Mach Travel Solutions Limited (544248) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Conference Call of Mach Travel Solutions Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Bhatia, Chairman and Managing Director, Mach Travel Solutions. Thank you, and over to you, Mr. Bhatia.

Thank you. Thank you. Good morning, everyone. My name is Amit Bhatia. I'm the Chairman and the Managing Director for Mach Travel Solutions Limited. I thank everyone for joining in. Joining me on the call today, we have Mr. Ravi Kumar Mishra, our CFO; and Mr. Adit Bhatia, Executive Director, my son, who's been associated with the company for a time now. This is Adit's first earnings call representing the company, and he will take you through the overall business performance, key developments and updates for the Q1 of this year. Over to you, Adit. Could you please take over?

Thank you. Good morning, everyone. It's a pleasure to be here and to have the opportunity to speak to you all today. I'm happy to be joining the earnings call and to share some perspective on the company, our business and the journey we are currently on. With that, let me begin by giving you a brief overview of Mach and our business. So Q1 has been a very important quarter for us as we are beginning to see the impact of the initiatives undertaken over the last year. Mach has always been a MICE-focused company, and that remains an important part of our business. However, over the last year, we have built beyond MICE by adding corporate travel, B2B, leisure and government and institutional projects while also developing our B2C OTA platform. The objective is to build a broader travel platform where we can serve multiple requirements of the same customer and create a greater mix of repeat and recurring business. Corporate travel is a very good example of this transition. We launched this vertical in April and have already onboarded more than 100 corporate clients. Unlike MICE, which is largely project-based, corporate travel involves ongoing requirements and annual or multiyear relationships. This gives us an opportunity to build a more predictable revenue stream over time. We are also combining technology with our service capabilities through a corporate self-booking tool, which covers booking, approval, ticketing, invoicing and reporting while continuing to provide dedicated account management wherever required. At the same time, our core MICE business continues to perform well. During the quarter, we completed MICE programs across Oceania region worth around INR 32 crores, covering approximately 950 to 1,000 delegates and many more such programs were executed. Government and institutional projects is another area we are building. Our recent IRCTC empanelment gives us an opportunity to participate in back-end travel and tourism services across rail tours, charter trains, customized tours and holiday packages, subject to specific assignments. Another is the Punjab Yatra program, valued at around INR 92 crores and covering approximately 1.85 lakh yatris, also continued to provide revenue visibility during the quarter and beyond. We have also expanded our operating presence across Noida, New Delhi, Mumbai, Kolkata, Bengaluru, Bhubaneswar and Ahmedabad, while continuing to invest in our digital capabilities and the B2C OTA platform. So the transformation is really about 3 things: broadening our business beyond MICE, building more recurring customer relationships and using technology to make the business more scalable. The foundation is now largely in place. Our focus going forward is to scale these businesses, expand our customer base, increase cross-selling and execute the pipeline that we have built. Based on the momentum we are seeing across our businesses and the pipeline currently in place, we are confident of achieving revenue of around INR 500-plus crores in FY '27. We also believe that the current pace of growth can be sustained through the balance of the financial year, providing a strong base for growth in the years ahead. With that, I will hand it over to our CFO, Mr. Ravi Kumar Mishra, to take you through the financial performance. Thank you.

Thank you, Adit. Good morning, everyone. I will take you through the financial performance for the quarter. Revenue from operations stood at INR 144.33 crores in quarter 1 financial year '27 compared with INR 22.62 crores in quarter 1 financial year '26, representing a 538% year-on-year growth. On a sequential basis, revenue increased from INR 83.25 crores in quarter 4 financial year '26 to INR 144.33 crores, a growth of around 73%. We have also started disclosing GMV, which stood at approximately INR 252 crores for the quarter. This provides a broader view of the overall scale of transactions handled across our businesses. Coming to profitability, EBITDA stood at INR 8.92 crores compared with INR 1.66 crores in Q1 financial year '26, a growth of approximately 437%. EBITDA margin was 6.09% compared with 7.17% last year. The year-on-year margin movement reflects the investments we are making in building the new verticals, expanding the team and strengthening our business and technology infrastructure. However, on a sequential basis, EBITDA increased from INR 3.81 crores to INR 8.92 crores, while the margin improved from 4.54% to 6.09%. So we are seeing an improvement in operating profitability as the business scales. At the PAT level, profit after tax stood at INR 6.17 crores compared with INR 1.52 crores in Q1 financial year '26, representing a 307% year-on-year growth. PAT margin was 4.22% compared with 6.54% last year. Sequentially, PAT increased from INR 1.8 crores to INR 6.17 crores, while PAT margin improved from 2.15% to 4.22%. Overall, the quarter has been a significant scale up in the business with a strong growth in revenue, EBITDA and PAT. We are conscious that we have made major investments in the newer business verticals. As the verticals scale, our focus will be on improving operating leverages and ensuring that top line growth translates into sustainable profitability. This is all from my side, and now we can open the floor for question and answers.

[Operator Instructions] The first question is from the line of Sudhir Bheda from Bheda Family Office.

