Le Travenues Technology (NSE:IXIGO) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Le Travenues Technology, also known as IXIGO, q two FY twenty seven earnings call hosted by Dan Capital Advisors Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please signal an update by pressing star, then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference call over to mister from Dam Capital Advisors. Thank you. I'm with you, sir. Thank you,. Good evening, everyone. On behalf of DAM Capital, I welcome you all to IXIGO's Q2 FY twenty seven earnings call. We have with us mister chairman, MD and group CEO of the company and Mr.

0:56 Group CFO of the company. Now before I hand over the call to and I would like to highlight the safe harbor statement on the second slide of the presentation and it is assumed to be read and understood. I now hand over the call to you, Alok. Thank you, and over to you. Thank you. Good afternoon, everyone, and thank you for joining our q two FY twenty seven earnings call on what is technically a long weekend, and I'm assuming many of you have booked your long weekend this time using IXIGO confirmed ticket or a Bibus. At IXIGO, our ambition is to build the best customer experience for travel. We built our business by understanding where a journey becomes stressful and then using technology to give people more certainty and peace of mind. Once we prove our ability to deliver peace of mind, we have seen that it builds customer loyalty and trust.

1:44 This quarter, we have made progress across the business in quite different market conditions across these lines of business. Trains recovered with some of the base effect of policy changes starting to go away, buses continued to grow strongly and secularly, and hotels took a great leap forward, getting to a critical mass that makes it large enough to start disclosing. Slight space to tougher external environment with high fares and limited capacity affecting bookings growth, and the overall market was down nearly 6% in volume terms in the quarter. Despite that, the team pulled off 7% segment growth, which in itself is an achievement. In q two FY twenty seven, we delivered resilient growth on quarterly GTV as well of 5,304 crores, up 22% Y o Y, and revenue from operations of $3.21 crores, up 13% Y o Y. Our path was an all time high aided by our partial sale of stake in Fresh Bus.

2:38 Flight and Bus led the quarter with GTV growth of 3732% Y o Y, respectively. From this quarter onwards, we are also disclosing a new line of business of hotels, which grew GTV two point six x y o y, 211 crores, with a gross take rate of more than 12%. Before Saurabh takes you through the numbers in detail, let me deep dive a bit by each line of business and give some color on the choices we are making for the next phase of growth. The recovery in trains was encouraging. Advanced bookings for Dushera and Diwali helped volumes, and we stepped up our focus on growth again while maintaining healthy unit economics. However, we want to see that momentum continue beyond the festive season before calling it a sustained recovery. I also want to call out that Confirm Ticket now has a 4.9 rating on the Google Play Store. And among the apps which have a scale of over 100,000,000 downloads, it has become the highest rated travel app in the world that operates at this kind of scale.

3:34 For us, that is a meaningful endorsement from the travelers we serve. We're also expanding our relationship with travelers beyond the ticket, food on trains, metro tickets, and our new Bharat Darshan rail packages offerings. These have enhanced our IXIGO train app where we are able to serve more parts of the journey. In buses, AbiBus has been growing faster than the overall OTA bus market for close to three years, expanding supply, building our brand in markets where we have room to grow, and improving the travel experience continue to drive that performance. Our new women's zone is a good example of how we are improving this experience. It helps women traveling alone make more informed choices through ratings from other women, information about seats next to other women, and other women friendly features that build trust for making operator choices and seat choices with more confidence.

4:26 Flights remains challenging in the near term as capacity has not returned as quickly as we had expected, and we are seeing the impact of oil prices reflect on the 30% increase in fares y o y on several routes. International travel has been more encouraging with our international flight GTV growing 59% year on year. Let me spend a little time on hotels because we see a significant opportunity to build our next major business here. We are disclosing hotels in the same level of detail as other businesses now because product market fit is emerging, and the business has become more material. This reflects our growing confidence even as we recognize that we are still early in this journey. We now do more than 5,100 room nights per day, net of cancellations, 4.7 lakh room nights for the quarter, a growth of 3.9 x compared to last year, and a growth of over 50% versus the comparable q one number.

5:20 In q two, hotel GDV reached 111 crores, up 39% sequentially and 2.6 times year on year. Revenue grew more than six fold year on year to 8.1 crore, and our gross take rate exceeded 12% and became the highest in our business. Contribution margin improved from minus 55% of revenue a year ago to minus 15% with a contribution loss of 1.2 this quarter. The reason why our unit economics is able to develop some headroom is more than 86% of our hotel bookings came from travelers which were already on our platforms or our captive users. Having said that, as we said in the past, we'll not be shy of continuing to invest in growing hotels as a strategic category for our business and aspire to remain the fastest growing OTA in our country in this line of business as well.

