Thomas Cook (India) Limited (500413) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Thomas Cook Limited Q1 FY '27 Conference Call hosted by Systematix Shares & Stocks. [Operator Instructions] I now hand the conference over to Mr. Chetan Mahadik. Thank you, and over to you, sir.

Yes. Thank you, Sanya. Welcome, everyone, and thank you for joining us today on the Thomas Cook (India) Limited Q1 FY '27 Earnings Conference Call. From the company, we have with us Mr. Mahesh Iyer, the Managing Director and Chief Executive Officer and the senior management team. We would like to begin the call with brief opening remarks from the management and following which, we will have the forum open for an interactive Q&A session. I would now like to invite Mr. Mahesh Iyer to make the initial remarks. Thank you, and over to you, sir.

[Audio Gap] Thomas Cook for the earnings call Q1 FY '27 financial and operating performance. Before we begin, I would like to introduce the management team joining me on the call today. I have with me on the call, Vikram Lalvani, Managing Director and CEO of Sterling Holiday Resorts; K.S. Ramakrishnan, Managing Director of DEI; Vishal Suri, Managing Director of SOTC; Debasis Nandy, who is the Group CFO; Brijesh Modi, who is the CFO at Thomas Cook (India) Limited; and Urvashi Butani, who heads Investor Relations. Now coming to our performance. The first quarter of FY '27 was, in many ways, a good test of the resilience of our business. It reinforced that our performance is increasingly being shaped by decisions within our control, that is, where we choose to allocate our capital, the customer segments and market we prioritize and our ability to execute with discipline while continuing to invest for future growth. I'm pleased to share that this was reflected across almost every part of our portfolio. Our India businesses led by foreign exchange, MICE and corporate travel continue to deliver healthy momentum and stable operating performance. Sterling Holidays delivered strong growth during the quarter, reflecting sustained demand, disciplined execution and the strength of its leisure hospitality business. Importantly, the impact of the conflict in West Asia was limited to a few businesses with direct exposure to the region, primarily Desert Adventures, our destination management business in the Middle East, DEI and parts of our long-haul outbound travel portfolio. While these businesses weighed on our reported performance, the diversified nature of our portfolio helped absorb much of the disruption with the broader business continuing to perform steadily and demonstrating the resilience of our operating model. Consolidated revenue for the quarter stood at INR 21,530 million, a decline of 12% year-on-year. Excluding the business impacted by the geopolitical disruptions, our India operations remained stable on a year-on-year basis. Excluding the GCC-based subsidiaries, that is DEI and Desert Adventures, the consolidated results of the group registered a growth of 8% at an EBIT level for the quarter, highlighting the resilience of our underlying businesses. Profit before tax for the quarter stood at INR 885 million, down 21% Y-o-Y, primarily due to the underperformance of Desert Adventures and DEI, our Middle East operations. With that context, let me take you through the performance of each of the businesses and the key drivers that shaped the quarter. Starting with foreign exchange business, which delivered a positive performance during this year with segment revenue growing by 6%, EBIT by 8% and EBIT margins at a healthy 45.3%. If you look at the LRS data that was published by RBI for the period April '26 and May '2026 across the three relevant categories, that is education, travel-related foreign exchange and remittance, the education industry saw a decline of 27%, travel-related ForEx saw a decline of 8% and remittance declined by 14%. Correspondingly, to give you a like-to-like comparison, our travel segment for the same period largely aligned with the industry trend, which is a decline of about 8%. However, our education portfolio, we actually grew by 17%. Our overall retail portfolio delivered an 8% Y-o-Y growth in turnover for the quarter, outperforming the underlying market. Following a relatively softer April and broadly stable May, June delivered a stronger performance than the previous year, reflecting improved business sentiments. Our education portfolio remained a key growth driver with turnover increasing by 36% year-on-year. This performance was supported by continued investments in our distribution and stronger partnership across leading NBFCs. We also witnessed encouraging traction from our Study Buddy Card program launched in partnership with Visa during the quarter. Our corporate business portfolio recorded 9% growth in turnover, driven by higher wallet share from our existing relationships, new client acquisitions and continued expansion of our corporate relationships. Our digital channels continued to gain traction during the quarter, reflecting our continued investment in strengthening our omnichannel proposition. Digital penetration improved to 23.5% compared to 20.4% last year, supported by higher customer engagement across our website. Transactions increased by 38%, TCPay app where our bookings increased threefold and WhatsApp channel, which saw a strong traction of 80-plus percent growth over the comparable period. We also continue to expand our digital distribution through quick commerce platform, Blinkit, enhancing convenience and accessibility for customers. We saw a 34% increase in the number of cards sold via this platform and are now present in 12 cities. We continue to drive our emphasis on customer proposition on the product front too. We launched our One Currency Card with 0 markup and 0 cross-currency conversion charges, offering customers greater value and protection against currency volatility. We also expanded our borderless ForEx card portfolio to 28 currencies with the addition of 16 new global currencies and launched a 10% value-back proposition for our customers. On the network side, we continue to optimize our retail footprint while simultaneously strengthening our presence at key travel hubs. During the quarter, we operationalized new foreign exchange counters at Delhi Airport, Terminal 1 and Terminal 2, while continuing to optimize our branch network to enhance productivity and improve operational efficiency. Moving on to the Travel segment. The travel business reported a revenue of INR 17,106 million during the quarter, a decline