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HolidayBreak integration key to growth in FY13E
• Consolidated revenues grew 27.4% Y-o-Y to `1.37bn in Q2FY12 driven by 24% growth in India
revenues (historically a lean season) and a relatively high 29% growth in Rest-of-World (RoW)
partly due to currency fluctuations.
• Consolidated EBITDA grew by a muted 11.5% due to `544 mn in Q2FY12 driven by 20% growth
in India EBITDA and 7% increase in RoW. With a 11.5% growth in EBITDA, a 41% rise in
depreciation, 16% rise in interest cost and a higher tax rate (30.7% in Q2FY12 as compared
to 25% in Q2FY11), the company’s PAT de-grew by 20.4% to `276 mn.
Result Highlights
Strong traction across the globe except Japan
Consolidated revenues grew 27.4% Y-o-Y to `1.37bn in Q2FY12 driven by 24% growth in India
revenues (historically a lean season) and a relatively high 29% growth in Rest-of-World (RoW)
partly due to currency fluctuations. The RoW growth would have been much higher had there not
been a 50% Y-o-Y decline in Japan’s revenues which were in line with expectations. The India
business contributed 40% to the total revenues with UK (23%), Australia (15%), Dubai (8%), and
HolidayBreak (4%) being the other major contributors.
Sharp margin decline in RoW while India margins declined marginally
Consolidated EBITDA grew by a muted 11.5% due to `544 mn in Q2FY12 driven by 20% growth in
India EBITDA and 7% increase in RoW (on account of transfer costs for Middle East travelers to
other destinations). Consequently, consolidated EBITDA margin declined 570bps Y-o-Y to 39.8%.
India accounted for 38% of consolidated EBITDA compared to 36% in Q2FY11.
PAT de-grew by 20% led by higher tax rates and interest costs
With a 11.5% growth in EBITDA, a 41% rise in depreciation, 16% rise in interest cost and a higher
tax rate (30.7% in Q2FY12 as compared to 25% in Q2FY11), the company’s PAT de-grew by 20.4%
to `276 mn.
Valuation & viewpoint
C&K is currently trading at 14.9x FY12E EPS and 9.2x FY13E EPS, a significant discount to its
historical one-year forward P/E band. We believe the discount was mainly due to a) decline in
return ratios due to huge cash on the books and b) uncertainty with respect to the impact of
acquisitions on the company’s future earnings. However, in view of a) the strong demand
visibility with 20.1% earnings CAGR in the next two years, b) the strong probability of an
improvement in return on capital in view of successful track record of past acquisitions, and c)
recent price correction, we expect the stock to perform well in the near future.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HolidayBreak integration key to growth in FY13E
• Consolidated revenues grew 27.4% Y-o-Y to `1.37bn in Q2FY12 driven by 24% growth in India
revenues (historically a lean season) and a relatively high 29% growth in Rest-of-World (RoW)
partly due to currency fluctuations.
• Consolidated EBITDA grew by a muted 11.5% due to `544 mn in Q2FY12 driven by 20% growth
in India EBITDA and 7% increase in RoW. With a 11.5% growth in EBITDA, a 41% rise in
depreciation, 16% rise in interest cost and a higher tax rate (30.7% in Q2FY12 as compared
to 25% in Q2FY11), the company’s PAT de-grew by 20.4% to `276 mn.
Result Highlights
Strong traction across the globe except Japan
Consolidated revenues grew 27.4% Y-o-Y to `1.37bn in Q2FY12 driven by 24% growth in India
revenues (historically a lean season) and a relatively high 29% growth in Rest-of-World (RoW)
partly due to currency fluctuations. The RoW growth would have been much higher had there not
been a 50% Y-o-Y decline in Japan’s revenues which were in line with expectations. The India
business contributed 40% to the total revenues with UK (23%), Australia (15%), Dubai (8%), and
HolidayBreak (4%) being the other major contributors.
Sharp margin decline in RoW while India margins declined marginally
Consolidated EBITDA grew by a muted 11.5% due to `544 mn in Q2FY12 driven by 20% growth in
India EBITDA and 7% increase in RoW (on account of transfer costs for Middle East travelers to
other destinations). Consequently, consolidated EBITDA margin declined 570bps Y-o-Y to 39.8%.
India accounted for 38% of consolidated EBITDA compared to 36% in Q2FY11.
PAT de-grew by 20% led by higher tax rates and interest costs
With a 11.5% growth in EBITDA, a 41% rise in depreciation, 16% rise in interest cost and a higher
tax rate (30.7% in Q2FY12 as compared to 25% in Q2FY11), the company’s PAT de-grew by 20.4%
to `276 mn.
Valuation & viewpoint
C&K is currently trading at 14.9x FY12E EPS and 9.2x FY13E EPS, a significant discount to its
historical one-year forward P/E band. We believe the discount was mainly due to a) decline in
return ratios due to huge cash on the books and b) uncertainty with respect to the impact of
acquisitions on the company’s future earnings. However, in view of a) the strong demand
visibility with 20.1% earnings CAGR in the next two years, b) the strong probability of an
improvement in return on capital in view of successful track record of past acquisitions, and c)
recent price correction, we expect the stock to perform well in the near future.
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