6:10 The TAM of the hotel's opportunity is proven in India, and it is the largest profitability pool globally for OTAs. IXIGO's opportunity is particularly compelling in the budget, mid market, and independent hotels where online penetration is low and travelers need greater reliability and peace of mind. About 60% of hotel room nights in India sell below 2,000 a night, and independent hotels account for 73% of rooms as per the recent Videc industry report. Out of the 70,000 hotels in India that we sell, we are now tied up directly with over 12,000 hotels across about 1,100 towns, up from 10,000 hotels last quarter. Our thesis on hotels fits our customer base closely. 94% of our transactions involve travel to or from tier two and three cities, and more than nine in 10 trips we sell are by train or bus. Many travelers looking for an affordable room are already booking their journey with us.

7:03 Our aspiration remains to become the largest player serving this part of the hotel market over the next four to five years. The size of the opportunity supports that ambition. Videc estimates India's hotel market at about 1.57 lakh crore rupees in FY twenty six, projected to reach 1.94 lakh crore rupees by FY twenty eight. Lodging represents as much as 30% of total travel spending. Hotel bookings through OTAs are projected to grow around 19% annually from 40,200 crores to 57,000 crores over that period. Hotels is already the second largest hotel... OTA category, around three times the size of the OTA rail market. These estimates may still understate the opportunity, particularly in non hotel accommodation that remains largely offline.

7:48 Building this business requires investment. Much of our spending on hotels, product, technology, and people sits in the group cost below contribution margin. So the segment contribution loss captures only a small part of what we are investing, and Saurabh will explain this in more detail in a bit. Our core business profitability give us... Gives us the capacity to keep funding this opportunity. We have an existing customer base, and we are now going to expand the direct supply. And as the unit economics start to come in, there is a lot of work to be done ahead in order to drive repeat business and achieve reliable stays based on direct supply, better fulfillment, and support when things go wrong. And we need to build peace of mind products in this category as well.

8:35 Our ambition is to become the largest player serving this part of the market. And over the next four to five years, we believe we can achieve that ambition. We will continue to calibrate our investment based on that progress and the long term returns that we see. Across the group, AI is helping us improve our service and productivity even as we continue to invest further in enhancing our capabilities with it. Tara handled 45 lakh queries before and after the booking and now resolves 94% of chat queries without human intervention and 82% of customer calls end to end. AI handled queries more than doubled year on year while customer service costs did not rise in proportion. That is already giving us greater capacity to serve travelers as we grow.

9:21 We also remain conscious of the advances that consumer AI agents could bring to travel discovery and booking. Our platforms are already available as natively integrated apps on ChatGPT, and we are continuing to build on XIGO Next, our own agentic AI products and voice first experiences. We believe that in a world where AI agents develop the potential to do consumer bookings on behalf of the customer, there's an opportunity to become the most contextually aware AI agent for travel for our users. In fact, we demoed a fully agentic booking flow complete with payments at the recently concluded GFS conference in Mumbai, and we await regulatory clarity before launching the same. Further, we want to stress again on this that we will differentiate our company by actually building the best peace of mind products for our travelers and using AI to solve their real world problems more meaningfully to... By building those relevant products suited for our market. For example, our recently lost smart lock product for flights is a perfect example of using AI to build better experiences.

10:20 Smart lock is an agentic AI product that finds and locks the cheapest flights based on preferences. You can tell it your route, budget, travel preferences. It scans the airfares twenty four seven and locks the first flight that fits within that budget and matches your preferences. If nothing matches by the time scanning ends, you get your full premium back in IXIGO money right away. Finally, a word on Fresh Bus. We are proud to have backed the team early. Reducing our stake now reflects our focus on being an asset light tech and distribution platform, and the lessons from that investment that we learned now helps us to service bus operators with more understanding on the unique opportunities and challenges that EV based bus operators face. Freshpet remains a valued commercial partner, and Saurabh will explain about the exceptional gain portion separately in a bit.

11:12 As we look ahead, our priorities are very clear. Strengthen our core business, continue the acceleration of our hotel trajectory to keep gaining share, and continue investing in building AI platforms to improve both customer experience and productivity. We will keep balancing these opportunities with the responsibility to deliver long term returns for our shareholders. Thank you to our customers, partners, teams, shareholders for your continued trust. With that, let me hand over to Saurabh, who will take you through the numbers. Good afternoon, and thank you, Alok. I'll start with the headlines. Now this was a quarter of growth in the core business, a deliberate step up in investment, and also a quarter where the numbers need to be read carefully given the impact of a significant one off.

11:59 Now all figures are in rupees, crore unless specified otherwise, and year over year comparisons would be q two FY twenty seven against q two FY twenty six. Passenger segments grew by more than 11% to 3.98. GTV grew 22% to 5,304.47 crore. Revenue from operations grew 13% to rupees $3.20.96 crore, and contribution margin grew 14% to rupees $1.24.86 crore. Adjusted EBITDA was rupees 23.58 crore against rupees 28.48 crore a year ago, down 17%. Reported PAT was rupees 63.42 crore, but this includes an exceptional gain, which, like always, I will discuss in the end.