Hearty congratulations to the entire Mach Travel team for performing an outstanding and giving the outstanding numbers in Q1 of FY '27. So congratulations. My question is how that transformation took place. If you throw some light on that from just a INR 22 crore number to like INR 140-plus crores in top line. So how that was done? How -- what steps did you take to the growth -- kind of growth you have shown? So that is my first question.

I will just take you through the reasons which have shown this kind of a growth. Now to start with, as you may be aware that we -- for about 22 years, we were only a MICE company. And when we came up with our IPO in 2024, we aspired to become a tech-enabled travel company like all the big ones which you are aware of. And in last 1.5 years, we were planning to become one. We were working parallelly with various aspects of travel-related services apart from MICE and we're ramping up new team, new technology. And when the financial year 2027 started from 1st April, we were able to implement all those policies and initiatives. Now apart from MICE, which was our predominant zone, in last 3, 4 months, we have now moved to virtually all the aspects of travel company. We not only do MICE, we also do corporate travel. We also do leisure travel that is personal bookings of HNIs and corporates where we are empaneled. We are also into government institutional business. And parallelly, we have a team which is taking care of B2B business for travel agents who do not have a volume as big as ours, we give them a tool to book tickets. And hence, they -- we pass on the deals which we get from the airlines, and we make margins there, and they also are comfortable working with us. Now I just want to reiterate the numbers. From INR 22 crores, we were at INR 143 crores, and our TTV was about INR 260 crores. When I say TTV, perhaps you would understand that the balance sheet sales come in at about INR 143 crores, but total ticketed volume is about -- and the total sale, the TTV numbers are INR 259 crores (sic) [ INR 252 crores ]. So these are primarily the reasons why we have shown this kind of a growth.

Yes, yes, understood. And the kind of growth you have shown is despite the geopolitical situation that is commendable, sir. So as you said in the opening remarks, this growth will continue even in the FY '27, the rest of the -- all 3 quarters. So just wanted to understand how the working capital management will be done efficiently to show that kind of numbers?

Currently, we are a debt-free company with just about INR 3 crores of debt. Now to be honest, we were facing challenges in the last couple of months in terms of working capital. And there is a thought of raising some money from banks in terms of OD. Currently, yes, there are issues with the payment cycle. We had the leverage -- we had the funds available from the IPO, which we have used. Currently, there is -- because the growth is -- there is a need for working capital. If this continues, we will have to take money from the bank in form of OD. So we are kind of now working towards it, and we will keep the markets updated in case we avail any of these facilities.

[Operator Instructions] The next question is from the line of Urmish Shah from Moneywisers.

Am I audible?

Yes, please.

My first question is on corporate travel. Could you just help me understand how the contracts are formed in terms of size, duration? And is there -- I mean, multiyear agreements or -- and what is the pricing power vis-a-vis our peers in terms of corporate travel?

How this corporate travel works is that, for example -- if I would just to -- make you feel comfortable understanding it. For example, if there is a company which has about 200, 400, 1,000 people. Now all these people were traveling already and were using their individual credit cards or services of some travel agent. So what we have done is that we have a tool, which is called SBT tool, self-booking tool, which we have developed, which is kind of the best technology available, and that is the same technology available with the big players in the market. And we -- our corporate team has contracted all these midsized companies. And we have over than about 100 corporates which are already signed, which gives us inroads to thousands of thousands of people. Now what happens is that when we sign a contract with the corporate, there is a maker and checker technology, which is given to the corporate. For example, if I have to travel from Mumbai to Delhi and I have to kind of take the approvals. So I would raise the ticket in my system, and it would be going to my boss and from there, it will be going to the HR or the admin head. The ticket would be printed remotely and the MIS is created and the billing is made in form of a credit shell, which is given to the companies. The credit period or the billing period is generally from 1st to the 15th, payable towards 20th of the month and from 16th to the 30th, which is payable towards 6th or 7th of the following month. This is the tool which we have. And this also gives us inroads to a lot of corporate personal travel, which the employees of a particular corporate they're working for. So this is to give you the details.

Right. Sir, why I asked this because as we have already crossed 100 corporate clients, I just wanted to understand what repeat revenue visibility do we foresee in this corporate travel segment?

No. This business corporate travel is a recurring account. This -- it is not like a MICE where it is incentive-based, it is time-based that every quarter, this kind of a travel would happen. So here, whenever need arises for any corporate to send their employees or whatever the travel arrangements which are needed in the corporate, that happens around the year. It happens 365 days a year, and there is no fixed pattern. So this business would continue. And you would appreciate that 100-plus corporates we've been able to sign in first 3 months. So the momentum will increase. The number of clients will increase. And hence, this number has to go up from here.

Right. Sir, my next question is on our average revenue generated per MICE. I do understand last year, we had Operation Sindoor and everything that slightly disrupted the revenue and the bookings, but it has been to INR 84 lakhs. Do you foresee as it can go upwards in FY '27 and FY '28 to the previous levels in FY '25 clocked?