of 14% year-on-year. Having said that, our India B2B and B2C businesses continue to demonstrate healthy momentum with decline largely confined to business directly impacted by the conflict in West Asia. Coming to our B2C portfolio, Q1 is typically a peak period on the leisure holiday side. Demand for short-haul and domestic destinations strengthened progressively as the quarter advanced as seen in the month-on-month trend. Both segments delivered a strong June, highlighting improved travel sentiment and customers' continued preference for shorter and regional travel. Our domestic segment saw a 29% increase during the quarter. We continue to witness encouraging traction in the spiritual travel segment. Increasing demand for pilgrimage circuits, premium spiritual experiences and destinations such as Kailash Mansarovar reinforces our confidence in the fast-growing category. Through our Bhakti and Darshan platforms, we remain well positioned to capture this fast-growing segment. The short-haul business delivered a 6% growth. And if I have to exclude the Middle East, which was flat or rather [ grew ] substantially during this quarter, the increase in our short-haul portfolio is 21%. Destinations such as Japan, Korea, China saw a combined increase of 38% year-on-year, while Vietnam and Cambodia delivered more than twofold growth on a year-on-year comparison. On the long-haul side, demand remained subdued during the quarter, owing to the conflict in West Asia with sales declining 28% year-on-year. In fact, if you look at the monthly trend, which we have presented this time, the performance was almost at par with the last year in April and improving in month-on-month in May. However, as the situation unfurled, we saw -- we could see a corresponding impact on the performance too. As we continue to scale our travel businesses, technology remains a key enabler of our customer engagement and operational efficiency. We continue to strengthen our digital ecosystem across both customer-facing and back-end platforms. Our AI-powered initiative, including conversational chatbots, AI-enabled quality monitoring, AI assist solutions and voice automation capabilities are helping improve customer engagement, enhance service quality and drive productivity across operations. Reflecting the growing adoption of our digital platforms and AI-led journeys, digital penetration reached 21% in Q1 FY 2027. Coming to the B2B side of the travel business, which accounts 63% of the reported travel numbers, there was a decline of 13% to INR 11,192 million. Let me provide a more nuanced analysis of the B2B segment, starting with segments that performed well. Our MICE portfolio recorded a healthy 14% year-on-year growth and with turnover increasing to INR 5,420 million. As highlighted in our previous earnings call, we were seeing a robust pipeline building for the second half of the year despite corporates initially adopting a cautious wait-and-watch approach. We are now witnessing that deferred demand translating into business, which is clearly reflected in our current quarter's performance. The MICE business witnessed a dynamic demand trend during the quarter. Following a strong April, activity moderated in May, owing to the timing of certain large events before rebounding sharply in June. The stronger finish to the quarter reflects improved execution of our order pipeline. During the quarter, we successfully managed over 110 groups ranging in size from 50 to 2,400 delegates, underscoring our ability to execute even across diverse scale and customer requirements. The business continued to maintain a balanced portfolio with approximately 23% of the turnover generated from domestic MICE and 77% from international, providing us a well-diversified demand base. Coming to our corporate travel portfolio, which I must highlight here is reported on a net basis, saw an increase of 7% in revenue to INR 350 million with gross turnover crossing INR 7 billion with an increase of 15% Y-o-Y. Corporate travel maintained a consistent growth trajectory throughout the quarter following a stable April. Momentum strengthened in May and remained healthy in June, reflecting sustained business travel demand, higher wallet share from existing clients and continued client execution. We added 7 new accounts across sectors, including financial services, automobile, IT, insurance and education. Air transactions volume grew by 14%. International air volumes increased by nearly 17% and hotel volumes grew by 33%, reflecting healthy business travel demand and continuous focus on customer acquisition. On the DMS portfolio, we reported a 31% decline to INR 5,422 million. Of this, the India DMS portfolio remained stable during the quarter. This is a traditionally lean quarter for the India inbound business. On the international DMS side, revenues declined by 33% for the quarter. Asian Trails, which cover the Asia Pacific region delivered a stable performance supported by growth in China and improving contributions from Cambodia, Malaysia and Singapore. Private Safaris in Southern Africa and East Africa continued to grow with revenue growing by 17% and 4%, respectively. The broader decline in the performance was largely attributable to the geopolitical disruption impacting Desert Adventures operations, where revenue declined by 89%, coupled with softer inbound tourism trends in the U.S., which weighed on the overall performance of the Allied TPro, where the top line declined by 40%. Total Travel segment EBIT declined by 50% year-on-year to INR 405 million. It is important to note that majority of the decline stems from our Desert Adventures business in the Middle East. While business volumes were immediately impacted by geopolitical situation, the associated cost base could not be adjusted at the same pace. As a result, the impact on profitability during the quarter was more pronounced. Before I hand over the call to Vikram for his comments on Sterling Holiday, I would like to conclude by saying that this quarter reaffirmed the resilience of our core India businesses and our strength of diversified portfolio. While geopolitical developments continue to influence part of our international operations, we remain encouraged by the momentum across our domestic and short-haul business and by the strategic investments we have made over the past few years. As we move through the year, our focus remains on executing consistently, responding with agility and continuing to build a stronger, more resilient business for the long term. With this, I hand over the call to Vikram.