12:53 Let's go to the business lines. Trains had some recovery, and thus we shifted from conserving margins to leaning on growth. Passenger segments grew... Rose about 7% year over year to 2.9 crore. Revenue grew 16% to $1.49.14 crore, and contribution margin grew 29% to 47.23 crore. Centimeters is at 32% of revenue. Our share of the OTA rail market is now close to 64%. Now buses continue to compound. GTV grew 32% to $7.52.65 crore. Revenue grew 24% to 81.04 crore, and contribution margin grew 27% to 43.14 crore. Centimeters is at 53% of revenue.

13:43 Flights were, as Alok had mentioned, flights was a difficult part of the quarter, something we'd also flagged in August. Capacity cuts at very high fares held the booking back. GTV grew 37% on the back of higher fare, but revenue fell 8% to 82.66 crores. And the contribution margin fell 10% to 35.68 crore. Gross take rate fell from 9.4% to 7% as the base fare and the international mix increased. With pure bank offers in the market, we funded more discount, which is why... And and that is the base in this, which is why the contribution margin as a share of revenue held at 43%. As Alok has already mentioned, October started softer than we would like with capacity not yet back.

14:34 We had indicated that we would share more about the hotel business as it evolved and with growing confidence in the product market fit. We are following through on that commitment this quarter, as you might have already guessed from outlook section. Now hotels reported... Hotels are now reported as a separate segment where GTV grew 2.6 times to 811.34 crore with approximately 4.7 lakh room nights and a gross take rate of over 12%. The segment reported a loss of 1.21 crores compared to a loss of 0.71 crores in the comparable quarter. Now remember, across quarters, we will prioritize different lines where we will invest. And in this quarter, we have prioritized people and technology for this segment. And according to management estimates, we would have spent a further 10 crore in the people and technology line for hotels, taking the total investment in hotels to slightly north of 11 crore this quarter.

15:34 We begin consolidate... Consolidating where we say this quarter, so part of this growth is inorganic. Now below contribution margin, adjusted EBITDA went down 17% from 28.48 crores, 23.58 crores. Other income was 22.08 crore against 5.17 crores a year ago, now reflecting the treasury income, and it is excluded from adjusted EBITDA. On the balance sheet, the total cash and cash equivalent, including the fixed deposit and mutual funds and net of borrowings, is about 1,831.71 crores. Operating cash flow of the year was 76.44 crores against 91.55 crores last year.

16:23 Now in the disclosures, we have made we have made three changes. Hotels is a separate segment. Food on train services have been moved into trains, and Brevis Day is consolidated within within hotels. We have restated earlier periods on the same to same basis. Now this time, as we've changed the format, we had asked for questions from investors. And a number of you have replied back. Between Alok and I, I've tried to... We've tried to cover a lot of these. Now one of the questions which has been asked quite frequently and has been on the use of capital on the balance sheet, especially the inorganic part. Now I would say something which we've said before that we would pursue selective acquisition where there is a strategic fit, strong team, technology, or distribution synergy, and reasonable pricing.

17:18 Now as we've said before, whenever something crystallizes, we will inform the markets right away. I'll get on to the last section, which is the one offs and the callouts that were there in q two FY twenty seven, which included the sale of a stake in FreshBooks on August 13, resulting in a one time gain of rupees 40.66 crore. Share of loss from FreshBooks and Squads, which we have been associated company, till FreshBooks was an associated company, was 2.49. The one offs and the callouts that were there in q two FY twenty six included a onetime ease of accounting charge of 26.93 crore on account of early achievement of performance thresholds specified in the grant terms and share of loss of FreshBuzz, which was an associate company then of 1.47 crore.

18:12 With that, I will pass it to the moderator. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of mister from DEM Capital Advisors. Please go ahead. Yeah. Hi. Thanks. Thanks, Anup, and sorry for your comments.

18:58 I have few questions. Firstly, if I look at revenue per ticket in Sykes, it has been reduced by 13, 14% over the average of, let's say, five, six quarters. So this time, we have given higher discounts. That's that's how it looks like it. So is it something which will continue going ahead in... As a form of market share gain, or this is something that we have done it only sort of for this quarter? Hi, Anmol. So I think, you know, if you look at the environment right now, right, it's fairly unique in the sense that the flight fares have gone up by about 30% like we indicated year on year. And therefore, the price delta between, let's say, a train ticket and a flight ticket or a bus ticket and a flight ticket is... Has become substantial.

19:50 And as you know, you know, there's a significant portion of our NBU users who make flight bookings who also for whom we need to make it more affordable. You know? So that has been one of the reasons for increase in discounts there on that line, and that's why you see the the net revenue sort of compressing a bit. See, the other reason in terms of how the optical take rate compression is, it's it's largely to do with the fact that the international mix has improved. And, also, we have seen, you know, as the fares go up, obviously, optically, the take rate compressions because convenience fee is a larger part of the income. But having said that, you know, as and when things bounce back, and we've seen this in the past, right, when COVID or after COVID, we saw fares move up and down a lot.

