ixigo Crashes 13% Despite Strong Q1, JM Financial Cuts Target Price

Shares of Indian traveltech firm ixigo plummeted by 13.6% to a low of ₹174.15 on the BSE following its Q1 FY27 earnings announcement. Although the company posted impressive profit growth, investors were apprehensive about rising expenses for hotels, technology, and AI, which could negatively impact margins. Despite the strong earnings, ixigo's stock recovered part of its losses to close 12.9% lower at ₹175.70.

In Q1 FY27, ixigo saw an 81% year-over-year increase in net profit to ₹34.2 Cr, revenue growth of 13% to ₹356.8 Cr, and a 65% year-over-year rise in EBITDA to ₹53.5 Cr. However, total expenses surged 15% to ₹337.8 Cr as the company ramped up investments.

Analysts at JM Financial retained a 'Reduce' rating on ixigo shares, but they lowered their 12-month target price to ₹200 from ₹220. This reduction was attributed to the company's continued investments in hotels and AI capabilities, which are expected to delay margin expansion. The brokerage also noted that ixigo's gross transaction value (GTV) grew 18.9% year-over-year to ₹5,524 Cr in Q1 FY27, driven by its bus business, which expanded 39.1% year-over-year, and its flight segment, which increased 26.7% year-over-year.

Nevertheless, the adjusted EBITDA margin contracted by 177 basis points year-over-year to 8.2% due to increased employee costs, branding expenses, and investments. JM Financial revised its FY27-FY29 EBITDA and EPS estimates downwards by 11-15% and 5-9%, respectively, reflecting these concerns. The company continued to invest in its expansion strategy, acquiring a 54.66% stake in traveltech startup Brevistay for ₹65.7 Cr and broadening its hotel supply through partnerships with over 10,000 hotels across 700 towns. ixigo is also developing its AI-native ixigo NEXT platform using small language models to boost automation, product development, and operational efficiency.

Additionally, ixigo's board approved an additional 11% stake in train food delivery platform Zoop for ₹36.4 Cr, increasing its total stake to 73%. Co-CEOs Aloke Bajpai and Rajnish Kumar highlighted the company's market share gains and resilient growth in Q1 FY27, surpassing ₹5,524 Cr in quarterly GTV.