Axis Direct's research report on Thomas Cook
Thomas Cook’s (TCIL) board has approved the proposal of a corporate restructuring exercise that would enable the company to focus on Travelrelated businesses and give its shareholders direct exposure to Quess. The contours as well as the timeline of the deal are yet to be disclosed.
Outlook
Our take: (1) In the scenario that existing shareholders are given Quess shares on pro-rata and no distribution tax is applicable, our estimates on residual business of Travel, forex and vacation ownership imply a 25% upside from CMP; (2) If distribution tax of ~20% is applied, we recommend existing shareholders stay invested and not monetize Quess – a steady compounder given immense opportunity landscape in business services tied directly to macro, shift from unorganized to organized, and consolidation of vendor base. Retain BUY on TCIL and Quess. Our estimates, TP remain unchanged.
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