20:43 If if the fares were to come down, we think we will also be the biggest beneficiaries of it because there is a lot of latent demand we are unable to serve today. So the reason why we are not growing double digits on the flight side, the only reason is that the fares are so high that this whole... You know, it's it's a much harder environment to sell flights into, and you're seeing the load factors also slightly edging down on the airline side. So so we'll wait and watch, and we continue to remain cautious on on how things will progress. But we are... I I don't think we will have to step the pedal beyond this on discounts if that is the question. Like, I think we are at a level at least on the current fare levels we are comfortable at, and we continue to take market share to your point. And, Anmul, if you see the... There are two parts to things. Right? The one part is the pure discount part. So if you're looking at our c m two per segment, which we get, that also at a high price environment gets affected because the attach of the products becomes lesser at a point of time. And we've talked about it last quarter too, Something like a travel guarantee or many of these products become less attractive at a high price point environment. So as that comes back, we see we see that improving.

22:05 And as Alok said, we are not... We don't believe as a company in in gaining temporary market share. We always... Whatever we do and what we are trying to do here is also make it possible for the loyal customers to travel more easily rather than just trying to gain market share aggressively. Sure. Just... Thanks for this. And just one kind... Question in continuation of the previous question. In... Particularly for q three, are we... Given that this is a festive quarter, so are we seeing some recovery? Any ugly trends about q three that you can indicate particularly in the flight segment? Yeah. And, well, I think we mentioned it in the FAQ also that, you know, festive demand is a shade lower than what one would have expected this time of the year. Right?

23:00 We are not saying there's there's any major negative bump. I mean, it's actually... Obviously, the the season always sees some bump up, but one would have seen a higher bump up if the fares were more amenable for the consumers. And they... Therefore, we we are saying, you know, we remain a little cautious on the flight side heading heading forward. We are not going to guide any aggressive growth on that side at this point. We will just try to do what we are doing, which is try to keep growing despite the market degrowing. If we continue to keep growing, that itself is an achievement. Understood. And secondly, good to see disclosures on the hotel segment and strong growth in the GPV as well. Here, I just wanted to understand two parts.

23:47 One is that when can we get a number of... Where the gross take rate is actually goes up to 16 to 17% like the rupee, which will obviously require more directly contracted properties. When do you think we'll reach you that kind of number? And in accordance, when do you think that this segment for us will become profitable? Yeah. Thanks, Amos. So that's a good question. I'm sure a lot of people have this in their mind. See, if you think about how the market structure looks like today. Right? So like I mentioned, out of the overall hotel market, a very large portion is in the mid tier budget and independent hotels.

24:32 Now also a reality of this market is that the take rates... The gross take rates are actually higher on that side compared to the more premium side of the inventory. Right? So in terms of the opportunity of tapping into the kind of take rates that you're indicating, well, in a small subset of the hotels we have directly contracted, we already operate at that take rate. It's just that on a blended basis, you're seeing a 12% number at this point of time. Right? So as our direct supply improves, and we already added 2,000 more hotels last quarter. Right? So we've crossed 12,000 on that. But as that continues going up... And by the way, we are not in any mad rush to also take this 12,000 number up significantly in a short period of time because you are... It has to grow in tandem with our growth. Right?

25:21 Because we also want our hotel partners to benefit as we grow. And therefore, we do expect to achieve the kind of take rates you're talking about over the long term. I think those are very much achievable in the long term. I think in the short term, we are obviously going to see it edge up, you know, over the next three to four quarters. You will see them edge up for sure. But I'm not giving any guidance right now on what... Where we'll be next year. It's just that we will be higher. That is a certainty. Right. I look... And on the profitability, sir, any target in terms of when can we expect profitability in the segment? See, I think we said this last year also, but now that the numbers are in front of us, let me remind everyone that all OTAs that were built in the hotel category lost money for several years in this country before they built out the category. And even at the volume that we exist today, most OTAs were losing money. Right? So it's not a novelty to be trying to build this by investing.

26:26 The advantage we have is that we have a captive user base where even at this scale, we are operating at a contribution margin, which is still... You know, we we we believe has a lot of headroom in terms of driving growth. Because once we open out to third party channels or once we start bringing in, you know, users from other platforms into the mix, you know, this this number, obviously, could edge up because you would have to invest more at that point of time. But right now, what I'll say is our investment will go hand in hand with our growth and only if we are seeing a return. So if I invest incremental dollars this quarter and the next four quarters, see those customers coming back and booking more with me, it means my return is coming and it's working.

27:12 Only then will... Do we typically step up investment. That's that's how every category you see XIGO operate in what built in the past. Right? Whether it was flight or whether it was buses. Know, that's how we build those categories out. So it will not be a different journey, but, yes, for two to three years, we expect to continue investing in getting to a a scale where we become comfortable that profitability becomes more important. But in in the short to medium term, I don't see why we would want to not keep doing what we are doing, which is done for growth within guardrails. We've always said that we do this within guardrails. We don't do it in a unmeasured way. We measure every single day, week, month what what the returns are. And, you know, in in the subsequent quarters, you may you may see us invest more, invest at the same level. That will all depend on how we are seeing these numbers pan up.