Thanks, Mahesh. Good afternoon, everyone, and thank you for joining us today. My name is Vikram Lalvani. I'm the MD and CEO of Sterling Holiday Resorts Limited. And I'm also joined by Mr. L. Krishna Kumar, who is the CFO of the company, and we are based in Chennai. It is my pleasure to welcome you to discuss our sterling performance for the first quarter of FY '27. Q1 FY '27 represents a defining milestone in Sterling's journey. It has been our best quarter ever across all quarters, and we've demonstrated 26 consecutive profitable quarters as well. While it is our strongest operating and financial quarter in the company's history, we believe its significance extends well beyond the numbers. It reflects the emergence of a business that has fundamentally transformed itself over the last couple of years into a scalable, profitable and a resilient hospitality platform. Today, I would like to focus my remarks around 7 key themes. The first one being record operating and financial performance. Q1 FY '27 represents the quarter in Sterling's history where virtually every business metric improved simultaneously. Revenue from operations reached INR 1.7 billion, growing 21% year-on-year. EBITDA increased 21% to over INR 620 million, while maintaining an industry-leading margin -- EBITDA margin of 37%. Profit before tax grew faster, 30% year-on-year, taking our PBT margins to 28%, an expansion of 200 basis points over the same period last year. Operating cash -- free cash flow also increased by 30%, reinforcing that our earnings are translating into strong cash generation and even, hence, a stronger balance sheet. Profitability continues to grow faster than revenue, demonstrating improving operating leverage, disciplined cost management and increasing maturity of our business model. Our financial position is stronger today than any other time of the past. Sterling remains debt-free with cash reserves exceeding INR 3.7 billion, providing significant strategic flexibility to invest in expansion, technology, leadership, guest experience and future growth opportunities. A strong balance sheet is not an objective by itself; it's an enabler. It gives us the confidence to invest in these opportunities and create long-term shareholder value without compromising on financial discipline. Taken together, these results reinforce a simple but a powerful message, which we would like to tell you. This is not a quarter driven by one exceptional initiative; it was a quarter where every growth engine delivered. Point number two, quality of earnings continued to strengthen. Our occupancy improved 700 basis points to 77% despite a significant increase in available inventory year-on-year. At the same time, our average room rates also increased by 10% to an all-time high of INR 7,809. Together, this drove a 20% increase in total RevPAR, one of the clearest indicators of revenue productivity in our industry. Room revenues increased 29% and food and beverage continued to grow over 15%. Demand continues to outpace supply additions, supported by stronger commercial execution, disciplined revenue management, scalable distribution through SterlingOne and an increasing influence of the Sterling [ Practice ]. Point number three, our portfolio strength and a visible growth pipeline. Today, Sterling operates over 78 resorts, hotels and retreats with nearly 3,800 rooms in over 65 destinations. Our year-on-year growth has been 28% in terms of number of resorts and hotels and 17% in terms of number of rooms. That's also making us one of the fastest-growing players in the listed space. We have a visible development pipeline of over 35 resorts, hotels and retreats, representing more than 2,000 additional rooms, spanning leisure resorts, experiential destinations and business hotels. Our growth has been guided by an asset-light approach that balances owned, leased and managed properties while maintaining capital efficiency. Point four, customer excellence, our strongest competitive advantage. Our Net Promoter Score remains above 81%. Sterling Kanha has received TripAdvisor's prestigious Best of the Best award for the fourth consecutive year, placing it amongst a very select group of resort properties globally, top 1%, and making Sterling the only resort brand to receive this distinction 4 years in a row and in succession. In addition, 28 Sterling resorts received TripAdvisor's Travelers' Choice awards, rating us in top 10% globally amongst all accommodations. Even more encouraging is that 12 resorts have now earned this recognition for 3 consecutive years, while 21 resorts have been recognized for this for 2 consecutive years. Point number five, responsible growth by creating shared value. At Sterling, we believe that business success and societal impact are not mutually exclusive. In fact, they strengthen one another. As we continue to scale Sterling, we are equally committed to building a stronger and healthier communities around us. Over the last 2 years, through our CSR initiatives, we have invested over INR 2 crores towards strengthening dialysis infrastructure across the country. We have installed 38 dialysis machines across 7 Indian states, supported 19 hospitals and created an annual dialysis capacity of approximately 57,000 life-saving treatments as well as created local employment opportunities within these health care ecosystems. This is what doing good by doing well truly means. Point number six, strong tailwinds delivered despite some meaningful headwinds. India continues to benefit from powerful structural tailwinds in tourism, especially domestic demand and organized hospitality. At the same time, rising operating costs, challenging supply chains due to global events and potential climate-related disruptions are headwinds that's coming our way. Delivering our strongest ever quarter despite these challenges reinforces our confidence in our execution capabilities. Point number 7, our balance sheet is absolutely strong. Our development pipeline provides excellent visibility, and we continue to invest in digital transformation, artificial intelligence as strategic enablers for the next phase of growth as well as investing in leadership and the brand architecture as we scale. Combined with disciplined capital allocation and our asset-light strategy, we believe Sterling is well positioned for sustained value creation. Before I hand it over to Ram of DEI, I would like to state a few comments in my closing remarks. A few years ago, our objective was to transform the business. Today, our objective is to compound that transformation. With one of the strongest balance sheets in the sector and expanding national footprint, a visible pipeline, industry-leading customer advocacy, disciplined capital allocation, we believe Sterling is exceptionally well positioned to deliver sustainable growth and enduring shareholder value. Over the last 5 years, Sterling has built the foundations of a high-quality hospitality company. Over the next 5 years, our ambition is to translate this foundation into superior growth, stronger returns, increasing cash generation and sustained stakeholder value creation. We firmly believe that our journey has just begun. Thank you, and we look forward to some of your questions as we go along. Over to you, Ram.

