The September 2025 quarter results paint a concerning picture of a company struggling to maintain profitability momentum despite a stable revenue base. Net sales for Q2 FY26 stood at ₹59.38 crores, registering a modest 4.16% sequential growth from ₹57.01 crores in Q1 FY26, but declining 2.56% year-on-year from ₹60.94 crores in Q2 FY25. More worryingly, the company's net profit of ₹6.39 crores represents a sharp 14.00% quarter-on-quarter decline and a 13.99% year-on-year drop, signalling deteriorating profitability despite relatively stable top-line performance.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Sep'25 | 59.38 | +4.16% | 6.39 | -6.99% | 10.76% |
| Jun'25 | 57.01 | -6.03% | 6.87 | -9.96% | 12.05% |
| Mar'25 | 60.67 | +4.12% | 7.63 | +41.82% | 12.58% |
| Dec'24 | 58.27 | -4.38% | 5.38 | -27.59% | 9.23% |
| Sep'24 | 60.94 | +9.31% | 7.43 | +10.73% | 12.19% |
| Jun'24 | 55.75 | -4.96% | 6.71 | +9.46% | 12.04% |
| Mar'24 | 58.66 | — | 6.13 | — | 10.45% |
Financial Performance: Margin Compression Overshadows Revenue Stability
The quarter's financial performance reveals a troubling pattern of margin erosion across multiple metrics. Operating profit excluding other income stood at ₹9.41 crores in Q2 FY26, representing a marginal 0.75% sequential increase from ₹9.34 crores in Q1 FY26, but declining 7.01% year-on-year from ₹10.12 crores. The operating margin (excluding other income) contracted to 15.85% from 16.38% in the previous quarter, marking a 53 basis point sequential decline and a 76 basis point year-on-year compression.
The PAT margin deterioration proved even more pronounced, falling to 10.76% in Q2 FY26 from 12.05% in Q1 FY26 and 12.19% in Q2 FY25. This 129 basis point quarter-on-quarter and 143 basis point year-on-year margin contraction reflects not just operational challenges but also rising cost pressures. Employee costs increased to ₹12.88 crores in Q2 FY26 from ₹12.36 crores in the previous quarter, growing 4.21% sequentially whilst revenue grew only 4.16%, indicating negative operating leverage.
Depreciation expenses increased to ₹2.19 crores in Q2 FY26 from ₹2.01 crores in Q1 FY26, reflecting ongoing capital investments. Whilst the company maintained minimal interest costs at ₹0.03 crores, indicating a debt-free balance sheet, the inability to translate revenue growth into profit expansion raises serious questions about operational efficiency and competitive positioning in the travel services sector.
Operational Challenges: Weak Return Ratios Signal Structural Concerns
Beyond the quarterly performance, International Travel House's fundamental quality metrics reveal deeper structural weaknesses. The company's average return on equity (ROE) of 12.88% over recent years, whilst the latest ROE stands at 15.09%, indicates moderate capital efficiency but falls short of excellence standards typically expected from market leaders. More concerning is the average return on capital employed (ROCE) of just 2.54%, though the latest ROCE has improved dramatically to 36.70%, suggesting recent operational improvements that have yet to translate into sustained profitability.
⚠️ Profitability Pressure Points
Key Concern: Despite being a net cash company with zero debt, International Travel House struggles with profitability consistency. The company's five-year sales CAGR of 13.44% has not translated into proportionate profit growth, with EBIT growing at 23.28% annually but from a low base following the pandemic-induced losses. The company's average ROCE of 2.54% (though latest at 36.70%) and ROE of 12.88% suggest capital is not being deployed efficiently relative to the industry's potential.
Margin Volatility: Operating margins have fluctuated significantly across quarters, ranging from 12.97% to 17.15% over the past seven quarters, indicating inconsistent operational execution and pricing power challenges in a competitive travel services market.