28:12 Sure. Thank thank you. Thank you guys for answering my questions. I'll join back in the queue. Thank you. Next question is from the line of Pankaj from Bhopa Securities. Please go ahead. Congrats for a good show, and thank you so much for the quarterly disclosures. Really appreciate it. I have a question picking up from my own question from earlier. And, Alok, just to your point, can you quantify what exactly do you mean by within Godrev? And I mean, basically, how to think about an overall bond and will have our investment that you are comfortable with on either an overall basis or an annual basis that you could quantify, you know, how to think of the framework that an x core of investment, let's say, goes into building hotel business out there?

29:01 Yeah. Sure. Thanks, Pankaj. I I think if if you see what sort of said was... Because we invested more than a crore above the contribution and 10 crores below that, so about 11 crore odd investment that we did in total. You know? I I I think if we see the incremental returns better than, you know, what we expect, we we will not be shy of, you know, stepping that up. The guardrails that I talk about relate to the payback period on whenever we acquire a customer either through discounts or performance. We always look at the payback period subsequently of that customer coming back to our platform to do more hotel bookings or to do more bookings in general. So two things that we are focused on right now. Number one, in terms of the percentage of our existing users that are coming to book other things, and then we are able to drive them into the hotel funnel and and make them realize that we now have a product and and rates where, you know, they can, in fact, get by choice as well as hotels within their budget.

30:05 I think that's our immediate focus and attention, and and and therefore, you don't see us as active on third party platforms as some of the other OTAs might be. So this is largely being driven from inside our platform. If we decide to go outside the funnel at some point, which will not happen probably in the next couple of quarters, but may happen down the line, you know, you could see a step up that investment. But if we see an opportunity to do it sooner, we'll not be shy of it. So so let me let me say that the the biggest guardrail which we mentioned last time around also was that, obviously, we don't want to... You know, if we've we've traded a very difficult part to get to profitability three, four years back and then stick to that profitability at the overall company level, right, and and maintain that. So we we believe that that guardrail is a very obvious one as a as a guardrail we will never try to breach.

31:00 But even within where we operate today, which is mid single digit EBITDA, you know, I think we would want to stick around there somewhere and not not sort of go too much below where we operate at, let's say, in this quarter. So, Pankaj, roughly, if you have to model, again, don't take this as a guidance. Over the next couple of quarters. Think of a similar range as this quarter, which is between 10 to 12 crores. Having said that, if the growth... If what we are seeing on the ground becomes more enticing or less enticing, Either way, we could move One way or the other. One way or the other. Yeah. Yeah. Got it. Thanks for that, Solomon. Look.

31:48 My second question is just from a very core conceptual perspective. How do you now define the product market fit in hotels? Right? And a continuation to that is what proportion of hotel supply on IXIGO's platform, perhaps online, just because they're present on you and may not be available on any other online platform? Yeah. See, product market fit is a function of two things. One is what you see versus what you get, being able to ensure that. And in cases where that is not happening, being able to course correct that within a very short period for the customer. Right? Because what was happening on the budget side in India was people were either not getting the rooms that they were promised in terms of the pictures or the reviews or the ratings or the room type, or they would walk in and discover that there could even be a better rate being offered if a customer just walked into a hotel. Right? Now these kind of problems existed very unique to our market. Right? And and the the ways to solve that involves, obviously, having a more direct relationship to ensure that, you know, the experience on the ground matches the experience being shown on the app.

33:05 But also, if something goes wrong, how quick are we to react and overcompensate for that. And I think we have... In a in a subset of our hotels, we've already sort of demonstrated to ourselves certain benchmarks where we have customer satisfaction scores that are coming in higher than other cohorts, where we have repeats from those customers actually improving, and then we also have the ability to say that, you know, the the the negative customer experiences such as bump rates or whether it's a mismatch, those coming within a certain tolerable limit. Right? So I I I think we'll be more explicit about it once we have peace of mind products built around this category out.

33:51 Like we indicated, you know, we are working on some peace of mind products here as well. And and then it will become more apparent what we are talking about. Thank you, and best of luck again, you know, for the upcoming quarters, and wish you guys are happy to share on Diwali. That's it from my side. Thank you, Pankaj, and I'm hoping that you booked your vacation on IXIGO. So we would be happy for that too. But thanks. Thank you. Next question is from the line of Karan Upul from Parekh Capital India. Please go ahead. Yeah. Thanks for the opportunity, and thanks for disclosing the hotel numbers.

34:39 Just on the hotel segment, you know, room nights per day is somewhere around 5,000 plus. How much can this scale, let's say, in the next two to three years time frame? And as it scales the ADV of 2,200, which we have currently, will that remain at that level? Or there is a room for ADV to improve? Yeah. So I I think the way to look at it is as follows. Right? Like, the Pareto average transaction value for IXIGO, given that we are so big on ground transportation and the fact that we serve so many next billion users, the average transaction value will will remain where the affordability for our kind of customers really is there.