Thank you, Vikram. Good afternoon, ladies and gentlemen. My name is K.S. Ramakrishnan. I'm the MD of DEI. We've had a fairly challenging quarter, as you have all seen and heard. We posted INR 1,307 million of revenue in the quarter 1 of '27 as compared to INR 2,097 million in quarter 1 '26, which has led to obviously -- from a positive EBIT of INR 106 million in the last year same quarter, we've gone to INR 152 million negative EBIT for this quarter. Obviously, this has been directly related to our 50% dependence of our overall global business falls in the Middle East, which has been heavily impacted due to the ongoing geopolitical issues, which seems to have not improved during the quarter. We're hoping and praying that, that gets better as we go along. This was also compounded by -- the revenue drop also has been compounded by a few other business decisions that we took of closing some nonprofitable sites in China, namely Universal, and some end of contract terms in Bahamas [indiscernible]. Given this as a challenge, we as the management of DEI took immediate action of working on cost optimizations. We have considerably reduced our losses by making sites -- reducing sites that do not make profits to be completely closed. Labor control has been fully enhanced and brought to a fairly reasonable optimization that we'll see in the coming quarters. The overheads have been strongly better. We've again worked strongly on getting some sustainable changes on the overheads from a long-term basis. This will help us when business comes back. We've also added to it renegotiating some of the terms with the Middle Eastern partners due to the situation, and we have got some positive response that helps us to optimize and makes our cost much better, hopefully to deliver better results in the coming quarters. We will [indiscernible] the volumes for our tech to go in full steam to make it better. That's all from my side. Thank you.

