Thomas Cook up for three days in a row; analysts expect margin expansion in FY24

Kerala backwaters. Arihant has maintained a buy rating on the travel company's stock at a target price of Rs 207.

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26 Aug, 2025 12:21

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Thomas Cook shares have gained over 12 percent in the last three days. On June 14, the stock closed at Rs 75.20, up 3.65 percent at the NSE. The share was trading in a volume of around 1.79 million.

Domestic brokerage firm Arihant Capital expects rapid topline growth and margin expansion across all the business segments of Thomas Cook. The travel company’s operating margin for FY23 was 3.52 percent. This is estimated to increase by 140 basis points in FY24 and 170 basis points in FY25, said the broking firm.

Arihant has maintained a buy rating on the stock at a target price of Rs 207.

Why margin expansion for Thomas Cook?

Arihant Capital in its report dated June 14 said the impact of 20 percent Tax Credited at Source (TCS) on international credit card payments will be minimal for Thomas Cook. This is because 80 percent of Thomas Cook’s business comes from corporate travel which does not attract TCS. TCS on credit card usage in foreign countries initially was 5 percent, it will be 20 percent from July 1.

Direct-to-Consumer inbound travel is expected to recover by Q3-Q4 FY24, and has an Operating Profit Margin (OPM) of 16-17 percent, said the brokerage firm. Inbound travel from Eastern European countries to places like Goa has an OPM of 8-9 percent. More inbound travel means more business for the company.

Also read TCS increase and Go First challenges impact travel industry, domestic demand strong : Thomas Cook 

The Destination Management Specalists (DMS) will turn profitable in FY23, says Arihant Capital. The firm believes the DMS business will give a Return on Capital Employed of 15 percent in the next three years. ROCE measures the profitability of a company in terms of capital.

Thomas Cook has resorted to cost-cutting measures, where it has reduced 30 percent of its costs. It has cut down on manpower and is investing in automation.

The company is adding new banking partners which has increased its credit card volumes. Thomas Cook is the second largest prepaid credit card player after HDFC.

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