The quarter's performance reveals a troubling disconnect between topline growth and bottom-line delivery. While Yatra Online managed to grow revenues year-on-year, the sequential contraction of 26.80% from Q2 FY26's ₹350.87 crores signals seasonal weakness in the travel industry. More concerning is the profit decline, which has erased much of the momentum built during the first half of the fiscal year when the company posted consolidated net profit of ₹30.28 crores across Q1 and Q2 FY26.
The market's reaction has been swift and unforgiving. Trading at ₹141.55, the stock is down 18.39% year-to-date and has declined 23.57% over the past three months, significantly underperforming the broader market. Despite a strong one-year return of 65.23%, the recent correction has pushed the stock 29.87% below its 52-week high of ₹201.85, raising questions about valuation sustainability and operational momentum.
| Quarter | Revenue (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | ₹256.82 | -26.80% | ₹8.34 | -41.60% | 3.25% |
| Sep'25 (Q2) | ₹350.87 | +67.23% | ₹14.28 | -10.75% | 4.07% |
| Jun'25 (Q1) | ₹209.81 | -4.18% | ₹16.00 | +5.12% | 7.63% |
| Mar'25 (Q4) | ₹218.97 | -6.92% | ₹15.22 | +52.05% | 6.95% |
| Dec'24 (Q3) | ₹235.26 | -0.48% | ₹10.01 | +37.12% | 4.25% |
| Sep'24 (Q2) | ₹236.40 | +134.50% | ₹7.30 | +80.69% | 3.09% |
| Jun'24 (Q1) | ₹100.81 | — | ₹4.04 | — | 4.01% |
Financial Performance: Margin Compression Overshadows Revenue Growth
Yatra Online's Q3 FY26 results present a mixed picture of operational performance. Net sales of ₹256.82 crores, whilst representing a 9.16% year-on-year increase from ₹235.26 crores in Q3 FY24, suffered a sharp 26.80% sequential decline from Q2 FY26's ₹350.87 crores. This volatility reflects the seasonal nature of India's travel industry, where the July-September quarter typically captures peak holiday season demand, whilst October-December experiences a natural slowdown.
The operating profit margin excluding other income improved to 8.77% in Q3 FY26 from 6.81% in Q2 FY26, demonstrating enhanced operational efficiency. However, this 196 basis point expansion failed to translate into bottom-line growth. Net profit collapsed to ₹8.34 crores from ₹14.28 crores sequentially, representing a concerning 41.60% quarter-on-quarter decline. The PAT margin contracted to 3.25% from 4.07%, indicating that cost pressures and higher depreciation charges eroded the benefits of improved operating leverage.
Employee costs remained relatively stable at ₹43.14 crores in Q3 FY26 compared to ₹41.06 crores in Q2 FY26, suggesting disciplined workforce management. However, depreciation charges surged to ₹10.94 crores from ₹9.87 crores, reflecting the company's ongoing investments in technology infrastructure and platform capabilities. Interest expenses also increased to ₹3.55 crores from ₹2.17 crores, marking the highest quarterly interest burden in recent periods and raising questions about debt management.
On a half-yearly basis, Yatra Online's performance appears more encouraging. For H1 FY26 (April-September 2025), the company posted net sales of ₹560.68 crores with consolidated net profit of ₹30.28 crores, representing robust growth from the corresponding period. This demonstrates the company's underlying business strength, though the Q3 stumble has tempered investor enthusiasm about near-term earnings visibility.
Quality of Earnings Concern
Other income contributed ₹4.78 crores in Q3 FY26, representing 37.34% of profit before tax. This elevated proportion of non-operating income relative to PBT raises concerns about earnings quality and the sustainability of reported profits. Investors should monitor whether core operations can drive profitability without substantial reliance on treasury income and other non-operating sources.
Operational Challenges: Low Returns and High Volatility
Yatra Online's operational efficiency metrics reveal fundamental challenges that extend beyond seasonal fluctuations. The company's average return on equity (ROE) of 4.60% and average return on capital employed (ROCE) of 2.49% rank amongst the weakest in the travel services sector, indicating poor capital productivity and management efficiency. These low returns suggest the company struggles to generate adequate profits relative to the capital invested by shareholders and employed in the business.
