Cox & Kings (India) is amongst the oldest travel brands [is also a Global Brand] in the country offering travel (both leisure & business), forex and visa processing services. The company acts as a One Stop Shop for all the travel related needs of Indian and international travelers.
In India, tourism as a % of GDP accounted for just 6% in 2008, as compared to about 9% for the world. Thus the domestic and inbound market offers a vast scope for all the operators to expand revenues.
Cox & Kings Current IPO Details:
Face value 10
Price band 316-330
Issue opens November 18, 2009
Issue closes November 20, 2009
Retail Size – 6,403,824 Shares or Rs 211 cr
Fully Diluted Equity after the IPO – 62.92 cr or 6.29 cr equity shares of FV 10
C&K reported revenue CAGR of 65.5% over FY06-09 period while OPM was in the 40%-42% range over the same period. PAT witnessed 80% CAGR over FY06-09. Excellent Performance, we should say.
Advantage Cox & Kings:
Apart from India, C&K has a presence in 19 countries through a mixture of
subsidiaries, branch and representative offices.
Higher business volumes would provide the company a better bargaining power to make bulk bookings for air travel, hotel accommodations, car rentals and ground handling
Foreign Currency Fluctuations and some competition from other players from the un-organized sector are the key risks.
Cox & Kings Versus Thomas Cook:
Thomas Cook another listed company in the same line of business is directly comparable. Sales of both the companies are almost the same. Thomas Cook is expected to report an EPS of Rs 1.4 to 1.6 for year ending Dec-2009 and is quoting at a P/E of 40.
Cox & Kings, even if it reports a PAT of 63 cr as reported in FY09 [Conservatively], its EPS after full equity dilution will be Rs 10. At a P/E of 33, the management has definitely left something on the table for INVESTORS. However, the company in our view will definitely earn more in FY10.
Since Thomas Cook sales has been growing at a far slower pace than Cox & Kings, its is highly likely that Cox & Kings will enjoy higher discounting 3 to 6 months after the IPO when FIIs would have cornered their chunk of shares 🙂