Understanding TBO Tek IPO: Unveiling 10 Significant Risks for Investors – A Comprehensive Guide

• TBO Tek, a leading technology provider for the travel industry, has announced its Initial Public Offering (IPO) that opened for subscription on 8 May 2024, and is set to close on 10 May 2024.
• The price band for the IPO, which includes an offer-for-sale (OFS) by the promoters and other investors, as well as a fresh issuance, has been set at ₹875 to ₹920 per equity share of face value of Re 1.
• “This is a significant milestone for TBO Tek and a testament to the strong business model we have built,” said Ankush Nijhawan, Joint Managing Director of TBO Tek.

TBO Tek, a leading travel technology provider, has announced its IPO. The subscription opened on 8 May 2024 and is set to close on 10 May 2024. The price band is set at ₹875 to ₹920 per equity share.

Key Risks Highlighted in the Red Herring Prospectus (RHP)

TBO Tek’s IPO revenue is significantly dependent on the hotels and ancillary bookings. The contribution from this sector has increased from 35.69% of its revenue for Fiscal 2021 to 67.83% for Fiscal 2023. Furthermore, all of its Gross Transaction Value (GTV) is entirely dependent on air and hotels and ancillary bookings in the last three Fiscals and in the nine months ended December 31, 2022, and December 31, 2023, respectively. Any factors that may negatively impact its hotels and ancillary bookings could adversely affect the business.

Dependence on Limited Range of Suppliers

TBO Tek’s business depends on its relationships with a limited range of suppliers. Any adverse changes in such relationships, or its inability to enter into new relationships, could adversely affect its business and results of operations. The business is also exposed to pricing pressure from its suppliers who may withhold inventory or modify the terms of arrangements, including for a reduction or elimination of commission, incentive, or other compensation payable to it.

Conclusion

While TBO Tek’s IPO presents an investment opportunity, potential investors should consider the risks highlighted in the RHP. These include dependence on a limited range of suppliers, pricing pressure from suppliers, and significant dependence on hotels and ancillary bookings for revenue. The company’s ability to manage these risks will be key to its future performance.