Cox and Kings IPO opens; should you subscribe?

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Cox and Kings IPO opens; should you subscribe?

The initial public offering (IPO) of 18,496,640 equity shares of Cox and Kings (India), a provider of all travel and travel related products, opened for subscription.

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The initial public offering (IPO) of 18,496,640 equity shares of Cox and Kings (India) , a provider of all travel and travel related products, opened for subscription. The price band is at Rs 316-330/share and the issue will close for subscription on November 20, 2009.

Moneycontrol.com talked to the experts whether to apply or not to the issue. All experts as well as brokerage firm recommended a subscribe. (Read brokerages views)

Investment Advisor, SP Tulsian said the issue was recommended even at the upper band of Rs 330 per share. "Cox and Kings (India) has been showing a consistent growth in its topline and bottomline for over the last 5 years. Total income of Rs 66 crore in FY06, grew to Rs 294 crore in FY09, while PAT rose to Rs 62.81 crore in FY09 from Rs 17.38 crore in FY06. In the recent past, share of unorganized players are shifting to organized players like Cox and Kings, which is reflected in the growth of 23% achieved by the company, between FY04 to FY08 against CAGR of 15%, achieved by the industry, in the same period."

"The company should be able to post a PAT of Rs 120 crore on total income of Rs 390 crore for the year ending March 10, which looks conservative, as PAT for the first quarter ending June 09 has already been placed at Rs 40.58 crore. This will result in an EPS of Rs 19 on fully diluted equity of Rs 62.92 crore. So, even taking the upper band of Rs 330 per share it is issued at a PE of about 18 times, leaving ample margin of safety. After a long time, we have come across a comforting IPO, which looks capable to give listing gain as well as much more, if held on with 12 months view. Issue is recommended even at the upper band of Rs 330 per share."

Avinash Gorakshakar, Head of Research at Reliance Money advised clients to subscribe to the issue for long term. "Strong brand equity and excellent long term growth prospects are the key reasons. It is attractive from a long term perspective only."

Another expert, Manish Bhatt of Prabhudas Lilladher also advised to subscribe the issue.

KR Choksey view

India's tourism industry accounts for 6% of GDP, much below world average. This provides Cox & Kings vast opportunity to the domestic outbound and inbound tourism market. Increasing global opportunities for companies with acquisition of businesses offering synergies, increasing disposable income, increasing standard of living, rising demand for management studies abroad, favorable environment for migrated people abroad would be the key drivers for growth in travel and tourism industry.

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