Jefferies has released a bullish report on TBO Tek Ltd following the company's acquisition of US-based Classic Vacations, hiking the target price.
TBO Tek acquired Classic Vacations on Sept. 3 for $125 million. Following the acquisition, the stock witnessed a strong run-up, ending as Nifty's top gainer on the same day. Since Sept 3, shares of TBO Tek have given over 12% returns.
In its latest note on TBO Tek, Jefferies has hiked the target price from Rs 1,625 to Rs 1,800 while maintaining a 'buy' call.
Jefferies highlighted the Classic Vacations acquisition as a prime example of the company's strong roll-up strategy.
A roll-up merger is when a singular entity, investor or company combines several small, fragmented companies in the same industry and turns them into a larger entity.
Jefferies believes this acquisition is a part of the company's roll-up strategy in incubated markets.
TBO Tek is involved in the business of travel distribution. They mainly connect travel agents and enterprises with a fragmented, global supplier base (hotels, airlines, ancillary service providers).
The company provides a digital platform for booking flights, hotels, experiences, cruises, rail, religious travel, and more.
In the case of Classic Vacations, it is a premium B2B & B2C luxury travel company based in the United States, with more than 10,000 travel advisors in the country.
As per Jefferies, the acquisition is going to strengthen TBO Tek's presence in the premium outbound market, especially in North America.
It may also lead to an Earnings Per Share (EPS) increase of around 2-6% from FY25 to FY28.
A total of eight analysts are tracking the company, with seven having a 'buy' rating. Only one analyst has recommended 'hold', while the company has no 'sell' call, as per data compiled by Bloomberg.
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