The ₹2,491 crore market capitalisation company, operating in India's competitive tour and travel services sector, faces mounting operational pressures despite marginal revenue growth. The quarter's performance underscores a fundamental deterioration in business economics, with profitability evaporating even as topline remained relatively stable. Employee costs surged 26.10% year-on-year to ₹33.30 crores, whilst the company's ability to generate operating leverage has completely broken down.
What makes this quarter particularly concerning is the stark divergence between revenue trajectory and profitability metrics. Whilst net sales inched up 0.72% year-on-year to ₹151.66 crores—the highest quarterly revenue on record—operating profit excluding other income collapsed to just 2.82% of sales compared to 31.74% in Q3 FY25. This represents one of the most dramatic margin compressions witnessed in India's travel services sector in recent quarters.
Quarterly Performance Trend: A Story of Sustained Deterioration
| Quarter | Net Sales (₹ Cr) | Net Profit (₹ Cr) | Operating Margin | PAT Margin |
|---|---|---|---|---|
| Dec'25 | 151.66 | 5.85 | 2.82% | 2.25% |
| Sep'25 | 118.34 | -32.70 | 3.35% | -38.85% |
| Jun'25 | 113.79 | 1.32 | 0.83% | 0.39% |
| Mar'25 | 139.48 | 15.36 | 9.69% | 9.97% |
| Dec'24 | 150.57 | 33.64 | 31.74% | 22.60% |
| Sep'24 | 144.67 | 25.87 | 25.58% | 18.52% |
| Jun'24 | 152.60 | 32.48 | 30.78% | 22.23% |
Financial Performance: Revenue Growth Masks Profitability Crisis
Easy Trip Planners' Q3 FY26 revenue of ₹151.66 crores represents a modest 0.72% year-on-year increase, but the 28.16% sequential growth from Q2 FY26 offers little comfort given the catastrophic margin erosion. The company's operating profit before depreciation, interest, tax, and other income stood at just ₹4.27 crores, translating to an operating margin of 2.82%—a precipitous fall from 31.74% in the year-ago quarter.
The sequential comparison reveals marginal improvement, with Q3 showing positive profit after tax of ₹5.85 crores versus a loss of ₹32.70 crores in Q2 FY26. However, this recovery appears anaemic when contextualised against historical performance. The company generated ₹33.64 crores in net profit during Q3 FY25, making the current quarter's performance an 82.61% decline year-on-year.
Employee costs surged to ₹33.30 crores in Q3 FY26, up 26.10% year-on-year from ₹26.41 crores, consuming 21.95% of net sales compared to 17.54% in Q3 FY25. This escalating cost structure, combined with other operational pressures, has decimated the company's profitability. The profit before tax of ₹8.37 crores in Q3 FY26 includes ₹9.64 crores of other income, meaning core operations generated negative profit before tax of ₹1.27 crores—a shocking reversal from the ₹44.54 crores operating profit (before other income) in Q3 FY25.
The tax charge of ₹4.95 crores at an effective rate of 59.14% further compressed net profitability, though this appears to be an accounting anomaly given the minimal profit before tax. On a full-year FY25 basis, the company reported net sales of ₹587.00 crores with profit after tax of ₹108.00 crores, translating to an 18.4% PAT margin—a stark contrast to the 2.25% margin achieved in Q3 FY26.
Operational Challenges: Return Ratios Signal Deteriorating Capital Efficiency
Easy Trip Planners' return on capital employed (ROCE) has plummeted to 6.36% in the latest period, down dramatically from the 34.05% five-year average. This metric, which measures how efficiently the company generates profits from its capital base, highlights the severity of the operational deterioration. Similarly, return on equity (ROE) stands at just 7.93%, well below the robust 30.06% five-year average, indicating that shareholder capital is generating anaemic returns.
The company's balance sheet reveals shareholder funds of ₹720.31 crores as of March 2025, comprising share capital of ₹354.41 crores and reserves of ₹365.90 crores. Long-term debt stood at ₹25.47 crores, up from ₹3.73 crores in the previous year, though the company remains largely debt-free with a net debt-to-equity ratio of negative 0.06, indicating a net cash position.