35:30 Right? And therefore, you you know, we expect that at these levels, the... Because the penetration is so low out there in the market. Like, if you go to a budget category, we are talking about 10 to 15% online penetration. We expect that we can continue to grow pretty rapidly. I mean, obviously, even the next four quarters, our target will be to continue growing in triple digits if we can. Right? But if I if I were to give you a longer term guidance, right, four to five years, we want to be the largest hotel OTA in the budget to mid market hotel category on a room night basis. And if you just look at the scale of that ambition and work backwards from where we are today, there is no choice. We have to grow.

36:19 This has to be the fastest growing line of business for the next years to come, right, in that sense. So so so so that's how we are looking at it, and then we are not that obsessed about where the ATV will come in at because if we are solving this problem also for more premium customers, if you go to our flight app and look at the hotel section there and how you can use Kara to actually navigate many of the things that you want to do in that, I think there is a experience led playbook that is also bringing in tier one customers to come and book hotels with us, which is a early trickle at this point. But depending on how this mix plays out in the future, we'll decide the direction of a to b. So it... The average room rate or ADR that we sell will be a function of how fast the tier two, three versus tier one customers grow. So it's early to comment.

37:07 It could it could be... It it could be lower than this as well if we decide to bring in the next... To Pankaj's question earlier, like, we go after hotels which are not on any OTA platform, the the average room rate could be lower as well. But at the same time, you know, we see opportunity to continue growing on the tier one side, so that could balance it out and keep it around where we are today. And and, Karan, if you see if you see what we've done in our other line of businesses, which are more mature, what we essentially sell, and I can't stress more on that, is we're not just selling tickets. We're selling tickets and peace of mind. And the idea is the peace of mind has its own ATV.

37:52 So as that develops, as we prove the ATV on the peace of mind, that is the point of time that starts taking precedence. And you've seen it in all, and you can compare all the numbers are public for us where the transaction value and the piece of point transaction value gets added to hotels. So as Alok said, it's it's tougher right now because we are earlier in that state. Earlier developing. Yeah. Yeah. Yeah. And just a follow-up for, Alok, in terms of the ATV being at 2,200 or maybe you're saying that it can do more than this as well, how do you ensure the capability, you know, in this kind of a price point given that there are so many options for for the customers.

38:39 Yeah. Just just your thoughts on that. So I just want to remind you what I said earlier that 60% of hotel room nights in India are below 2,000 rupees a night. Right? So if if a company ever won the whole market, you know, it... The ATV would be closer to this than not, if you think about it. Right? The the reason why other OTAs have a higher old ATV is most of them operate, you know, in the upper part of that pyramid, and therefore, the ATV reflects, you know, the the the kind of value that comes in from there. And the real under penetration problem is on the mid to lower end of this market where we are trying to make a difference. Right?

39:25 So so we are not that worried about where this comes right as long as we solve the customer problems and pain areas. Because if we solve that, the piece of the pie, the the fortune at the other end is much larger. The other part, you have to again remember, and it's it's... I'll I'll again go back around to the product. Even right now, if you see the repeat that the old users have for us across segments, the repeat ratio is high because of the product we have because of the problems we are solving. We are in some segments which were conventionally thought of as pure commodity segment, and we are giving you a contribution margin on that and take a case of something like a train business where we have proved this. We've we've continues to increase. We continue to increase market share, and we have done it because of the product. So repeatability doesn't come because of the segment where you are in. Repeatability comes about what problems are you solving.

40:27 So which is what we need to do. And, again, I'm not saying that we've done it right now, but I remain confident having seen the teams do it twice that they can achieve it another time. Got it. Sorry. Just one more question on the contribution margins for the hotel segment. As the hotel business scales, so the current level of contribution margin, will it continue to improve, or will it stay within the current time, which is it currently? No. The first part on contribution margin is what I'd said earlier that, look, as a business, I choose which line I need to invest in, which can help benefit the... My customers more.

41:12 So if you see last two quarters, last quarter that leaning was more above contribution margin. This quarter that leaning was more below contribution margin. So that'll that'll... As you're developing business, that will vary across. And that will vary because right now, I'm not trying to optimize contribution margin. I'm trying to optimize a business, which is a sustainable business in the long run. And where the customers who are traveling with me and outside too, as Alok had mentioned, they kind of gain. So what I would say is that in this sense, that'll... That will vary. The other part of contribution margin is when it becomes a settled business, it will probably... It will be between... And when I say settled, I mean, in a couple of years, tomorrow or not next quarter.

42:00 But when it becomes a settled business, it will be one of the highest... With this and buses end up being the highest contribution margin businesses for us because of the nature of this business, because of fragmented supply. And in some sense, the supply that naturally comes with us is a supply which is even more fragmented because it's been very tough for anybody to reach them. And we have invested the past decade and a half in solving problems for that demand. So it's it's a it's a it's a very different problem that we are trying to solve. Alright. Thank you, and always. Fine. Thank you. You.

