Indira Securities is bullish on Cox & Kings and has recommended buy rating on the stock with a target of Rs 168 in its January 3, 2013 research report.
“Cox & Kings is the longest established travel company in the world. Company is one of the oldest and recognized holiday brands that cater to the overall travel needs of an Indian and International traveler. Its business can be broadly categorized as Leisure Travel, Corporate Travel, Forex and Visa Processing. The company design travel packages for both individuals and groups for their domestic and international leisure travel. It makes travel arrangements for corporate clients to cater to their business meetings, conferences, events and as an incentive for their employees and business partners. It provide end to end travel solutions including land, air and cruise bookings, hotel bookings, in-transit arrangements, local sightseeing, visa, passport and medical insurance assistance and such other destination management services. It also provide value added services viz., customizing travel plans for its NRI customers, travel arrangements for Trade Fairs, providing private air charter services, etc. Besides, it offer travel related foreign exchange & payment solutions. Its India operations are headquartered in Mumbai and have the status of a limited company. It has over 12 fully owned offices in India across key cities such as New Delhi, Chennai, Bangalore, Kolkata, Ahmedabad, Kochi, Hyderabad, Pune, Goa, Nagpur and Jaipur. It has global presence with its operations in 18 countries.”
“The company has a strong global presence. The acquisition of Holidaybreak, which is into education travel across Europe, has helped Cox & Kings to bolster its overall performance. Cox & kings has reported a consolidated sale turnover of 838 cr. for FY2012 which is expected to grow by 100 % i.e 1676 cr for FY2013. Companies trailing 12-month (cons.) EPS is at Rs 19.08 per share. The stock's price-toearnings (P/E) ratio is 7.07. The latest book value of the company is Rs 113.79 (cons.) per share. The dividend yield of the company is 0.75%.The expected EPS will be around 24 for FY2013 with the same P/E of 7 the price will go around 168. Cox & Kings continues to trade at a low valuation due to high debt (debt to equity ratio of 2.5 as in September 2012).However, the company is taking steps to reduce its debt burden. It is planning to reduce its current debt of Rs 3,706 crore by Rs 500-600 crore a year through cash generated from operations. The $138 million generated by selling a minority stake in Prometheon Holdings (a subsidiary company) will also be used to repay debt. This debt reduction will help improve its profitability and return ratios in the future.”
“Cox & Kings has been underperforming for the past few quarters with its valuation down to reasonable levels. The downside risk here is limited since the low valuation is already discounting global slowdown and high debt concerns,” says Indira Securities research report.
Public holding more than 90% in Indian cos
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