Critical Red Flags: Profitability Crisis
Operating Profit Collapse: Operating profit excluding other income fell 91.06% year-on-year to ₹4.27 crores, representing just 2.82% of sales versus 31.74% in Q3 FY25. Core business economics have fundamentally deteriorated.
Employee Cost Inflation: Employee expenses surged 26.10% year-on-year whilst revenue grew just 0.72%, indicating severe operating leverage breakdown. Staff costs now consume 21.95% of revenue versus 17.54% a year ago.
Return Ratio Deterioration: ROCE crashed to 6.36% from a five-year average of 34.05%, whilst ROE declined to 7.93% from 30.06%, signalling capital is no longer being deployed productively.
Current assets of ₹773.62 crores as of March 2025 provide adequate liquidity, though the company's cash flow from operations of ₹111.00 crores for FY25 represented a decline from ₹124.00 crores in FY24. The working capital cycle has tightened, with changes in working capital contributing ₹24.00 crores positively in FY25 compared to a negative ₹47.00 crores in FY24.
Industry Context: Underperformance in Recovering Travel Sector
India's tour and travel services sector has witnessed gradual recovery following pandemic-related disruptions, yet Easy Trip Planners' performance stands in stark contrast to the broader industry trend. The company's 33.67% stock price decline over the past year significantly underperformed the sector average decline of 2.17%, resulting in 31.50 percentage points of underperformance.
The company's five-year sales compound annual growth rate (CAGR) of 33.45% demonstrates historical strength, but the five-year EBIT CAGR of negative 11.87% reveals that revenue growth has not translated into sustainable profitability expansion. This divergence between topline growth and operating profit trajectory suggests structural issues in the business model or competitive positioning.
Margin Compression: A Structural Challenge
Easy Trip Planners' operating margin excluding other income has collapsed from 31.74% in Q3 FY25 to just 2.82% in Q3 FY26—a 28.92 percentage point deterioration. This isn't merely cyclical weakness but appears to reflect fundamental changes in the company's cost structure and competitive dynamics. The company's historical strength in maintaining 25-30% operating margins has completely evaporated, raising questions about sustainable profitability levels going forward.
Peer Comparison: Valuation Premium Unjustified by Performance
| Company | P/E Ratio | P/BV Ratio | ROE % | Debt/Equity | Dividend Yield |
|---|---|---|---|---|---|
| Easy Trip Planners | 35.21 | 2.79 | 30.06% | -0.06 | NA |
| TBO Tek | 70.51 | 11.88 | 18.20% | -0.88 | NA |
| BLS International | 17.24 | 5.21 | 24.97% | -0.52 | 1.11% |
| Le Travenues | 145.62 | 12.53 | 7.03% | -0.48 | NA |
| Thomas Cook (India) | 21.02 | 2.25 | 6.09% | -0.28 | 0.40% |
| Yatra Online | 45.76 | 3.23 | 4.60% | -0.02 | NA |
Easy Trip Planners trades at a price-to-earnings ratio of 35.21 times trailing twelve-month earnings, positioned in the middle of its peer group range. However, this valuation appears increasingly difficult to justify given the company's deteriorating profitability trajectory. The company's historical five-year average ROE of 30.06% remains the strongest among peers, but the latest ROE of 7.93% suggests this competitive advantage has eroded significantly.
The price-to-book value ratio of 2.79 times appears reasonable compared to peers like TBO Tek (11.88x) and Le Travenues (12.53x), but higher than Thomas Cook India (2.25x). Given the company's net cash position with negative debt-to-equity of 0.06, the balance sheet strength provides some downside protection, though this alone cannot justify current valuations amid collapsing profitability.
Valuation Analysis: Fair Price Masks Deteriorating Fundamentals
At the current market price of ₹7.92, Easy Trip Planners trades at a P/E ratio of 35.21 times and price-to-book value of 2.79 times. The stock's valuation grade has oscillated between "Fair" and "Expensive" over the past year, currently assessed as "Fair" following a change from "Expensive" in August 2025. However, this fair valuation assessment appears based on historical earnings power rather than current run-rate profitability.
