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COX & KING
(Rating: Accumulate, CMP: Rs. 194; Target: Rs. 225; Upside: 16%; Investment Period: 6-12 months)
Investment Rationale
• Cash-rich and a proxy for the booming travel and tourism market in India, Cox & Kings appears a good
investment after its recent falls. The company's entrenched presence in domestic and international travel puts
it at a distinct advantage in the highly-fragmented tourism industry.
• It’s recently announced potential acquisition of the UK-based Holidaybreak Plc too adds to its attractiveness. If
successful, the acquisition would catapult Cox & Kings into the next growth orbit. Back home, rising disposable
incomes, favourable demographics of Indians, with many increasingly seen opting to holiday abroad, and
improving trend in inbound and outbound tourism too promise a healthy growth environment for the company.
Valued at about Rs 2,250 crore, the acquisition will be funded through a mixture of debt and equity. The
company has about Rs 1,000 crore cash and has lined up debt from Axis Bank for the remaining amount. The
deal, however, is subject to approvals (expected by September). While the Holidaybreak acquisition would be
the biggest by Cox & Kings yet, it isn't the first. The company has so far acquired seven companies and has
successfully managed to integrate operations and extract synergies from them.
• Bulk bookings have also helped the company improve its operating margins, which have in the last three years
expanded to 46% (in FY11). Income and profits, during the same period, reported a CAGR growth of 20% and
24% to Rs 497 cr and Rs 122 cr respectively.
At the CMP of Rs 194, the stock is trading at a P/E of 29.07 on TTM basis. EPS on TTM basis is Rs 6.4.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
COX & KING
(Rating: Accumulate, CMP: Rs. 194; Target: Rs. 225; Upside: 16%; Investment Period: 6-12 months)
Investment Rationale
• Cash-rich and a proxy for the booming travel and tourism market in India, Cox & Kings appears a good
investment after its recent falls. The company's entrenched presence in domestic and international travel puts
it at a distinct advantage in the highly-fragmented tourism industry.
• It’s recently announced potential acquisition of the UK-based Holidaybreak Plc too adds to its attractiveness. If
successful, the acquisition would catapult Cox & Kings into the next growth orbit. Back home, rising disposable
incomes, favourable demographics of Indians, with many increasingly seen opting to holiday abroad, and
improving trend in inbound and outbound tourism too promise a healthy growth environment for the company.
Valued at about Rs 2,250 crore, the acquisition will be funded through a mixture of debt and equity. The
company has about Rs 1,000 crore cash and has lined up debt from Axis Bank for the remaining amount. The
deal, however, is subject to approvals (expected by September). While the Holidaybreak acquisition would be
the biggest by Cox & Kings yet, it isn't the first. The company has so far acquired seven companies and has
successfully managed to integrate operations and extract synergies from them.
• Bulk bookings have also helped the company improve its operating margins, which have in the last three years
expanded to 46% (in FY11). Income and profits, during the same period, reported a CAGR growth of 20% and
24% to Rs 497 cr and Rs 122 cr respectively.
At the CMP of Rs 194, the stock is trading at a P/E of 29.07 on TTM basis. EPS on TTM basis is Rs 6.4.
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