Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_CoxKings_InitiatingCoverage.pdf
B e t t i n g o n s y n e r g i e s …
Cox & Kings (C&K) is one of the leading and oldest (established in 1758)
players in the travel & tourism industry that caters to the overall travel
needs of Indian and international travellers. The company has a presence in
more than 19 countries besides India through subsidiaries and JVs. Opting
for the inorganic route to grow exponentially, C&K has done seven
acquisitions in the past six years (including the Holidaybreak Plc.
acquisition), which has made it an integrated player globally with quality
products and services. With its recent HBR acquisition, we expect return
ratios to improve post FY12E as it has provided synergies in terms of
geographic diversification, widening its product portfolio and cross-selling
opportunities, amid challenges in terms of effective integration. We are
initiating coverage on the stock with a BUY rating.
Cox and Kings: A well diversified globally integrated player
C&K has done seven acquisitions in the past six years (including HBR),
which made C&K an integrated player globally with quality products and
services. This series of acquisitions brought huge business volume on the
book of C&K on a consolidated basis. This, in turn, increased C&K’s
bargaining power with vendors due to its large customer base and global
presence. The overseas acquisition created value for the company with
healthy growth in revenues (CAGR of 51% during FY07-11) and operating
margins (i.e. at ~40%) during the same period.
Holidaybreak acquisition: A long-term strategic fit
We foresee HBR as a good long term strategic fit for C&K as it has provided
synergistic opportunities in terms of geographic diversification, widening its
product portfolio and offering cross-selling opportunities. However,
medium-term benefits are unlikely on account of a slowdown in UK and
European region and seasonally weak first half (i.e. October-March) of HBR.
Valuations
At the CMP of | 161, C&K currently trades at 6.4x FY14E EV/EBITDA. The
stock has traded at a two-year average band of 7-9x. This discounted
valuation mainly factors in depreciating rupee as majority of C&K India’s
business is outbound & there is a slowdown in Europe. However,
considering the steady & resilient nature of education & adventure business
segment of HBR and strong growth momentum in India, we believe, current
valuations overlook the long term synergy & growth potential. We have
used SOTP valuation and arrived at a target price of | 195, in line with peer
valuation (i.e. 7x FY14E EV/EBITDA), reflecting our conservative valuation
approach. We are initiating coverage on C&K with a BUY rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_CoxKings_InitiatingCoverage.pdf
B e t t i n g o n s y n e r g i e s …
Cox & Kings (C&K) is one of the leading and oldest (established in 1758)
players in the travel & tourism industry that caters to the overall travel
needs of Indian and international travellers. The company has a presence in
more than 19 countries besides India through subsidiaries and JVs. Opting
for the inorganic route to grow exponentially, C&K has done seven
acquisitions in the past six years (including the Holidaybreak Plc.
acquisition), which has made it an integrated player globally with quality
products and services. With its recent HBR acquisition, we expect return
ratios to improve post FY12E as it has provided synergies in terms of
geographic diversification, widening its product portfolio and cross-selling
opportunities, amid challenges in terms of effective integration. We are
initiating coverage on the stock with a BUY rating.
Cox and Kings: A well diversified globally integrated player
C&K has done seven acquisitions in the past six years (including HBR),
which made C&K an integrated player globally with quality products and
services. This series of acquisitions brought huge business volume on the
book of C&K on a consolidated basis. This, in turn, increased C&K’s
bargaining power with vendors due to its large customer base and global
presence. The overseas acquisition created value for the company with
healthy growth in revenues (CAGR of 51% during FY07-11) and operating
margins (i.e. at ~40%) during the same period.
Holidaybreak acquisition: A long-term strategic fit
We foresee HBR as a good long term strategic fit for C&K as it has provided
synergistic opportunities in terms of geographic diversification, widening its
product portfolio and offering cross-selling opportunities. However,
medium-term benefits are unlikely on account of a slowdown in UK and
European region and seasonally weak first half (i.e. October-March) of HBR.
Valuations
At the CMP of | 161, C&K currently trades at 6.4x FY14E EV/EBITDA. The
stock has traded at a two-year average band of 7-9x. This discounted
valuation mainly factors in depreciating rupee as majority of C&K India’s
business is outbound & there is a slowdown in Europe. However,
considering the steady & resilient nature of education & adventure business
segment of HBR and strong growth momentum in India, we believe, current
valuations overlook the long term synergy & growth potential. We have
used SOTP valuation and arrived at a target price of | 195, in line with peer
valuation (i.e. 7x FY14E EV/EBITDA), reflecting our conservative valuation
approach. We are initiating coverage on C&K with a BUY rating.
No comments:
Post a Comment