Here’s Why Jefferies Is Betting Big On This Small-Cap Travel Firm

TBO Tek shares have rallied 15% since September 3, when it struck a $125 million deal to buy Classic Vacations, a U.S.-based luxury travel wholesaler. Brokerage firm Jefferies called this move a “classic opportunity” to expand into North America’s high-end outbound travel market. 

The brokerage raised its price target to ₹1,800 from ₹1,625 and increased earnings forecasts by up to 6% for FY26–28, while maintaining a ‘Buy’ rating.

Jefferies View

Analysts Prateek Kumar and Raghav Malik said the move marks TBO’s first sizeable acquisition since Jumbonline in Europe in 2023 and strengthens its roll-up strategy of opening new source markets. 

“The deal strengthens TBO’s presence in the premium outbound market, especially in North America,” they wrote, noting the region currently makes up only about 5% of the company’s gross transaction value (GTV).

They described the acquisition multiple of 11x EV/EBITDA as higher than TBO’s past deals but justified it given the premium nature of Classic’s business and the strategic value of entering the US luxury travel market. Jefferies expects the integration to be EPS-accretive in the near term.

Why Acquire Classic Vacations?

Classic Vacations, over 50 years old, primarily serves US travel advisors arranging luxury holidays to Hawaii, the Caribbean, Mexico and Europe. 

Its average hotel daily rate exceeds $1,000 compared with TBO’s $250, and its average booking size is more than ten times higher at $8,600. The business recorded $111 million in revenue and $11.2 million in EBITDA in 2024, with GTV at $500 million.

TBO, by comparison, had $3.6 billion GTV and $17.4 billion revenue in FY25. The analysts highlighted that Classic’s higher gross take rate of 22–23% versus TBO’s 6% makes its business attractive, though commissions to advisors partly offset margins.

What The Deal Brings For TBO Tek?

Jefferies said TBO plans to integrate Classic’s 1,500 luxury hotel relationships into its Platinum platform, allowing cross-leverage of supply across both businesses. Classic’s long booking windows, which average 140–245 days compared with TBO’s 60, should also support more stable cash flows.

“CV would get access to TBO’s supply tech, global inventory, and booking engine capability,” the analysts said, pointing out that many of Classic’s transactions remain manual and could benefit from TBO’s systems.

Earnings Impact

The brokerage raised FY26–28 EPS estimates by 2–6% after incorporating Classic into its model. 

It now sees EPS at ₹24.45 in FY26, ₹35.67 in FY27 and ₹50.07 in FY28, valuing the stock at 42x Sep-27 EPS. 

Jefferies projects GTV growth of 20% CAGR and revenue growth of 33% CAGR through FY28, with EBITDA and net profit also growing at 36% CAGR.

Cues For Traders 

Jefferies’ bull case sees potential for a price of ₹2,100 if hotel growth outpaces forecasts, while its bear case suggests downside to ₹1,400 if travel consolidation slows. 

On Stocktwits, retail sentiment for TBO Tek was ‘neutral’ amid ‘extremely high’ message volume.

TBO Tek’s stock has declined 8% so far in 2025.

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