[Operator Instructions] The first question is from the line of Chetan Mahadik from Systematix.

A few questions. Firstly on travel. So excluding the impact of the geopolitical disruption, how has the underlying demand trended in July and, say, early August across the outbound leisure?

Is there any more questions or that's the only question you had?.

On travel, I have one more, that is, say, customers, if you see, have shifted from Europe and westbound destination towards Japan, Vietnam and China. So do these newer destinations carry, say, comparable margins? Or does it change significantly? These were on travel first.

Chetan, let me address both the questions. Your first question on the long-haul trend. While it's kind of a little early to say that we are seeing a shift in the trend as far as the long haul is concerned because the impact of the war is not fully absorbed. What happens is there are statements that are made and there are these missiles that fly at odd days and that kind of makes it difficult for customers to make a decision or firm up their decision on travel. What I can definitely confirm is that the desire to travel continues to be very, very strong and the Europe and the westbound market is always going to remain stronger in times to come also. At this point in time, what we have witnessed in July and some of the trends in August are reflecting a better outcome in terms of conversion as compared to what we saw in the period April to June. So yes, that trend is definitely looking better. Whether this will all translate into a higher outcome as compared to what we had on the comparable period last year, it's a little too early days to say. To your second question on the short-haul side, yes, what we are also witnessing is the demand from the westbound long-haul flights or long-haul travel is now moving to short-haul destinations. And that part of the business, as I mentioned before in my commentary also, is seeing double-digit growth, and we continue to witness similar trends even today. From a margin perspective, they are very similar to the kind of margins we make on the long-haul products. It is only important to mention here that the average ticket price differs on the long-haul side versus short haul, the delta between the 2 will be anywhere between 20% to 25% in terms of a ticket -- average ticket value for a transaction.

Understood. Understood. And next on the ForEx part. So we recently operationalized the Delhi airport counters while optimizing some branch locations. So going forward, do we strategize to acquire more airport counters than, say, more traditional kind of branches?

