Edelweis's research report on Cox & Kings
Cox & Kings’ (CNK) continuing operations revenue fell 2% YoY to INR 6bn (as per IGAAP) impacted by adverse currency and tepid performance in Leisure International in UK due to Brexit. Leisure India reported 11% YoY growth in revenues, but intense competition hit margins (down 135bps YoY). While education saw stable constant currency revenue growth of 13%, reported revenues fell 10% YoY marred by currency. Expansion pipeline in Meininger remains strong. Factoring in rising competition in Leisure India and impact of Brexit, we cut our FY17/18E EPS by 6% with focus on organic growth and debt repayment remaining key monitorables. Maintain ‘BUY’ with TP of INR 227 (INR 241 earlier).
We prune our FY17/18E EPS by 6% factoring in enhanced competition in Leisure India and impact of Brexit on UK operations. CNK staying on course in organic growth and debt repayment are key monitorables. We continue to value standalone/international businesses separately, assigning P/E multiples of 12.0x/9.0x on FY18E. We maintain ‘BUY’ with target price of INR 227.
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