The company's balance sheet remains healthy with shareholder funds of ₹165.37 crores as of March 2025, supported by reserves of ₹157.37 crores. With zero long-term debt and current assets of ₹186.18 crores against current liabilities of ₹62.15 crores, the company maintains a comfortable liquidity position. Cash and equivalents stood at ₹35.00 crores as of March 2025, providing financial flexibility. However, this strong balance sheet has not translated into superior returns, with the company's sales to capital employed ratio averaging just 1.25 times, indicating underutilisation of assets.
Industry Context: Travel Sector Recovery Remains Uneven
The Indian travel and tourism sector has witnessed uneven recovery post-pandemic, with corporate travel still below pre-COVID levels whilst leisure travel has rebounded strongly. International Travel House's performance reflects these mixed dynamics, with the company's diversified service offerings across metros and select tier-two cities providing geographic diversification but also exposing it to varied demand patterns.
The company's positioning as part of the ITC Hotels Group provides brand credibility and potential synergies, yet the results suggest these advantages have not translated into market share gains or pricing power. The travel services industry remains highly fragmented and competitive, with both traditional players and new-age digital platforms vying for market share. International Travel House's inability to demonstrate consistent margin expansion despite its established presence raises questions about its competitive moat and differentiation strategy.
Sector Underperformance Deepens
International Travel House's stock has significantly underperformed its sector over the past year, declining 41.33% compared to the Tour, Travel Related Services sector's 10.09% decline. This 31.24 percentage point underperformance reflects investor concerns about the company's specific challenges beyond broader sector headwinds. The stock's high beta of 1.50 indicates greater volatility than the market, amplifying both downside and upside movements.
Peer Comparison: Valuation Discount Reflects Quality Concerns
When benchmarked against industry peers, International Travel House presents a mixed picture. The company trades at a price-to-earnings ratio of 11.52 times, significantly below the sector average and peers such as Le Travenues (210.38x), Thomas Cook India (26.76x), Easy Trip Planners (37.39x), and Yatra Online (45.65x). However, this valuation discount appears justified given the company's operational challenges and inconsistent profitability trajectory.
| Company | P/E Ratio (TTM) | P/BV Ratio | ROE % | Div Yield % |
|---|---|---|---|---|
| Intl. Travel House | 11.52 | 1.74 | 12.88 | 1.45 |
| Le Travenues | 210.38 | 14.79 | 7.03 | — |
| Thomas Cook (India) | 26.76 | 2.73 | 6.09 | 0.33 |
| Easy Trip Planners | 37.39 | 2.96 | 30.06 | — |
| Yatra Online | 45.65 | 3.11 | 4.60 | — |
| Landmark Global | 7.16 | 1.09 | 15.63 | — |
International Travel House's ROE of 12.88% positions it in the middle of the peer group, superior to Le Travenues (7.03%), Thomas Cook (6.09%), and Yatra Online (4.60%), but significantly trailing Easy Trip Planners' impressive 30.06% and Landmark Global's 15.63%. The company's price-to-book ratio of 1.74 times reflects reasonable valuation relative to book value, especially when compared to peers trading at substantially higher multiples. The dividend yield of 1.45% provides some income cushion, with the company paying ₹5.50 per share in its latest dividend declared in August 2025.
Valuation Analysis: Attractive Price Masks Fundamental Weakness
At the current market price of ₹378.55, International Travel House trades at what appears to be attractive valuation multiples on a standalone basis. The P/E ratio of 11.52 times trailing twelve-month earnings represents a significant discount to the broader market and most travel sector peers. The EV/EBITDA multiple of 5.66 times and EV/EBIT of 7.19 times suggest the stock is not expensive relative to its operational cash generation capacity.
However, the PEG ratio of 2.74 indicates the stock is not particularly cheap when growth prospects are factored in. With five-year sales growth at 13.44% annually, the company's valuation multiples suggest limited expectations for acceleration. The stock's 52-week range of ₹360.00 to ₹696.00 illustrates the dramatic re-rating that has occurred, with the current price sitting just 5.15% above the yearly low and 45.61% below the high reached in mid-2025.