The latest ROCE of 5.18% and ROE of 6.82%, whilst showing sequential improvement, remain well below industry standards and peer performance. For context, competitors like Easy Trip Planners boast an ROE of 30.06%, whilst BLS International delivers 24.97%. This substantial gap highlights Yatra Online's inability to convert its market position into superior shareholder returns, a critical weakness for long-term investors seeking quality compounders.
On the balance sheet front, Yatra Online maintains a relatively strong financial position with minimal debt. As of March 2025, shareholder funds stood at ₹783.76 crores against long-term debt of just ₹3.08 crores, resulting in a negligible debt-to-equity ratio of 0.07. The company's net debt-to-equity of -0.02 indicates it is effectively a net cash company, providing financial flexibility for growth investments and cushioning against industry downturns.
However, working capital management presents concerns. Current assets of ₹959.21 crores comfortably exceed current liabilities of ₹498.01 crores, but cash and cash equivalents declined to ₹49.00 crores in FY25 from ₹140.00 crores in FY24. This ₹91.00 crore reduction in cash reserves, coupled with negative operating cash flow of ₹88.00 crores in FY25, signals potential liquidity pressures despite the company's low debt profile.
⚠️ Monitoring Point: Cash Flow Deterioration
Yatra Online's operating cash flow turned negative at ₹88.65 crores in FY25, marking the second consecutive year of negative cash generation from operations. Whilst the company maintains adequate liquidity, sustained negative operating cash flow raises questions about the sustainability of the business model and the quality of reported accounting profits. Management must demonstrate an ability to convert earnings into actual cash generation.
Industry Context: Travel Sector Recovery Continues Amidst Volatility
The Indian travel and tourism sector continues its post-pandemic recovery trajectory, though growth has become increasingly uneven across quarters. The sector's performance is heavily influenced by seasonal patterns, with peak travel seasons (summer holidays, year-end vacations) driving disproportionate revenue concentration. Yatra Online's 67.23% quarter-on-quarter revenue surge in Q2 FY26 followed by a 26.80% contraction in Q3 FY26 exemplifies this volatility.
Corporate travel, which represents Yatra Online's largest business segment as India's leading corporate travel services provider, has recovered strongly from pandemic lows. However, intense competition from both established players like MakeMyTrip and emerging disruptors like EaseMyTrip has compressed margins across the industry. The online travel agency (OTA) space faces pressure from direct bookings by airlines and hotels, as well as from newer business models offering zero-commission platforms.
Yatra Online's positioning as the third-largest OTA in India provides scale advantages, but the company faces structural challenges in defending market share. The company's 5-year sales growth of 56.74% and EBIT growth of 101.05% demonstrate its ability to capitalise on sector tailwinds, yet the sustainability of this growth remains questionable given recent quarterly volatility and margin pressures.
| Company | P/E Ratio (TTM) | P/BV Ratio | ROE (%) | Debt/Equity | Dividend Yield |
|---|---|---|---|---|---|
| Yatra Online | 42.49x | 2.90x | 4.60% | -0.02x | NA |
| TBO Tek | 75.74x | 12.14x | 18.20% | -0.88x | NA |
| BLS International | 18.18x | 5.50x | 24.97% | -0.52x | 0.35% |
| Le Travenues | 160.36x | 13.80x | 7.03% | -0.48x | NA |
| Thomas Cook (India) | 21.46x | 2.30x | 6.09% | -0.28x | 0.39% |
| Easy Trip Planners | 36.80x | 2.92x | 30.06% | -0.06x | NA |
Peer Comparison: Valuation Discount Justified by Weak Returns
Yatra Online's valuation metrics reveal a company trading at a significant discount to sector peers, though this discount appears justified by inferior operational performance. At a P/E ratio of 42.49x, Yatra trades below the peer group average of approximately 63x, and substantially below premium players like Le Travenues (160.36x) and TBO Tek (75.74x). However, the company's P/E multiple remains elevated relative to its earnings quality and growth visibility.