Chetan, I think I have alluded to this at some point in time in my previous conversation. Look, airport is not a focused strategy per se, but we are very opportunistic in that market. If there is a counter where we can be present at a price point that is, I would say, rewarding from a commercial perspective, we will go into it. We don't step into airports for brand visibility or advertising because that's not the model we operate in. I think we have a very good brand, well -- trustworthy in the market. So we don't need to really go out there and put those monies at airports to advertise. So we take a very calibrated calculated move in terms of the airports that we enter. So if you look at our entry into Delhi Airport, this is something that we thought it fits the commercial construct that we have and made commercial sense for us to remain invested. That's why we went into Delhi Airport. But otherwise, as a model, we are not going at it. Yes, if there are airports that come at terms that are mutually beneficial to us, we will definitely evaluate that.

Okay. And lastly, on our hospitality business. So our ARR has seen a healthy growth of around 9% to 10%. So apart from any real rate growth, was it driven by a geographic mix shift in any offers, say, slightly premium theme-based restaurants or something else?

So one -- let me take that. See, average room rates grew by 10%, but simultaneously, even the volume grew to almost 77%. One, it obviously was the summer period. And we -- and domestic is our key source of business. And we leverage the domestic as a key source of business as well. Over a period of time, as we kept expanding as well, Sterling has added different, I would say in a simple form, different classes of hotels. So it has different levels or different segmentation. So we've moved away from just being a mid-scale player towards upper upscale, upscale and upper mid-scale as well. So what happens in such situations, your ability to expand the rates as and when the demand is increasing, actually, that enables us actually do so in a much more fungible manner. So that's how we've actually managed to leverage and get this average rate growth simultaneously with the volume growth. So both of them actually grew simultaneously. And that's why the total revenue per available room also grew by almost 20%.

The next question is from the line of Anil Shah from Insightful Investments.

My question is on Digital Imaging. I asked this question in a different format in terms of a much more shorter period of time last quarter, whether our EBITDA or EBIT loss had peaked. Obviously, it's worsened from the Q4 levels. But on a more sustainable basis, my question on Digital Imaging is, given -- a, what's the capital employed in this business, both from a CapEx perspective in terms of a regular CapEx or regular upgradation of the technology and instrumentation, et cetera? And the OpEx involved in the management bandwidth, what is the best case ROCE that we can really make? And what's the best EBIT that we can make on a normalized basis? Because obviously, from what I understand, there is a lot of capital also involved in this particular business and so is a lot of OpEx. So if you could just throw some light more on a medium- to longer-term perspective on Digital Imaging as such?

Okay. I'll take one part of it and ask Debasis to help me with the ROCE, et cetera. From a capital perspective, our biggest -- largest capital that we've deployed in the last 5 years probably is only on our technology upgrade that we've gone through, all right? So on a regular day-to-day basis, the capital requirement is not so large, if I may address that. And the largest that we've put is on the technology upgrade that's going to be sustainable and delivering more than required in the next 5 to 7 years. So that's one piece of it. So it's not intensive that way. From a day-to-day operational level, we spend less than about probably, say -- it's not very large from an operational level on the CapEx because most of our contracts are such that we go and operate in a premise which is already ready and done by our partner. So there's no large setup costs, et cetera, except for some hardware and the software that's already invested. Debasis, you can fill me up with the rest, if you want to.

Yes, yes, sure. So Anil, if you look at the segment results, you'll see that the net assets employed in the photo imaging services, which is crucial to DEI, is at INR 243 crores. INR 243 crores is the net asset. As far as your -- as far as the other question is on what would be the likely in a normal quarter or a normal year where we do not have the geopolitical risk, et cetera, what should be the expected sort of EBIT range? So typically, in a normal year, DEI should be working in the range of -- EBIT ratio should be in the range of about 6%, 7% on sales, okay? And so we can honestly do the math on that and figure out what the sort of return on capital that we can expect.

