Buy Cox & Kings; target of Rs 308:ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's reserach report on Cox & KingsCox & Kings’ (C&K) Q2FY16 revenues declined 21.0% YoY (up 0.3% QoQ) to | 685.4 crore (in line with I-direct estimate of | 668.5 crore) on account of sale of the camping business. Excluding the camping business, revenues increased 13.1% YoY led by 7.7% YoY increase in leisure business, 13.1% YoY increase in the education business and 25.3% YoY increase in the Meininger business In the leisure segment, Leisure India reported revenue growth of 13.1% YoY while the international segment increased 4.8% YoY. The company concluded the sale of the camping division in Q3FY15. Hence, YoY results are not comparable on a like-to-like basis On the margin front, the EBITDA margin declined 588 bps YoY to 46.4% (vs. I-direct estimate of 48.3%) led by higher advertising expenses (up 36.5% YoY). Excluding the camping business, EBITDA margins were flat YoY Given the company’s healthy operating cash flows, we expect its debt servicing ability to improve further. The company has already reduced its debt by | 1815 crore during FY15. Additionally, with a healthy outlook for the leisure and education division, we expect the company to reduce its debt further by ~| 600 crore over the next two years despite a moderation in revenue growth due to sale of the camping division. We continue to maintain BUY recommendation on the stock with a revised target price of | 308/share i.e. valuing at 11x FY17E EPS).

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