Buy Cox & Kings; target of Rs 329: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com`s research report on Cox & Kings“Cox & Kings, Q1FY15 revenues grew 26% YoY to Rs 738.7 crore (vs. I-direct estimate: Rs 657.7 crore) on account of consolidation of Meininger’s financials and higher sales from the leisure domestic segment (up 14% YoY). The camping division also contributed to topline in this quarter as sale of camping division is likely to conclude by Q2FY15. EBITDA margins improved 24 bps YoY to 47.6% led by an all-round better performance of all segments, excluding the camping division. The sale of the camping business for Rs 890 crore is likely to help Cox & Kings to de-leverage its balance sheet significantly, going forward.” “Cox & Kings (C&K) has done seven acquisitions in the past seven years (including HBR), which made C&K an integrated player globally with quality products and services. This series of acquisitions brought huge business volume on the book of C&K on a consolidated basis. This, in turn, increased the bargaining power with vendors due to its large customer base and global presence. The overseas acquisition created value for C&K with healthy growth in revenue (CAGR of 57% in FY07-14) and average operating margins (i.e. at ~39.3%) during the same period. C&K acquired a 100% stake in UK based HolidayBreak Plc (HBR). The acquisition was done under an all-cash deal of ~£312 million (at a valuation of 7.8x FY11 EV/EBITDA, enterprise value of £444 million and EBITDA of ~£58 million) in September 2011 through wholly owned subsidiary Prometheon Holdings (UK). We foresee HBR as a good long term strategic fit for C&K as it has provided synergistic opportunities in terms of geographic diversification, widening its product portfolio and offering cross-selling opportunities.” “Given the company’s healthy operating cash flow, we expect its debt servicing ability to improve. The sale of the camping business for Rs 890 crore is likely to help C&K to de-leverage its balance sheet significantly, going forward. Hence, we remain positive and maintain our BUY rating with a revised target price of Rs 329/share (i.e. at 9.5x FY16E EPS),” says ICICIdirect.com research report. 

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