On Tuesday, Kotak Securities adjusted their outlook on RateGain Travel Technologies Ltd (RATEGAIN:IN) shares, reducing the price target to INR840 from INR900. The firm's rating remains at Add, despite the company's first quarter of the fiscal year 2025 performance falling short of expectations in terms of revenue and profitability.
The shortfall in RateGain's revenue was attributed to the distribution segment's underperformance. This was primarily due to volume-based discounts given to a major client and the loss of a few clients.
Despite these challenges, the company's management has maintained its growth forecast for the fiscal year 2025 at 20%, with an anticipation of a 150-200 basis points improvement in EBITDA margins, which the analyst regards as optimistic.
In response to the quarterly results, earnings estimates for RateGain have been revised downward by approximately 1-3%. The firm's fair value has consequently been adjusted to INR840, though the Add rating has been retained by Kotak Securities.
The analyst's statement highlighted the adjustments and the reasons for the continued positive rating: "We cut earnings estimates by ~1-3%; lower FV to Rs840. Retain ADD."
RateGain's management's outlook remains firm on achieving the projected growth and margin improvements despite the recent setbacks. The updated price target reflects the new earnings projections and the company's current market position following the quarter's performance.
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