Buy Cox & Kings; target of Rs 338: Axis Securities

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26 Aug, 2025 12:21

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Axis Securities's research report on Cox & KingsCox & Kings’ (C&K’s) restructuring of global businesses (details below) reduces its net debt by additional 10%, saves capex, and increases cash flow (loss-making Laterooms hived off). Management is committed to continue deleveraging balance sheet further by paying down debt of Rs 3-5 bn pa from cash flows. C&K will write off goodwill of GBP 71.4 mn (~ Rs 7.1 bn) towards Superbreaks divestment. As a result, goodwill is expected to come down to Rs 25 bn in FY16 (~ Rs 33 bn in FY15). Hence we expect PAT growth and return ratios to trend upwards FY17 onwards. RoCE is expected to improve to 14% by FY18 (11% in FY15). Maintain BUY with TP of Rs 338(14x FY18E EPS). We expect (1) India business to sustain 15% revenue CAGR over FY15-18 with stable EBIDTA margin of ~50%; (2) Education: 8% revenue CAGR over FY15-18 andstable EBITDA margin of 40-41%; (3) Meininger: 12% revenue CAGR over FY15-18 with EBITDA margin at 34%; (4) International Leisure business(30% of rev): As a result of the recent restructuring, businesses forming part of International Leisure were monetized; we expect FY17 revenue/EBIDTA at Rs 3.8 bn and Rs 1.7 bn (down 45%/1% YoY). Our FY17E and FY18E EPS stand at Rs 22 and Rs 25 (Rs 24 and Rs 28 earlier). We rollover our TP to FY18 and maintain BUY with TP of Rs 338.

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