The price-to-book ratio of 2.90x positions Yatra Online at the lower end of the peer spectrum, with only Thomas Cook (India) trading at a comparable 2.30x multiple. This valuation discount directly reflects the company's weak ROE of 4.60%, which ranks last amongst the peer group. Easy Trip Planners commands a similar P/BV of 2.92x despite generating an ROE of 30.06%, highlighting the market's recognition of superior capital efficiency.
From a balance sheet perspective, Yatra Online's net cash position (debt-to-equity of -0.02x) provides a competitive advantage, matching or exceeding the financial strength of peers. However, this balance sheet strength has not translated into superior returns, suggesting operational inefficiencies rather than financial constraints limit the company's profitability. The absence of dividend payments across most peers, including Yatra Online, reflects the sector's focus on reinvestment for growth rather than shareholder distributions.
Yatra Online's market capitalisation of ₹2,221 crores positions it as the sixth-largest player in the peer group, reflecting its established market presence. However, the company's inability to convert this scale into competitive returns raises questions about its long-term positioning. Investors must weigh the valuation discount against the fundamental performance gap when assessing relative attractiveness.
Valuation Analysis: Expensive Despite Recent Correction
Despite the recent 23.57% correction over three months, Yatra Online continues to trade at what appears to be an expensive valuation relative to its fundamentals. The company's P/E ratio of 42.49x represents a substantial premium to its earnings quality, particularly given the volatile quarterly performance and weak return metrics. The valuation grade has fluctuated between "Fair" and "Expensive" multiple times since July 2025, currently settling at "Expensive" as of August 11, 2025.
The EV/EBITDA multiple of 30.15x and EV/EBIT of 56.84x appear stretched, especially when considering the company's EBIT-to-interest coverage of just 1.44x. These elevated multiples suggest the market is pricing in significant growth expectations that may prove challenging to deliver given recent quarterly volatility. The EV/Sales ratio of 2.30x, whilst reasonable for a technology-enabled services business, requires consistent margin expansion to justify—something Yatra has struggled to achieve.
The PEG ratio of 0.20x appears attractive on the surface, suggesting the stock trades at a discount to its growth rate. However, this metric must be interpreted cautiously given the erratic quarterly earnings pattern and questions about earnings sustainability. The 5-year EBIT growth of 101.05% looks impressive, but recent performance suggests this growth trajectory may not be maintainable.
At the current price of ₹141.55, Yatra Online trades 29.87% below its 52-week high of ₹201.85 but remains 115.45% above its 52-week low of ₹65.70. This wide trading range reflects the market's uncertainty about the company's fair value. Based on fundamentals, a fair value estimate of approximately ₹125-130 appears more appropriate, suggesting 11-15% downside risk from current levels. This estimate factors in the company's average quality grade, weak return metrics, and elevated valuation multiples.
Shareholding Pattern: Mutual Fund Exodus Raises Concerns
The shareholding pattern reveals troubling trends in institutional confidence. Promoter holding has remained stable at 64.46% over the past five quarters, providing governance stability. However, the sharp decline in mutual fund holdings from 19.08% in December 2024 to 8.75% in December 2025 represents a significant vote of no confidence from domestic institutional investors. This 10.33 percentage point reduction over just four quarters signals concerns about the company's growth prospects and valuation sustainability.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 64.46% | 64.46% | 64.46% | 64.46% | 0.00% |
| FII | 5.05% | 4.20% | 2.81% | 2.75% | +0.85% |
| Mutual Funds | 8.75% | 12.73% | 18.25% | 18.63% | -3.98% |
| Insurance | 0.00% | 0.00% | 0.30% | 0.87% | 0.00% |
| Other DII | 2.38% | 0.54% | 0.54% | 0.79% | +1.84% |
| Non-Institutional | 19.36% | 18.07% | 13.63% | 12.50% | +1.29% |
Foreign institutional investor (FII) holdings have increased modestly from 2.75% in March 2025 to 5.05% in December 2025, suggesting some international interest. However, the absolute level remains low, indicating limited conviction from global investors. Insurance companies have completely exited their positions, declining from 1.53% in December 2024 to 0.00% in December 2025, representing another institutional vote of no confidence.