The valuation grade has fluctuated between "Attractive" and "Fair" over recent months, currently sitting at "Attractive" since April 30, 2025. Whilst the absolute valuation metrics appear compelling, investors must weigh this against deteriorating operational trends and margin pressures that suggest the discount may be justified rather than representing a buying opportunity.
Shareholding Pattern: Stable Promoter Base, Minimal Institutional Interest
The shareholding structure of International Travel House has remained remarkably stable over recent quarters, with promoter holding steady at 61.69% across the last five quarters through September 2025. The promoter group, led by ITC Hotels Limited (48.96%) and Russell Investments Limited (12.73%), demonstrates unwavering commitment to the business despite operational challenges. Importantly, there is no promoter pledging, eliminating concerns about financial stress at the promoter level.
| Quarter | Promoter % | FII % | MF % | Insurance % | Other DII % | Non-Inst % |
|---|---|---|---|---|---|---|
| Sep'25 | 61.69 | 0.00 | 0.00 | 0.00 | 0.01 | 38.30 |
| Jun'25 | 61.69 | 0.00 | 0.00 | 0.00 | 0.01 | 38.30 |
| Mar'25 | 61.69 | 0.00 | 0.00 | 0.00 | 0.01 | 38.30 |
| Dec'24 | 61.69 | 0.00 | 0.00 | 0.00 | 0.01 | 38.30 |
| Sep'24 | 61.69 | 0.00 | 0.00 | 0.00 | 0.00 | 38.31 |
However, the complete absence of foreign institutional investor (FII) and mutual fund holdings raises significant red flags about institutional confidence in the stock. With institutional holdings at a mere 0.01%, comprising only other domestic institutional investors, the stock lacks the quality endorsement that typically accompanies fundamentally strong businesses. The 38.30% non-institutional shareholding provides limited liquidity and price discovery, contributing to the stock's high volatility (beta of 1.50) and susceptibility to sharp price movements.
Stock Performance: Severe Underperformance Across All Timeframes
The stock's price performance has been dismal across virtually all meaningful timeframes, reflecting persistent investor disappointment with the company's results and outlook. Over the past year, International Travel House has declined 41.33% whilst the Sensex gained 9.00%, resulting in a negative alpha of 50.33 percentage points. The two-year performance shows a 40.48% decline against the Sensex's 14.90% gain, underperforming by 55.38 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +2.91% | -0.29% | +3.20% |
| 1 Week | +0.01% | -1.86% | +1.87% |
| 1 Month | -5.09% | -2.21% | -2.88% |
| 3 Months | -18.57% | +1.65% | -20.22% |
| 6 Months | -24.40% | +1.37% | -25.77% |
| 1 Year | -41.33% | +9.00% | -50.33% |
| 2 Years | -40.48% | +14.90% | -55.38% |
| 3 Years | +52.18% | +38.37% | +13.81% |
The three-year performance shows a positive 52.18% return, outperforming the Sensex by 13.81 percentage points, reflecting the strong post-pandemic recovery rally. However, the subsequent deterioration in one and two-year returns indicates this momentum has completely reversed. The stock currently trades below all key moving averages – 5-day (₹377.06), 20-day (₹378.58), 50-day (₹399.72), 100-day (₹440.07), and 200-day (₹467.20) – confirming the established bearish technical trend that began in October 2025.
Investment Thesis: Quality Concerns Overshadow Valuation Appeal
The investment case for International Travel House rests on a foundation of attractive valuation metrics and a debt-free balance sheet, but these positives are substantially outweighed by operational deterioration and quality concerns. The company's proprietary Mojo Score of 28 out of 100 places it firmly in "STRONG SELL" territory, reflecting the confluence of negative factors across valuation, quality, financial trends, and technical indicators.
