RateGain Q2 Review - Results Beat But Lowers FY25 Guidance On Weak Deal Wins: Dolat Capital

Dolat Capital Report

Rategain Travel Technologies Ltd. reported 6.6% QoQ growth, (our estimate: 4%), led by MarTech (48% of revenue), which grew 7% QoQ, while distribution (21% of revenue) and desktop-as-a-service (31% of revenue) segments grew 8%/5% QoQ. Ebitda stood at 21.7% (our estimate: 19.8%), up 258 bps QoQ led by cost efficiency measures.

The company has revised its guidance downward from 20%+ to 15% YoY, due to loss of large client in MarTech, pricing pressure in DaaS, and election-led deal signing delays in U.S. However, retaining of FY25 Ebitda margin expansion of 150-200 bps was positive.

While Q2 was a beat, guidance for the future appears weak. FY25E/FY26E estm have been lowered by 0.4%/5.1%, but margin expansion measures led to raising EPS estimate by 6.1%/0.3% for FY25E/FY26E. We introduce FY27E with rev/EPS growth of 14%/12%. Macro trends and Rategain’s market position remains healthy. Revise to ‘Accumulate’ rating with DCF-based target price of Rs 920 (implies 44 times of FY27E).

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