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• International Travel House (ITH), an associate of ITC Ltd (61.7% stake), established in 1981, is an integrated
travel and tourism service provider accredited with ISO 9001 certification. It offers the entire bouquet of travel
services, including business travel, car rentals, leisure holidays and conferences & exhibition management
services. ITH has a nationwide network through 10 IATA travel offices, 14 car rental offices and 19 travel
counters. The company services business travel needs of Indian and multinational business houses with
implants in 160 companies including NDTV, Infosys, HCL, Citibank, Samsung, Max Hospitals, Ficci, Essel group
among others. The company has a major presence in the car rental business with transportation contributing a
healthy 75.6% of the total topline as of FY14. The company has its own transport fleet of ~900 cars and has
over 700 trained travel professionals. The topline and bottomline has grown at a CAGR of 12% and 13%,
respectively, in FY10-14. The company also commands healthy return ratios with RoCE and RoE of 18% and
14%, respectively, in FY14. The dividend payout for ITH is steady at ~20%
• The company is promoted by ITC Ltd and is involved in the business of travel services. The company clocked
a topline and bottomline of | 172 crore and | 18 crore, respectively in FY14. On a consistent basis, the
company clocks EBITDA margins of ~20%. On the balance sheet front, the company is debt-free with net cash
position of ~| 46 crore as of FY14 (~20% of the current market cap). Its domestic competitors though backed
by foreign promoter groups are currently trading at 37.3x TTM P/E (Thomas cook trading at 64.2x TTM P/E
while Cox & Kings trading at 10.4x TTM P/E). The company, however, is trading at 13.1x FY14 P/E, which is a
steep discount to its domestic peers (~65% discount). We feel that this discount is unwarranted given the
healthy financials, strong promoter group and robust economic outlook. However, since the company is a
major car rental player, it is expected to trade at a certain discount to its industry peers
• The company realises healthy business (| 82 crore; 48% of topline) form its parent group i.e. ITC Ltd. and will
also be a key beneficiary of increase in occupancy at ITC’s hotels across the country. With a new government
at the Centre and its thrust on healthy growth of the domestic tourism industry, the company is poised for an
exciting journey ahead. Key government announcements, which should ultimately benefit the company
include visa on arrival policy & electronic visa approval provision. On the risk front, the company is facing
some competition from new start-ups offering car rental services in the cities in which the company operates.
These start-ups are vying for a share of the market on the basis of an asset-light business model and heavy
use of back-end technology and analytics. However, ITH is working towards building on its web strategy. It is
evaluating web based operating platforms for its forex, conferences and delegate management business, as
also for revamping its website and making itself ready for meeting the challenges of e-commerce


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Tide Water Oil Company India is a part of the multi divisional Andrew Yule group. Tide Water Oil has been one
of the leading players in the Indian lubricant industry since 1928. The company has an extensive distribution
network with 50 distributors and over 650 dealers servicing over 50,000 retail outlets. This network is fed by
five plants and 55 depots located strategically across the country. The company operates in two major
segments: automotive and industrial. It has tie-ups for the manufacture of genuine oils with a number of
renowned OEMs in the automotive and industrial equipment segment including Hero MotoCorp, Honda Motor
Cycle, L&T Komatsu Ltd, etc. The company also has a technical collaboration JX Nippon Oil & Energy
Corporation, the No.1 petroleum conglomerate in Japan. Superior quality lubricants under the brand name
Eneos are manufactured and marketed in India by Tide Water Oil. It manufactures and markets Veedol brand
of lubricants
• Over the last few years, the lubricant industry’s volume growth has contracted due to improvement in motor
vehicle technology leading to lower consumption of lubricant oil and longer refill cycle. The industry reported
negative volume growth at ~1% CAGR over FY10-13 whereas Tide Water Oil reported a volume growth at
~2.3% CAGR. However, going forward, the lubricant industry is expected to report an improvement in volume
growth owing to an improvement in the Indian economic scenario with growth of automobile sales and an
improvement in industrial sector leading to higher lubricant oil consumption. Over the last 12 years, Tide
Water Oil has shown a continuous improvement in market share increasing from 2.9% in FY03 to 4.7% in FY13
owing to its strong brands (Veedol, Prima, Turbo, etc.), wide distribution network and good quality of
products. The company’s strong brands and wide distribution network (mainly in the “Bazaar” segment) would
aid it to grow its business substantially. The company expanded its global footprint with the acquisition of
Veedol International (100% subsidiary) in FY12 from Castrol and Lubricants UK, wholly-owned subsidiaries of
BP Plc. This acquisition brought with it global rights to a wide portfolio of registered trademarks for the master
brand, Veedol, as well as associated product sub-brands and iconic logos
• Tide Water Oil’s revenues have increased from | 751.6 in FY10 to | 1156.5 in FY14 at a CAGR of 9% while
profits have increased from | 57.8 in FY10 to | 68.3 in FY14. The return ratios of the company have remained
strong with RoCE at 21.5% and RoE at 17.6% in FY14. We expect the decline in crude oil prices and growth in
volumes to help the company improve its margin profile and thereby profitability, going forward

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