42:48 Next question is from the line of from Motira Roosevelt Financial Services. Please go ahead. Hi. Can you hear me? Yes. Hello. Yeah. So a couple of questions. So from next three to four years point of view, what one can, you know, visualize the GPV mix considering we are aggressive on hotel part? That is question number one. The second, at aggregate level, considering we have a very good market share in real booking side, should we assume that this market has been will continue over next few, four year time frame? And third, in bus segment, does this margin trajectory on net and gross ticket will continue? Yeah. These two three questions I have. Yeah. Thanks.

43:41 Yeah. So I I think I'll answer this in in two parts. One is if you look back to the history of us building any line of business, right, big flights, for example, and if you ask me four years ago that four years from now, what will your GTV mix of flight be? And if I said 40%, it would have been laughed off by people because it was not an obvious thing to do. Right? And I think today, when I'm starting hotels at 2.1% of GTV, if I tell you that in a few years' time, this should be one of the top two GTV contributors for me in four to five years, I think it will be something that, you know, you may not appreciate at this point. But, you know, if you just do the math on us being the largest by room nights even at the ATVs we operate at today, you will see why I see that, right, in four to five years, why that will be the case, that it will be, if not the largest, maybe the second largest by GTV in our mix.

44:43 Now coming to trains, right, we are already the market leaders. We are already at 64% of the OTA market, and the overall capacity growth is barely four to 5% every year. So, you know, I I, like, I I do not foresee that GTV share over time for trains to improve. I see it as reducing. In fact, at one point, we were at more than 50% GTV on trains today that has come down to early forties. Right? And and this might go down further in a... In terms of contribution to the overall GTV. Will it continue growing? Of course, we... See, I think growing in trains is a function of two things. One is creating new products for that traveler, which we have historically always been able to launch something more meaningful every year for the train traveler.

45:29 Second is how do we leverage the opportunity to cross sell, upsell more into that base, right, which is whether it's food, whether it's metro, whether it is, you know, hotels, whether it is other facilities. You know? I I think there is always more opportunity to do that on the train side. Buses is the most interesting vertical because, you know, I think we have proven that we've just focused execution, innovation on product, and deepening relationships with the supply side where, you know, we have actually won over a lot of new supply on both on private and SRTCs, and we have built meaningful products for them. I think there is a scope to continue, you know, operating at decent levels of contribution margin. And and but this should remain our second fastest growing GTV line because hotels will now become the fastest growing GTV line. Right? So that should be the case at least for the midterm. I don't see why that should change. Right? So I I don't know if I gave you a good enough answer, but, you know, I I I think the mix on on this pie will evolve a lot over the next three years just like it evolved a lot in the last three years.

46:47 Thank you so much. All the best. Yeah. Yeah. Thank you. Thank you. Thank you. Next question is from the line of from GM Financial. Please go ahead. Hi, Alok and Rajesh. Thanks for the opportunity. My first question is with your with regards to your comments on consumer AI agents gaining popularity. And then I was reading through and I think you talked about a differentiated customer base of lower tier cities, also a fragmented supply, especially in the bus category. My question to you is, of the four segments that you currently operate in, which one is more prone to consumers using personal AI agents like Instinct or Muse going ahead in a meaningful manner, right? And if you can do the order of in which those segments will be grown?

47:45 And also any any mechanism through which you can address... You can make this trade into an opportunity kind of for your... Each of these businesses? Yeah. So, Sufil, I'll take this, Alok here. Alok, I think... Let's start with the facts on the ground today as of today. Right? I mean, then we'll address the opportunity and challenges. So as of today, traffic from all AI platforms put together remains low single digit percentage of traffic, not just for us, but we also know as a fact for our category. Right? At least in India, that is the case. So we do not see any meaningful traffic contribution yet from any of these, you know, as in there's no game changing traffic contribution we are seeing right now even though we are experimenting with various kind of integrations by making ourselves more discoverable on these platforms, by actually creating plug ins with them or or being more exposed into their platforms. I mean, obviously, some of them haven't even launched in India yet, but but the fact is the following. Right? I mean, in in a world where if we believe that more and more AI agents will do things for us, I think it will boil down to, you know, how useful and how consumer friendly is your AI agent versus somebody else's. Right?

49:08 And for a... It's a fact that when it comes to Indian supply and Indian consumers, the amount of data that we see every day is nontrivial. And therefore, the depth to which we can solve some of these problems, even what we see people asking Tara and then when we are able to solve them or even if we are not able to solve them, then it gives us the data point of what we need to build to be able to solve them. Right? I think that is the most precious part because the differentiation in in a few years' time will largely be, are you able to solve the customer's problems faster, cheaper, better, and also in a more contextually aware manner, right, using the past history that you have with the customer and how much you understand the supply side.

49:54 So if I need to get you an exceptional refund from a certain airline, is that process known to my agent versus some other agent? If I need to actually suggest some hotels to you, recommend some hotels to you, how much do I know about you will be a function of what I recommend to you. Because if you traveled on a train, I might recommend a certain different kind of hotel to you versus if you arrive there on a flight booking. Right? So it's it's those kind of nuances, final nuances that will determine what these consumer AI agents are able to achieve over the long term. Yes. There will be horizontal agents that will claim to do it all. But just like it happened on apps or on the Internet, you know, over time, people gravitate to specialists. We do not we do not think that, you know, it will not happen again. I mean, I think there is a reasonable chance that in every vertical, you will have specialist AI agents who are able to do that vertical job far better than any horizontal AI agent will. Right? That's our view.