The enterprise value-to-EBITDA multiple of 35.63 times appears elevated, particularly given the sharp margin compression witnessed in recent quarters. If the company's operating margins remain structurally impaired at 3-5% levels rather than recovering to historical 25-30% levels, current valuations imply significant downside risk. The stock trades 43.51% below its 52-week high of ₹14.02 but remains 29.62% above its 52-week low of ₹6.11, suggesting the market is pricing in some recovery potential.
Shareholding Pattern: Institutional Exodus Continues
| Investor Category | Dec'25 | Sep'25 | Jun'25 | QoQ Change |
|---|---|---|---|---|
| Promoter Holding | 47.72% | 47.72% | 47.72% | 0.00% |
| FII Holding | 0.44% | 0.50% | 2.59% | -0.06% |
| Mutual Fund Holding | 0.18% | 0.18% | 0.17% | 0.00% |
| Insurance Holdings | 2.30% | 2.30% | 2.30% | 0.00% |
| Non-Institutional | 49.35% | 49.30% | 47.22% | +0.05% |
The shareholding pattern reveals concerning trends in institutional confidence. Foreign institutional investor (FII) holding has collapsed from 3.74% in March 2025 to just 0.44% in December 2025, representing a sustained exodus of sophisticated foreign capital. The sequential decline of 0.06% in Q3 FY26 continues this troubling trend, with FII holdings having fallen 2.09% in Q2 FY26 alone.
Mutual fund holding remains negligible at 0.18%, unchanged quarter-on-quarter but down from 0.24% in March 2025. Insurance company holdings have stabilised at 2.30% after declining from 2.66% in March 2025. The promoter holding stands firm at 47.72%, with key promoters Rikant Pittie (25.22%), Nishant Pitti (12.48%), and Prashant Pitti (10.03%) maintaining their stakes. However, the presence of 26.14% pledged shares raises governance concerns.
Stock Performance: Massive Wealth Destruction Despite Recent Bounce
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +15.62% | -0.94% | +16.56% |
| 1 Month | +12.98% | -0.35% | +13.33% |
| 3 Months | -0.50% | -1.52% | +1.02% |
| 6 Months | -13.91% | +3.32% | -17.23% |
| Year-to-Date | +7.90% | -2.28% | +10.18% |
| 1 Year | -33.67% | +9.66% | -43.33% |
| 2 Years | -68.00% | +14.98% | -82.98% |
| 3 Years | -68.19% | +35.81% | -104.00% |
Easy Trip Planners' stock performance reflects severe wealth destruction over medium to long-term horizons. The three-year return of negative 68.19% compares catastrophically against the Sensex's positive 35.81% return, resulting in negative alpha of 104 percentage points. The two-year return of negative 68.00% versus Sensex's positive 14.98% underscores consistent underperformance.
Recent momentum provides little comfort. Whilst the stock has gained 15.62% over the past week and 12.98% over the past month, these bounces appear to be short-term volatility rather than sustainable trend reversals. The six-month return of negative 13.91% against Sensex's positive 3.32% demonstrates continued relative weakness. The stock's beta of 1.35 indicates high volatility, with risk-adjusted returns deeply negative at negative 0.85 over the past year.
Investment Thesis: Quality Erosion Undermines Historical Strengths
Easy Trip Planners' investment thesis has deteriorated materially. The company's quality grade has been downgraded to "Average" from "Excellent" historically, reflecting the sustained margin compression and profitability decline. The financial trend remains firmly "Negative" as of December 2025, with the company flagged for having operating profit fall 111.5% versus the previous four-quarter average and profit after tax declining 65.9%.
The technical trend classification of "Bearish" aligns with the fundamental deterioration, with the stock trading below all key moving averages. The proprietary Mojo Score of 34 out of 100 places the stock firmly in "SELL" territory, down from 47 in May 2024. This score reflects the confluence of negative factors: bearish technicals, negative financial trends, deteriorating quality metrics, and poor long-term growth with five-year EBIT CAGR of negative 11.87%.
