Hold Cox and Kings; target of Rs 290: ICICI Direct

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26 Aug, 2025 12:21

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Cox and Kings’ results were above our estimates. While revenues were below our estimate due to currency weakness, EBITDA and PAT were above our estimate. Revenues increased 0.5% YoY to Rs 705.6 crore (below I-direct estimate of Rs 781.2 crore) Segment wise, Leisure India and Meininger reported revenue growth of 12.5% YoY and 16.2% YoY but education and leisure international declined 13.7% YoY and 20.9% YoY, respectively EBITDA margin increased 790 bps YoY to 52.9% (vs. I-direct estimate of 45.4%) mainly due to forex gains.

Apart from improving macro in the domestic segment, healthy growth in international segment (especially Meininger) is expected to drive revenues over the next two years. The company plans to increase bed capacity at Meininger at a CAGR of 27.8% in FY17-22. Hence, we believe a substantial part of growth in the international business will be driven by Meininger revenues. Further, demerger of its forex segment (huge growth potential) will drive the value for its investors over the long term. Although we remain positive on the stock, the recent run up in the price prompts us to downgrade to HOLD with a revised target price of Rs 290 (i.e. valuing at 27x FY19E EPS & 6x EV/EBITDA).

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