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Cox & Kings’s India business performed in-line with expectations.
However, Japan continued to remain a drag on international operations.
Consolidated numbers include results of Holiday Breaks (HBR) which
reported a loss for the quarter - an off-peak season. However, post the
HBR acquisition, Europe contributes more than 70% of Cox consolidated
EBIT with India accounting for only 18%. Recession in Europe might have
a significant impact given that a large part of the business is discretionary
in nature. Further, full benefits of synergies from the HBR acquisition are
expected to flow in only from FY14. Maintain Hold.
Indian operations perform well, Japan remains a drag
Standalone India business of Cox reported a 23% YoY growth in revenues besides
EBIDTA margins of 37.5%, broadly in-line with expectations. However, turnover and
margins from Rest of the World (RoW) disappointed as operations in Japan remained
subdued. Consolidated loss of INR76mn was mainly due to the inclusion of HBR which
reported an EBIDTA loss of GBP1.5mn for the quarter as against GBP1.3mn in the same
period last year.
Synergies from HBR to flow in from FY14 onwards
We have built in a 3% growth in sales for HBR in FY13 (versus a flat growth in last few
years) and 10% growth in FY14 when full benefits of synergies start to flow in. Further,
we have assumed a marginal improvement in margins for FY13 and a sharper 100 bps
improvement in FY14. We see synergies coming in mainly from Hotel Break and
Adventure divisions of HBR in the near-term, driven by market and product expansion
and buying efficiencies.
Outlook and valuations: Fairly valued; maintain ‘HOLD’
We have recalibrated our estimates to factor in Q3 performance. Our revised SOTP
value of INR212 per share (INR248 earlier) comprises of: 1) Cox India and RoW
business valued at 9x FY13 EV/EBIDTA - in-line with historical multiples and 2) HBR at
6.5x EV/EBIDTA - at marginal premium to its historic averages. Maintain ‘HOLD’
recommendation on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cox & Kings’s India business performed in-line with expectations.
However, Japan continued to remain a drag on international operations.
Consolidated numbers include results of Holiday Breaks (HBR) which
reported a loss for the quarter - an off-peak season. However, post the
HBR acquisition, Europe contributes more than 70% of Cox consolidated
EBIT with India accounting for only 18%. Recession in Europe might have
a significant impact given that a large part of the business is discretionary
in nature. Further, full benefits of synergies from the HBR acquisition are
expected to flow in only from FY14. Maintain Hold.
Indian operations perform well, Japan remains a drag
Standalone India business of Cox reported a 23% YoY growth in revenues besides
EBIDTA margins of 37.5%, broadly in-line with expectations. However, turnover and
margins from Rest of the World (RoW) disappointed as operations in Japan remained
subdued. Consolidated loss of INR76mn was mainly due to the inclusion of HBR which
reported an EBIDTA loss of GBP1.5mn for the quarter as against GBP1.3mn in the same
period last year.
Synergies from HBR to flow in from FY14 onwards
We have built in a 3% growth in sales for HBR in FY13 (versus a flat growth in last few
years) and 10% growth in FY14 when full benefits of synergies start to flow in. Further,
we have assumed a marginal improvement in margins for FY13 and a sharper 100 bps
improvement in FY14. We see synergies coming in mainly from Hotel Break and
Adventure divisions of HBR in the near-term, driven by market and product expansion
and buying efficiencies.
Outlook and valuations: Fairly valued; maintain ‘HOLD’
We have recalibrated our estimates to factor in Q3 performance. Our revised SOTP
value of INR212 per share (INR248 earlier) comprises of: 1) Cox India and RoW
business valued at 9x FY13 EV/EBIDTA - in-line with historical multiples and 2) HBR at
6.5x EV/EBIDTA - at marginal premium to its historic averages. Maintain ‘HOLD’
recommendation on the stock.
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