagar, presents results both on a consolidated basis (including the acquired Classic Vacations business) and on an organic basis (excluding it), and frames the quarter as an inflection point in the company's operating-leverage narrative.

The central message in the founders' letter is that gross profit for the organic business grew faster than selling, general and administrative (SG&A) costs during the quarter, allowing Adjusted EBITDA to grow faster still. Management attributed this to earlier investments in commercial capacity, technology and infrastructure beginning to support a larger business without a proportionate rise in cost. Headcount costs were described as flat across multiple quarters, and hosting-and-bandwidth expenses fell year-on-year despite higher platform activity. On a constant-currency basis, the company said organic SG&A grew only 4% versus a year earlier. The expansion in the ratio of Adjusted EBITDA to gross profit and to revenue is set out in the key figures.

The company said the quarter unfolded against continuing disruption across the Middle East — a market it identifies as a source, a destination and a major aviation transit hub, and one of its higher-margin markets. Reduced saliency of that market pressured the blended gross-profit margin of the organic Hotels and Ancillary business, which fell to 5.2% of GTV from 5.5% in the prior quarter. Management described a deliberate choice to protect volumes where incremental business remained contribution-positive, competing for share amid elevated competitive intensity, and said exit margins improved from the quarterly average as conditions normalised through the quarter. In India, the airlines business grew while Hotels and Ancillary volumes softened as bookings rerouted eastwards to lower average-booking-value destinations.

The company reported that cash and equivalents rose during the quarter, driven in part by a release of timing-related working capital, and cautioned that this magnitude should not be read as a steady-state outcome. It noted the reported cash balance included ₹65 Cr from a working-capital drawdown at Jumbonline. Classic Vacations, seasonally strongest in the first quarter, contributed to the consolidated figures, and the letter said the bulk of its integration is expected to complete by the end of Q3 FY27.