Emkay PCR maintains buy rating on Thomas Cook

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Emkay PCR maintains buy rating on Thomas Cook

Emaky PCR has maintained buy rating on Thomas Cook. We recommend investors to avoid the open offer at an expected price of Rs 107 per share as the scrip has more potential to move up in the long run.

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Emaky PCR has maintained buy rating on Thomas Cook India in its March 10, 2008 research report. "Thomas Cook Group PLC (TCG) has announced to acquire upto 74.9% in Thomas Cook India Ltd (TCIL) at a price of Rs 107 which is 20% above the current market price. The deal results into the exit of Dubai Investment Group which acquired 54.4% stake in TCIL at Rs 46.2 and 7.36% through open offer at Rs 61.95 per share in January 2006. With this acquisition TCIL would become the part of world's second largest travel company TCG. We believe that the change in promoters would be positive for TCIL as it will get access to TCG's world wide network and would boost its outbound travel business. We currently maintain our financial estimates and maintain BUY recommendation on the scrip. We expect that the recent development would benefit TCIL in terms of operation in the long run. Besides this, TCG has shown its confidence in the business of TCIL by acquiring at Rs 107"

"We recommend investors to avoid the open offer at an expected price of Rs 107 per share as the scrip has more potential to move up in the long run. We expect that the recent development would be value driver for the company in the long run. Currently we maintain our previous financial estimates and would revise the same once the company declares its CY07 financials (expected in the third week of March 2008). On the basis of CY09E EPS of Rs 4.2, the scrip is currently trading at a P/E of 21x and EV/EBITDA of 12.5x. We maintain our BUY rating and would revise the target price soon," says Emkay research report.

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