I mean, in terms of what we have, INR 243 crores is the net capital that we're deploying in this business. Obviously, a reasonable large part of that was upgradation, which we did in the last few years, if I'm right. And you think from the next few years' perspective, is there a lot of spend on CapEx or on upgradation that is yet to happen? Because it's -- this part of technology is constantly evolving and you need to be right up there. So is there a constant spend that we need to do there?

So the business that we are in is in imaging, and we capture emotions of guests and deliver that. We are not a technology company per se, okay? We have only built technology that helps us deliver that seamlessly. If for whatever number that Debasis -- more than 50%, 60% of that amount has been just in the -- not just the upgrade, but the revamp of that, that will last for the next 5 to 10 years. So there won't be any ongoing cost of any substantial nature near to what's already been done so far.

So Ram, if I may add to that. So Anil, DEI has been in existence for more than 20 years now, okay? And for the first about 15 years of its life cycle, it worked on a particular technology, which it had obtained from a third party. And there were some updations on that, but not a upgradation, so to say. And only in 2020 or 2021, we realized that we are falling behind and we need to develop a new technology, which, as Ram pointed out, would last for another at least about 10 years or so. So there will be periodic sort of inputs to be given into technology, but that is not every year or every few years. It's probably every 10, 12 years that we need to probably upgrade the technology.

And what would be a target IRR or ROCE that we really want to generate? Because at peak EBITDA that we've done in the last 6 years, it's around INR 50 crores or something on this business. And I'm presuming that was one of the more normal year in the world.

Yes. So I mean, from the time we have acquired DEI, honestly, there have been only 2 normal years in the world. We acquired them in late 2019. And the only 2 normal years was about, I think, about '23 and '24. Those are the 2 normal years that we had. But to come back to your question -- [indiscernible] -- yes, yes, coming to that exactly. So we will -- we go by the overall target of delivering a 20% ROE. That's our long-term goal. And it is not that -- it is true that every business has to deliver at least that much because it cannot be that one business delivers more and one business delivers less. So that's the sort of return that we're looking for.

Yes. And this EBIT obviously does not -- you won't reduce the corporate overheads in this EBIT because it's a segmental EBIT.

Yes. But the segment doesn't have much -- so DEI has no common expenses or support expenses. Everything is absorbed in the segment results. DEI -- the structure that we have for DEI is that it's headquartered in Dubai and spread across Asia and a bit of U.S. and stuff like that. But we do not ascribe any of DEI's expenses as common expenses. Okay? So the entire expenses of DEI is absorbed in that particular segment.

Right. Right. Right. And just coming to the travel part of the business, somebody asked you about July, et cetera. So from a full year perspective, assuming things -- I mean, even as we speak, things are not really absolutely normal. There is -- on and off, the switch is still on as far as the war is concerned. But assuming that we assume this to be normal, what kind of growth in travel are we looking for from FY '27 perspective in terms of top line? And what kind of EBIT margins range you would like us to work with?

So Anil, Mahesh again. We've kind of spoken about it in the past. I mean maybe this is not the right time for me to give you a guidance on what will be the FY '27 outcome. As you rightly said, we are still in the midst of the war, and we see new statements emerging every day, which determines which way the flow of traffic or aircraft will fly. So those uncertainties continue to haunt us. But just alluding to the point that I made previously to the question that was asked by Chetan, I think from a long-haul perspective, we are seeing some positive shift in the trend, that is, that whatever deficit that we were seeing previously, the deficit percentages have come down. So if you were looking at a 28%, 30% deficit on the long-haul side, now currently, they are trending slightly lower than that kind of levels. Obviously, we are also seeing momentum or growth on the short haul and the domestic side of it. But as I qualified and said, the short-haul average ticket price or the average value of a package is lower than that of a long haul. So there is that mix impact that will come into play. Currently, very difficult for me to give you a forward-looking statement as to what my exit FY '27 will be. But reasonable to expect that if the situations remain constant, we should be better in H2 as compared to H1.

The next question is from the line of Madhur Rathi from Counter Cyclical Investments.