The increase in non-institutional holdings from 12.50% to 19.36% over the past three quarters suggests retail investor accumulation, possibly attracted by the stock's correction from higher levels. However, this shift from institutional to retail ownership typically signals reduced analytical scrutiny and potentially higher volatility. The overall institutional holding of just 16.18% ranks amongst the lowest in the peer group, limiting potential support during market downturns.
Stock Performance: Volatile Returns Reflect Operational Uncertainty
Yatra Online's stock performance has been characterised by extreme volatility, reflecting the market's difficulty in pricing the company's uncertain earnings trajectory. Over the past year, the stock has delivered impressive returns of 65.23%, significantly outperforming the Sensex's 10.25% gain and generating positive alpha of 54.98 percentage points. However, this strong annual performance masks considerable recent weakness and raises questions about sustainability.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | -5.82% | -0.30% | -5.52% |
| 1 Week | -1.80% | 0.80% | -2.60% |
| 1 Month | -12.97% | 0.12% | -13.09% |
| 3 Months | -23.57% | -0.58% | -22.99% |
| 6 Months | +2.92% | 4.66% | -1.74% |
| YTD | -18.39% | -1.46% | -16.93% |
| 1 Year | +65.23% | 10.25% | +54.98% |
| 2 Years | -16.54% | 18.16% | -34.70% |
The near-term performance tells a different story. Year-to-date, the stock has declined 18.39%, underperforming the Sensex by 16.93 percentage points. The three-month decline of 23.57% and one-month drop of 12.97% reflect growing investor concerns about earnings sustainability following the disappointing Q3 results. The stock's 5.82% single-day decline on February 12, 2026, underscores the market's negative reaction to the latest quarterly performance.
Technical indicators paint a mixed picture. The stock currently trades in a "Mildly Bullish" trend as of February 2, 2026, having transitioned from a "Sideways" trend. However, the stock trades below all key moving averages—5-day (₹148.31), 20-day (₹149.69), 50-day (₹163.90), 100-day (₹161.98), and 200-day (₹134.61)—suggesting weak momentum and potential for further downside. The MACD shows "Mildly Bearish" signals on the weekly timeframe, whilst Bollinger Bands indicate "Mildly Bearish" conditions.
The stock's volatility of 56.38% classifies it as a "HIGH RISK HIGH RETURN" investment, with a beta of 1.32 indicating 32% higher volatility than the broader market. This elevated risk profile makes Yatra Online unsuitable for conservative investors seeking stable returns. The risk-adjusted return of 1.16 over one year compares favourably to the Sensex's 0.90, but this must be weighed against the substantial drawdown risk evidenced by recent performance.
Investment Thesis: Average Quality Meets Expensive Valuation
Yatra Online's investment case rests on three pillars: near-term operational momentum, business quality, and valuation. The company's Mojo Score of 61 out of 100 translates to a "HOLD" rating, reflecting balanced but ultimately unconvincing fundamentals. The score breakdown reveals the nuances of this assessment, with positive near-term drivers offset by average quality and expensive valuation.
The near-term drivers appear positive, with quarterly financial trends classified as "Positive" despite Q3's disappointing performance. The company's half-yearly performance shows robust growth, with net sales of ₹607.69 crores growing 28.84% and PAT of ₹26.13 crores expanding 50.94%. Technical indicators show a "Mildly Bullish" trend, though the stock's position below all moving averages tempers this assessment.
Quality metrics present a mixed picture. The company has graduated from "Below Average" to "Average" quality status, reflecting improvements in long-term growth metrics. The 5-year sales CAGR of 56.74% and EBIT growth of 101.05% demonstrate the company's ability to scale. The zero-debt balance sheet and absence of promoter pledging provide financial stability. However, the weak ROE of 4.60% and ROCE of 2.49% significantly limit the quality assessment, indicating poor capital efficiency that undermines long-term value creation.