50:55 And are we investing in it? Are we actually acutely aware about this opportunity as well as challenge? Yes. We are. And we believe that, you know, at at the right time, we will obviously, you know, come out with products that address this opportunity. So, yeah, I hope that answers. And, Praful, the other part of this is also... Again, I'll I'll keep on repeating this, but, look, we're selling both peace of mind as well as tickets. The peace of mind needs to be a very specialist solution because that is why the attach rate remains what it is, trying to understand the problems which appear.

51:40 It's a lot of our proprietary database, which nobody else has. And in some sense, I would say that IXIGO next presentation video that Radneesh did is a good video to go back to to see what we are... What our view is on on this... On where our solution and our edges in in in this kind of a problem. No. Sure. So I understand your your thought process on the contextual data and how how we identify being used there. My question actually is, like, there is a certain simplistic use cases. Right? Let's just say someone traveling from Mumbai to Delhi. Now for such a use case, there's not much of data needed.

52:29 Right? Whoever cracks it, does it. So so those kind of use cases, don't you think can, you know, be quickly be adopted by the horizontals? Yeah. So something like building products is the easy part. Right? I think... And we already demonstrated our GFF of fully agenting booking flow, right, which can solve this Delhi to Mumbai problem in seconds and even with payments, etcetera, integrated into it. Right? I don't think building the product is the hard part. Getting the trust of the customer involves a lot more than that. Right? And it... The fact that, you know, we have reached a certain scale of distribution by winning that trust and by building certain peace of mind products. I think that's the nontrivial part to crack. So AI has allowed people to build a lot of things, you know, much faster than, you know, let's say, five years ago. Right? However, how many of those products are able to reach a critical mass in terms of distribution scale and lovability and trust?

53:31 I think that's a question that still remains unanswered at this point of time. Yes. There are early adopters who love certain products and will swear by them. But I also know those early adopters who use these same products, and these products are failing at certain use cases which are deeper. Right? So I think it's too early to comment on, you know, whether a horizontal AI agent will actually do everything conceivable for you with the same level of depth and trust as any vertical app in the world is doing. That's a broader question. But the fact of the matter is that we have a large distribution base where if we were to build anything, we can distribute way faster, and we already have the trust of the customer to start using it. Right? Which is what the IXIGO next philosophy is all about, and that's why we are going all in on that.

54:21 Got it, Haruk. The other question is with respect to your hotels business. And now you called out INR 10 crores of fixed cost investment this quarter. Will it be fair to say... And I'm presuming this is mainly related to employee costs or some bit of tech costs. So will it be fair to say that we are broadly done with this fixed cost investment in our hotels business? Or there are more investments that are yet to come? And if yes, what will be the nature of those investments? Let me... As I said, look, broadly, are three areas where you could invest for technically. And there is a customer inducement, which is a broader block. There is a technology. There will be people.

55:08 Now as the hotel grows, it'll it'll shift between these. What I told on Pankaj's question is where we see it over the next couple of quarters. No. Beyond that, the differentiation would be... Now if we are seeing the product being sticky and we feel that the product is the... What we are getting as a feedback or the popularity of the product is doing well and it makes sense to invest more, that is the point of time we could move out of this. Or if we see things are not moving as nicely as they can, we could also decrease it. But what I've given you is a broad idea where things would be now between the the the line items, how does it move?

55:57 Is this something which we are too early in the stage to commit on either of where it will move? What I can say is that the long term plan, which I looked... Talked about last time and reiterated this time, is where we have our eye on and which we feel comfortable and confident about. Okay. Okay, sir. Just a last one here. So, you know, bus business grew around 28% in segment terms. The question in my mind is like, could this business have grown much faster than 28%, especially given that there are challenges on the supply side for flights and also trains also is not growing in a meaningful manner.

56:46 So this segment should not be growing at a much faster rate than what we delivered this quarter. So personally, the way to think of it, and I've been reasonably consistent about where we see this business to grow, as in there is a there is a growth margin trade off that you take in a business. And if you see this business again, like we always have said, and you can go back six quarters, eight quarters, I have said broadly the same thing, and we are very comfortable with this pace of growth at this Centimeters. So we are very comfortable with this. Now I am not making a business for a quarter. I'm making a business which can solve customer problems in the long run, and this space fits nicely for us on that.

57:39 Got it, sir. No. Thanks for the opportunity and all the best. Thank you, Sultan. Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, everyone, for joining our q two FY twenty seven earning call. Because it's the start of the festivities, I would want to wish you all a great. And, you know, have a great Diwali. We'll speak on the other side of this quarter. Take care. Thank you very much. On behalf of TAM Capital Advisors Limited, that concludes this conference.

58:25 Thank you all for joining us today, and you may now disconnect your lines.