Shares of TBO Tek Ltd. surged to a record high on Monday after Goldman Sachs initiated coverage with a 'buy' rating, citing a strong execution track record, strong free cash flow generation, an asset-light balance sheet, and low competition, among other positives in the business model.
The brokerage has set a target price of Rs 1,970 per share, implying an upside of 26% from the previous close.
Revenues for the travel distribution platform grew at a compound annual growth rate of 26%, and the brokerage estimates a 22% growth in the financial year 2024-2027.
During its listing on May 15, the scrip closed 52.61% over its IPO price of Rs 920 apiece on both the National Stock Exchange and BSE. The Rs 1,550.8 crore IPO was subscribed to 86.7 times on its final day, led by solid demand from qualified institutional buyers.
Goldman Sachs said that increased competition, a slowdown in global travel, and headwinds from the shift to online travel could be potential risks for the company.
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Shares of Tbo Tek rose as much as 6.1% during the day to a life high of Rs 1,685 apiece on the NSE. It was trading 3.3% higher at Rs 1,641 apiece, compared to a 0.32% decline in the benchmark Nifty 50 as of 9:50 a.m.
The stock has risen 16.6% since its listing on May 15. The total traded volume so far in the day stood at 6.1 times its 30-day average. The relative strength index was at 67.
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