Valuation remains the most significant concern. At current levels, Yatra Online trades at an "Expensive" valuation grade, with multiples that appear unjustified by fundamentals. The P/E of 42.49x, EV/EBITDA of 30.15x, and P/BV of 2.90x all suggest the market is pricing in aggressive growth that may prove difficult to achieve. The frequent oscillation between "Fair" and "Expensive" valuation grades over recent months highlights the stock's sensitivity to earnings volatility and the market's difficulty in establishing a stable valuation framework.
Key Strengths
- Market leader in corporate travel services segment
- Third-largest online travel agency in India with established brand
- Strong long-term growth: 56.74% sales CAGR, 101.05% EBIT CAGR
- Zero-debt balance sheet with net cash position
- No promoter pledging, ensuring governance stability
- Improved operating margins to 8.77% in Q3 FY26
- Robust H1 FY26 performance with 28.84% revenue growth
Key Concerns
- Weak ROE of 4.60% and ROCE of 2.49%, lowest in peer group
- Net profit declined 41.60% QoQ in Q3 FY26
- High earnings volatility with inconsistent quarterly performance
- Negative operating cash flow of ₹88.65 crores in FY25
- Mutual fund holdings declined sharply from 19.08% to 8.75%
- Other income represents 37.34% of PBT, raising quality concerns
- Expensive valuation with P/E of 42.49x and EV/EBITDA of 30.15x
Outlook: What to Watch
The forward outlook for Yatra Online depends critically on the company's ability to demonstrate consistent profitability and improve capital efficiency. The travel sector's recovery trajectory provides a supportive backdrop, but Yatra must execute operationally to convert this macro tailwind into sustainable shareholder value. Several key factors will determine whether the stock can justify its current valuation and regain investor confidence.
Positive Catalysts
- Q4 FY26 results showing margin expansion and profit recovery
- Sustained improvement in ROE/ROCE towards double-digit levels
- Positive operating cash flow generation in FY26
- Market share gains in corporate travel segment
- Stabilisation or reversal of mutual fund selling
Red Flags
- Further QoQ profit decline in Q4 FY26
- Continued negative operating cash flow
- Additional mutual fund or FII stake reductions
- Rising interest expenses indicating debt accumulation
- Stock breaking below ₹134.61 (200-day MA)
Investors should closely monitor quarterly profit trends, particularly whether Q4 FY26 can reverse the Q3 decline. The company's ability to generate positive operating cash flow will be crucial in validating the quality of reported accounting profits. Any further institutional selling, particularly by mutual funds, would signal deteriorating confidence and could trigger additional price weakness. Conversely, stabilisation in shareholding patterns and consistent margin expansion would provide confidence in the investment thesis.
The Verdict: Hold with Caution
Score: 61/100
For Fresh Investors: Avoid initiating positions at current levels. The expensive valuation combined with weak return metrics and high volatility makes this an unattractive entry point. Wait for either a significant price correction (towards ₹120-125 levels) or sustained improvement in quarterly profitability and return ratios before considering investment.
For Existing Holders: Continue holding with close monitoring of Q4 FY26 results. The company's established market position and long-term growth potential justify maintaining exposure, but be prepared to exit if quarterly performance continues deteriorating or if the stock breaks decisively below ₹130. Consider reducing position size on any rally above ₹155-160.
Fair Value Estimate: ₹125-130 (11-15% downside from current price of ₹141.55)
Rationale: Whilst Yatra Online benefits from India's travel sector recovery and maintains a debt-free balance sheet, the combination of weak return metrics (ROE 4.60%, ROCE 2.49%), expensive valuation (P/E 42.49x), and deteriorating institutional confidence outweighs near-term positives. The Q3 profit decline and negative operating cash flow raise sustainability concerns that require resolution before the stock merits a more constructive rating.
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.