Key Strengths & Risk Factors
KEY STRENGTHS
- Strong Balance Sheet: Net cash position with debt-to-equity of negative 0.06 provides financial stability and flexibility
- Market Leadership: Established brand in online travel services with strong historical market position
- Historical ROE: Five-year average ROE of 30.06% demonstrates past capital efficiency, though recent performance has deteriorated
- Revenue Stability: Q3 FY26 revenue of ₹151.66 crores represents highest quarterly sales, showing demand resilience
- Zero Debt Burden: Minimal interest costs of ₹1.56 crores in Q3 FY26 ensure profitability isn't constrained by debt servicing
KEY CONCERNS
- Catastrophic Margin Collapse: Operating margin crashed from 31.74% to 2.82% year-on-year, representing 91% decline in operating profit
- Profitability Crisis: Net profit of ₹5.85 crores down 82.61% YoY; core operations generated negative PBT before other income
- Cost Structure Inflation: Employee costs surged 26.10% YoY whilst revenue grew just 0.72%, indicating severe operating leverage breakdown
- Return Ratio Deterioration: ROCE crashed to 6.36% from 34.05% average; ROE declined to 7.93% from 30.06%, signalling capital destruction
- Institutional Exodus: FII holding collapsed from 3.74% to 0.44% over nine months, reflecting loss of sophisticated investor confidence
- Negative Long-term Trend: Five-year EBIT CAGR of negative 11.87% despite 33.45% sales CAGR shows sustained margin compression
- Severe Underperformance: Stock down 68.19% over three years versus Sensex up 35.81%, representing 104 percentage points of negative alpha
Outlook: What to Watch
POSITIVE CATALYSTS
- Margin recovery above 15% levels in coming quarters demonstrating operational improvements
- Employee cost rationalisation bringing staff expenses below 20% of revenue
- Return of institutional investors (FII/MF holdings rising) signalling confidence restoration
- Quarterly profit exceeding ₹20 crores consistently for two consecutive quarters
- Management commentary providing clear roadmap for profitability restoration
RED FLAGS TO MONITOR
- Operating margins remaining below 10% for another two quarters, confirming structural impairment
- Further sequential decline in quarterly profit in Q4 FY26
- Continued FII selling with holdings falling below 0.25%
- Any increase in promoter pledging above current 26.14% levels
- Revenue growth turning negative in subsequent quarters
The Verdict: Avoid Until Profitability Stabilises
Score: 34/100
For Fresh Investors: Avoid initiating positions. The catastrophic 91% decline in operating profit, sustained margin compression to 2.82%, and negative financial trend make this an unacceptable risk-reward proposition. Wait for at least two consecutive quarters of margin recovery above 15% and consistent profitability above ₹20 crores before considering entry.
For Existing Holders: Consider reducing exposure on any further rallies towards ₹9-10 levels. The fundamental deterioration appears structural rather than cyclical, with operating margins collapsing from historical 25-30% to sub-3% levels. The institutional exodus (FII holdings down from 3.74% to 0.44%) and three-year wealth destruction of 68.19% underscore the severity of business challenges. Hold only if conviction exists in management's ability to restore margins to historical levels.
Fair Value Estimate: ₹6.50 (18% downside from current ₹7.92). Current valuation of 35x P/E appears unjustified given deteriorating profitability trajectory and structural margin compression. Fair value assumes partial margin recovery to 12-15% levels, still well below historical 25-30% operating margins.
Rationale: Easy Trip Planners faces a fundamental profitability crisis that cannot be dismissed as temporary weakness. Operating profit excluding other income collapsed 91% year-on-year despite stable revenue, indicating severe business model deterioration or competitive pressure. The company's historical strength—maintaining 25-30% operating margins—has completely evaporated, with Q3 FY26 margins at just 2.82%. Return ratios have crashed (ROCE to 6.36% from 34.05% average; ROE to 7.93% from 30.06%), whilst institutional investors have fled (FII holdings down 88%). Until management demonstrates ability to restore margins above 15% sustainably, the stock remains uninvestable despite net cash balance sheet and reasonable P/BV multiple.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