I have to just try and clear something that the yardstick of measuring the success of a MICE division is not by measuring the number of events being divided from the entire MICE business and coming on to a figure of INR 84 crores or INR 2 crores. It is a total business which we worried about. At times, a smaller business gives us bigger profitability, a bigger business gives us less profitability and more hard work. So what I can assure you right now that our MICE business is looking great. The growth is there in terms of MICE business also. This momentum will continue throughout this year and for the following years also. But giving you some kind of a detail on what kind of revenue per event -- per MICE event would happen is a little difficult for us.

Okay. Sir, one more question before I join back. Could you just help me understanding the thought process of the IRCTC empanelment and what kind of specific opportunities does our company see over there?

IRCTC has just about 4, 5 vendors who are their A-listed vendors. And thankfully, we are part of them. IRCTC has a lot of business opportunities coming throughout the year. For example, they have their trains, which are given to agencies like us. For example, if there is a train which is a 10-day train. So they would appoint one of us as a preferred partner, and our job will be to take care of the entire train, the F&B, the housekeeping, the security, the doctor on call. Apart from the driver, the locomotive pilot and the guard, everything is done by us, the local excursions, which are happening on local city levels. For example, there is a Buddhist circuit train, which is there. So the local travel, which would happen would be done by a company like us. So we look at something like these. Then there are other excursions which happen as IRCTC needs vendor like us, we have got business opportunity for them. We have picked up one business of about INR 75 lakhs to INR 1 crore from them, which has happened about a week back, which pertains to a group traveling for an excursion. So this kind of opportunities come from IRCTC, and it is a prestigious organization, and we are very happy to get associated with them.

So the empanelment is for how many years?

Adit, could you please share this information?

Yes, yes. So the empanelment, I don't have the exact number as of now. I just slipped my mind, but I think it's for 2 years, but it is extendable also. And then after that, we have to participate again to get empaneled again.

The business which we picked up, can you please throw some light on that?

So I think it would be better if we send a press release later on as I think that would be better.

The next question is from the line of Nishita from Sapphire Capital.

Yes, am I audible?

Yes, please.

Congratulations on such great set of numbers. So I just wanted to understand, now you mentioned that our growth drivers have been the new initiatives that we've taken. So if you could give the revenue contribution between -- like for Q1 FY '27, how much revenue did we get from our core MICE business and then from the rest of the initiatives, the new initiatives that we took?

I would not have the complete bifurcation for the entire INR 143 crores, but I would say that predominant number came from our MICE, our core business, which was to the tune of about -- I could be wrong, about INR 50 crores, INR 60 crores. And the balance happened from the other verticals -- sorry, about INR 100 crores came from the MICE business and about 10%, 15% came from the corporate business. And similarly, about 15% came from the Punjab Yatra, which we are taking care of for the Punjab government.

Okay. And so going forward, how do we see this contribution looking like? Like are we expecting the revenue contribution from other verticals to grow? Currently, it's at around 30% or so. So do we expect that contribution to grow? Or is MICE going to be a predominant revenue contributor?

Like I said that we are just about 3, 4 months old company with a new brand entity and the new verticals which we have that we've brought in. Now what has happened is that it takes time for business to ramp up. There are some 3, 4 months or 5 months which are needed to get empaneled for various companies. Yes, we've been really lucky that 1st April was the new financial year beginning, and hence, we were getting empaneled at a faster rate. But this momentum will continue throughout the year, and our business will increase. We are hopeful that when we present the Q2 numbers, this upward trend would be shown there. And you would see for yourself that the new initiatives are bringing in more revenue and margins into the company.

Understood. Understood. And my next question is on our margins. So this quarter, our margins were low, you mentioned because of the investments that we've made and the hiring that we did for the new verticals. So just wanted to understand when can we expect the operating leverage to kick in? And when can we expect the margins to go back to the previous 10% level on EBITDA?

I do not have a firm date or period to share with you, but you got it right. When you invest into technology, you invest into talent, you invest into offices and there is a need for a lot of funds, which -- I'm getting a little distinct sound from somewhere. Can please...

Yes, I'll just mute myself.

Okay. Sorry, I didn't realize it was you. But anyway, so yes, so coming back to, say, it takes time for the all divisions to bring in revenue, for example, IRCTC, we have a team. They were -- they took some time to get empaneled. They took some time to get business. So when the business would start rolling from all the divisions and at a greater number, the profitability will improve. Plus, what happens is that when the scale would increase of the business, our buying power will increase, our -- the pie is going to increase, hence, our negotiating power will increase. All this is going to transform into increasing the markups. So this is the answer...

Right. So like can we expect the margins to go up from here? Or are we going to see some more pressure on margins in Q2 as well?

I would not say that the margins would have pressure, but try and understand that we are running a profitable company, and we've been doing it for the last 22 years. We do not want to burn money to raise business volumes. But at the same time, when we get aggressive with the market and we wish to take business, we have to compromise on the markups. That could be in some percentage, but I would not say that we would start burning the money. But at the same time, our point here is to increase the size of the cake. So hence, this answers to my question, we'll be aggressive in the market and run a...

Okay. Understood. And my last question would be, so you mentioned that we can achieve around INR 500 crores plus revenue in FY '27. So that -- and in Q1 only, we've achieved around 29%, 30% of our target. So are we being a little conservative? Or is there some seasonality which makes you say that like generally does Q1 do better or...