Yatra Online Limited has delivered a resilient Q3 FY26 performance despite aviation disruptions and seasonal headwinds. Revenue Less Service Cost (RLSC) rose 23% year-on-year, powered by strong growth in air ticketing and hotel bookings. While margin compression occurred sequentially due to deferred MICE revenues and seasonal shifts toward B2C leisure travel, EBITDA margins expanded meaningfully on an annual basis. Working capital pressures emerged due to temporary disruptions and corporate restructuring, but management remains confident of meeting full-year guidance. Structural improvements in operating leverage, corporate onboarding momentum, and AI-led productivity gains support the long-term earnings trajectory.

Revenue Momentum Remains Intact Despite Sectoral Disruptions

RLSC surged 23% YoY to Rs. 1,277 Mn in Q3 FY26, with modest sequential growth of 2%. Growth was anchored in:

Air Ticketing revenues up 32% YoY

Hotels & Packages revenue up 25% YoY

Gross Booking Value (GBV) expanded 21% YoY to Rs. 21,759 Mn. However, the B2B share of GBV declined to approximately 60% from 67–68% in H1 FY26 due to seasonality and aviation disruptions, particularly flight duty time restrictions impacting Indigo operations.

Net take rate stood at 5.9%, marginally below Q2 levels but up on an annual basis, demonstrating pricing discipline.

EBITDA Expansion Signals Structural Operating Leverage

The most striking highlight was margin expansion:

EBITDA grew 66% YoY to Rs. 225 Mn

EBITDA margin expanded 460 bps YoY to 17.6%

Sequential margin compression of 136 bps was largely attributable to deferred MICE revenue of approximately Rs. 300 Mn and seasonal B2C skew.

Management reiterated its medium-term goal of raising EBITDA to 1.5% of GBV by FY28E, up from 1.2% currently.

Operating leverage is being strengthened via:

Integration of DIYA AI

Optimization of 70–75 support roles immediately

Long-term headcount rationalization of up to 200 roles

These initiatives enable revenue scaling without proportional employee cost expansion.

Corporate Travel Engine Continues to Accelerate

Yatra onboarded 40 new corporate clients in Q3, representing annual billing potential of approximately Rs. 2.2 Bn.

Corporate online adoption has surpassed 70% and is expected to stabilize between 80–85%, improving efficiency and margin profile.

The company has introduced a three-tier corporate acquisition model:

Dedicated SME sales force

Elite enterprise acquisition team

Retention and cross-sell specialists

Importantly, churn remains below 3%, underscoring stickiness.

MICE: Temporary Setback, Structural Margin Accretive

The Meetings, Incentives, Conferences & Events (MICE) vertical witnessed disruption-led deferral of approximately Rs. 300 Mn revenue.

However:

70–80% of deferred revenue expected in Q4 FY26

Take rates range between 9–10%

Contribution margins exceed 50% (post direct costs)

This remains one of the most margin-accretive verticals in the portfolio.

B2C Business: Volume-Led Growth

B2C demand remained healthy:

Air passenger volumes up 13% YoY versus industry growth of ~1%

Hotel room nights up 22% YoY

Sequential revenue per passenger declined 7% due to seasonal pricing dynamics, but higher take rates supported YoY revenue expansion.

Balance Sheet & Working Capital Dynamics

Temporary working capital pressures emerged due to:

Vendor advances for cancelled trips

Corporate re-registration following subsidiary merger

This resulted in:

Cash declining to Rs. 2 Bn from Rs. 2.2 Bn

Gross debt increasing to Rs. 583 Mn from Rs. 211 Mn

However, receivable days remain manageable at 28 days (measured as % of GBV), and payable days stand at 7 days.

Management views this as transitory rather than structural.

Financial Trajectory: FY26–FY28 Outlook

Below is a snapshot of forward projections:

By FY28E:

EBITDA margin expected to reach 24%

ROCE projected to improve to 16%

ROE expected at 14%

This reflects a multi-year profitability inflection.

Valuation & Investment Thesis

The stock is currently trading at approximately:

43.3x FY26E earnings

25.6x FY27E earnings

16.8x FY28E earnings

Applying a 35x Core P/E on FY28E earnings yields a target price of Rs. 236, implying 55.5% upside from current levels.
Key catalysts:

MICE recovery in Q4 FY26

Corporate onboarding momentum

AI-driven margin expansion

Operating leverage scaling

Risks:

Aviation disruptions

Working capital stretch

B2C pricing pressure

Conclusion: A Structural Earnings Inflection Story

Yatra Online Ltd. stands at an operational inflection point. The Q3 disruption masked underlying momentum rather than derailing it. With structural cost optimization, corporate stickiness, and margin-accretive MICE recovery, earnings visibility improves materially over FY27–FY28.

For investors with a 12–24 month horizon, the risk-reward equation appears favorable at current levels.

Disclaimer: Investors are advised to conduct their own due diligence and assess individual risk tolerance before making investment decisions.