The quality assessment reveals an "Average" grade, upgraded from "Below Average" in May 2024, but this improvement has not translated into consistent operational performance. The financial trend turned "Negative" in December 2025, driven by deteriorating quarterly metrics including profit declines and margin compression. Technical indicators uniformly point to continued weakness, with MACD, Bollinger Bands, and KST all signalling bearish trends on both weekly and monthly timeframes.
"At ₹378.55, International Travel House trades near its 52-week low, but the valuation discount appears justified by deteriorating fundamentals rather than representing a buying opportunity."
Key Strengths & Risk Factors
Key Strengths
- Debt-Free Balance Sheet: Zero long-term debt with ₹35.00 crores cash provides financial flexibility and eliminates solvency concerns.
- Attractive Valuation Multiples: P/E of 11.52x and EV/EBITDA of 5.66x represent significant discounts to sector averages and most peers.
- Stable Promoter Holding: 61.69% promoter stake with zero pledging demonstrates long-term commitment from ITC Hotels Group.
- Established Brand Presence: Part of ITC Hotels ecosystem with offices across major metros and select tier-two cities.
- Dividend Income: 1.45% dividend yield with consistent payout history provides some return cushion.
Key Concerns
- Deteriorating Profitability: Net profit declined 14.00% QoQ and 13.99% YoY despite revenue stability, indicating margin pressure.
- Margin Compression: PAT margin contracted 129 bps QoQ to 10.76%, reflecting operational inefficiencies and cost pressures.
- Weak Capital Returns: Average ROCE of 2.54% and ROE of 12.88% indicate suboptimal capital deployment efficiency.
- Zero Institutional Interest: Complete absence of FII and mutual fund holdings signals lack of quality endorsement.
- Severe Stock Underperformance: 41.33% decline over past year with negative alpha of 50.33 percentage points versus Sensex.
- High Volatility: Beta of 1.50 indicates greater downside risk during market corrections.
- Negative Financial Trend: Quarterly metrics showing deterioration with profit at lowest levels in recent quarters.
Outlook: What to Watch
Positive Catalysts
- Margin Recovery: Stabilisation of operating margins above 16% levels with better cost management.
- Revenue Acceleration: Return to sustained mid-teen revenue growth reflecting market share gains.
- Institutional Interest: Entry of quality mutual funds or FIIs signalling fundamental improvement.
- Technical Reversal: Stock breaking above 200-day moving average of ₹467.20 with volume confirmation.
- Sector Tailwinds: Broad-based recovery in corporate travel and outbound tourism segments.
Red Flags to Monitor
- Further Margin Erosion: Operating margins falling below 15% indicating intensifying competitive pressures.
- Market Share Loss: Revenue growth lagging sector peers consistently over multiple quarters.
- Break Below Support: Stock falling below 52-week low of ₹360.00 opening downside to ₹320-330 zone.
- Promoter Stake Reduction: Any decline in 61.69% promoter holding signalling reduced commitment.
- Dividend Cut: Reduction or elimination of dividend payments indicating cash flow stress.
The Verdict: Avoid This Value Trap
Score: 28/100
For Fresh Investors: Avoid initiating positions. The seemingly attractive valuation multiples mask fundamental deterioration, with declining profitability, margin compression, and negative financial trends. The complete absence of institutional interest and severe stock underperformance reflect justified concerns about the company's competitive positioning and growth prospects. Better opportunities exist in the travel sector with stronger operational momentum and quality metrics.
For Existing Holders: Consider exiting positions on any technical bounce towards ₹400-420 levels. The combination of deteriorating quarterly results, bearish technical setup, and lack of near-term catalysts suggests limited upside potential. The 1.45% dividend yield provides insufficient compensation for the operational risks and downside volatility (beta 1.50). Only long-term investors with high risk tolerance and conviction in eventual turnaround should consider holding, but must be prepared for continued underperformance.
Fair Value Estimate: ₹320-340 (15-20% downside risk from current levels based on continued margin pressure and earnings downgrades)
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. Past performance is not indicative of future results. The views expressed are based on data available as of January 14, 2026, and are subject to change based on market conditions and company developments.
