Le Travenues Technology (Ixigo) shares experienced a strong rally of over 9% on January 13, reaching ₹232.55 per share and breaking a four-session losing streak. The surge came after JM Financial upgraded its rating on the stock to 'Buy' from 'Reduce', citing that the recent correction had created an attractive investment opportunity.

JM Financial's Investment Rationale

JM Financial's analysis revealed that Ixigo shares had corrected approximately 20% since the end of November 2024, primarily due to expectations of slower growth in the flights business during Q3 and Q4 FY26. The brokerage attributed this anticipated slowdown to recent industry disruptions and an unfavorable base effect from the Kumbh Mela benefit received in the previous year.

The domestic brokerage also highlighted uncertainty around margins due to the company's ramp-up in technology, supply-side, and promotional investments toward its hotels' online travel agency (OTA) business. However, JM Financial emphasized that these challenges represent a temporary earnings and sentiment overhang that should ease over the coming quarters.

Revised Target Price and Valuation

Despite the upgrade, JM Financial adjusted its target price downward to ₹275 per share from the previous ₹300 per share. This revision was based on a 4-8% cut in FY26-28E earnings estimates and a reduction in the target P/E ratio to 60x from 65x.

Long-term Growth Prospects

From a medium-to-long-term perspective, JM Financial believes Ixigo remains well-positioned to outperform peers. The brokerage highlighted several competitive advantages, including the company's effective cross-selling of services across various applications, sharp focus on superior customer experience, and robust traction for its differentiated value-added services.

The recent correction has materially improved the risk-reward profile, which prompted JM Financial's double upgrade from 'Reduce' to 'Buy'.

Stock Performance Analysis

The stock's recent performance shows mixed trends across different timeframes:

Currently, Ixigo trades at a P/E ratio of 164.28, with a market capitalization of ₹10,016.00 crore. The stock's volatility reflects the market's mixed sentiment regarding near-term challenges versus long-term growth potential in the online travel booking sector.

Le Travenues Technology (Ixigo) shares jumped over 7% to an intraday high of ₹227.50 on January 13 following JM Financial's upgrade to 'Buy' rating with a target price of ₹275 per share. The brokerage's target implies an upside potential of approximately 30% from current levels, driving renewed investor interest in the online travel aggregator.

JM Financial's Bullish Outlook: Four Key Drivers

Attractive Valuations After Recent Correction

JM Financial highlighted that the recent correction in Ixigo's stock price appears overdone, with shares declining about 20% since early December. The brokerage acknowledged trimming its consolidated revenue estimates and EBITDA projections but believes the price decline has largely addressed valuation concerns.

Despite these adjustments, JM Financial views the correction as offering an attractive long-term entry point, noting that the stock now factors in near-term uncertainties more than warranted while underappreciating its structural strengths and recovery potential.

Strong Long-Term Fundamentals in Travel Ecosystem

The brokerage expects online travel agencies to benefit from structural tailwinds in India's travel ecosystem, including improving infrastructure, better connectivity, and rising affordability. These drivers are particularly strong in tier-2 and smaller cities, where travel demand is growing faster than in tier-1 markets, supported by enhanced multi-modal connectivity.

JM Financial believes Ixigo is well-positioned to capitalize on these trends over the medium to long term, citing several competitive advantages:

• Strong brand recall in tier-2 and smaller markets
• Effective cross-selling across applications
• Consistent focus on customer experience
• Strong adoption of differentiated value-added offerings including Travel Guarantee, Ixigo Assured, and Abhi Assured

Air Industry Disruption Concerns Overdone

The brokerage addressed concerns about air industry disruption, primarily occurring in the first half of December, noting this is not a structural issue for online travel agencies as underlying passenger demand remains strong. As stability returns, JM Financial expects Ixigo to revert to growing faster than other OTAs, supported by improving air connectivity of tier-2+ cities where it maintains strong brand recall through utility-led offerings and regional language customer support.

Measured Hotel Expansion Strategy

JM Financial expects Ixigo to focus on strengthening its product and building curated hotel supply rather than pursuing discount-driven growth as it scales its hotels business. This approach should help keep losses minimal in the foreseeable future. While strategic mergers and acquisitions remain a possibility, management has indicated it will pursue only profitable, capital-efficient, and synergy-accretive acquisitions.

H2FY26 Outlook and Base Effect Considerations

Looking ahead to H2FY26, JM Financial noted that Ixigo had benefited from Kumbh Mela-related travel demand in the same period last year. As normalcy returns this year, the brokerage expects year-over-year GTV metrics to appear optically softer, particularly in Q4FY26, across business segments due to a high base effect, even if underlying demand trends remain stable.

"We therefore believe GTV growth rates would normalize starting 1QFY27, once the Kumbh-led base effect is fully absorbed," JM Financial stated.

Ixigo shares are down 10% since the beginning of 2025, making the current levels attractive according to the brokerage's analysis.