The brand ‘COX and KINGS’ ( C&K) need no explanation not only in India but in many countries around the world.Founded in 1758 in UK ,C&K is the oldest travel company in the world.After changing many hands ,now this company owned by UK born Mr.ABM Good and India based Mr .Ajit Kerkar.Company came out with an IPO in India in 2009 and listed its stocks both in BSE and NSE .
C&K is
one of the largest travel companies in the world with a network in more than 20
countries including India ,Australia,
United Kingdom,USA ,Japan, ,Newzealand ,Sri Lanka , United Arab
Emirates..etc. Company offering a wide array of travel related services in the
field of Domestic Tourism,Business travel,Outbound tourism,Travel
Insurance,currency exchange,Destination management,Visa processing
services...etc.Like many other companies,it is not mere an arranger of tours
but owns valuable assets like hotels,Mobile homes ..etc.Its hotel chain -
Meininger - runs 16 hotels across 10
cities in Europe with 7340 beds capacity .Recently company started its 720
bed hotel in Brussels, the capital of Belgium . In addition to this
,Company having 1300 permanent homes and
7000 mobile homes which is using for its Camping business .Added to own hotels ,C& K having strong tie-up with
large hotel chains across the globe .Company is the leader in packaged tours in
India with its brands like ‘Duniya Dekho’ ,’Bharat Dekho’..etc.Its European
subsidiary is leading Education and
Camping business with well known brands like PGL,NST,Eurocamp,Keycamp..etc.
I know , I could not convey the mammoth picture of this company and its
size of operations into your mind through this brief note.Don’t think ,this is
a small travel company arranging tour operations but it
is a true Indian multinational .To get a better insight into company’s business
and offerings ,I request you to go through the links of websites of C&K and
its subsidiaries listed below.
2)
Holidaybreak
3)
Meininger
4)
Eurocamp
Investment
rationale
Cox and Kings came out with an IPO in 2009 @ Rs.330 which oversubscribed 6 times.Thereafter it divided its FV to Rs.5 and currently
trading at its all time low price of Rs.87.This sharp price erosion happened mainly
due to the fear of increasing debt level which the company raised for
acquiring ‘Holidaybreaks’ of UK for an amount of Rs.2250 Cr in an all cash
deal. In many cases we have seen the failure of many companies due to high debt
acquisitions .It happened mainly due to
lack of synergies in business and
failure to integrate the business
of acquired companies.Here the case is different,the acquired company having
wonderful assets and a market leader in many of the segments it is operating
and a perfect fit for C&K Almost 90% of its total capacity for education
and camping business for 2014 is already booked and this point alone indicating
its dominant position in UK market .Its integration with C&K happened smoothly and the latest financial
results giving a clear indication for that.C&K is now planning to introduce
many new concepts of acquired companies in India too in near future.In the last
FY ,company reported a consolidated turnover of Rs.1808 Cr and a net profit of
Rs.248 Cr. In the recent June quarter alone company reported a Sale of Rs.586 Cr
and a net profit of Rs.135 Cr. The past few years were not so good for travel
and tourism sector due to various reasons.The severe recessionary pressure in
western countries affected both tourism and business travels. But now the
situation is changing slowly in favor.The sharp depreciation of Indian currency making India as a preferred
destination for many western travelers.On the other side, touring outside the
country is becoming a passion even for middle class families in recent times
even after rupee depreciation. Malaysia ,Singapore,Hong-Kong,Middle East ,USA
..etc are turning as hot destinations for Indian tourists.With revival in
western economies , Business tours are expected to improve in future .With vast
network in all these countries Cox and kings will be one of the biggest beneficiary of this changing trends.
Some more positive indications
Higher level of debt is considered as the major dampener for
C&K .But company already initiated various steps to reduce its debt.In
recent past City Venture Capital purchased a 30 % stake in one of C&K’s UK
arm (Prometheon Holdings UK) for Rs.765 Cr. In last FY itself Company re-paid Rs.200 Cr from its free cash
flow. Management recently indicated that, their first priority will be the
reduction of debt. As an indication of promoters increasing confidence in their
company ,they recently hiked their stake through open market purchases. Even one
of the most conservative investor in Indian Market - Life Insurance Corporation
of India- declared their faith in the company by acquiring a 2 % stake
in the latest September quarter.
I believe ,this is a great
Indian MNC ( now ) available at an attractive valuation at a time many positives are
started to kick in.With robust cash flow and well experienced promoters ,company
can manage the debt and move to new heights.Recommending to accumulate the
stock . CMP Rs.87
Link to latest Annual Report HERE
Disc: I have vested interest in C&K
Link to latest Annual Report HERE
Disc: I have vested interest in C&K
Dear sir,
ReplyDeleteYour views about wockhardt results & the concall?
Frankly speaking it was slightly above my expectation .During the concall , many questions raised about regulatory actions and management clarified it is not practical to give a time frame to resolve everything because the final verdict should come from inspecting authorities.All plants will be at CGMP standard in 6 months and they will apply for re-inspection thereafter .But we can't say exactly when USFDA will do it and certify them.I expect Utmost 1.5 year to clear everything .Full transcript of concall may available in company website by next week.
DeleteCox & Kings raised $ 65-mn through GDR issue and since then the GDR shares are being slowly dumped into the Indian market. From a level of 44 lakhs shares in 2010 there is still an overhang of 14 lakhs shares. Till the time those are fully absorved, I don't think Cox & Kings's share price would rise beyond a trading range. I would even say that it may fall further to 50-60 levels. While appreciating your efforts, may I ask you if you considerd these GDR shares a thought while recommending ?
ReplyDeleteI don't think they will sell it at any rate. Not sold anything in past three months.On the other side ,domestic institutions are hiking their stake for the past one year.
DeleteHello Mr.VP, Panacea biotec is looking for an extra ordinary meeting on Nov 22 to consider the company to be declared as sick company as its net worth has eroded as per the SICA.... Where is this company heading now..just now they got the WHO pre approval etc..... will it impact the share price now? this news is looking a bit scary....
ReplyDeleteplease comments....
regards
This is part of procedure when networth falls below certain level.I hope , resumption of WHO related business within few quarters will help the company to increase its networth and come out of the Preview of SICA ,few quarters down the line.
DeleteDear VP sir what is your complete view on
ReplyDeleteINSECTICIDES (INDIA) LTD , I would like to add on my portfolio
Not strictly tracking this stock.Bottom line growth seems muted for this company for the past many years.
DeleteHi,
ReplyDeleteWhat is your view on Kale Consultancy after results? Should one accumulate at this time or Hold?
Rgds
Girish
Stock recommended around Rs.120 which is now trading above Rs.550 .Not recommending a BUY at CMP
DeleteSir,
ReplyDeleteYour post and recommendation of 2 stocks in the oil exploration sector was very enlightening. Deep inds is another stock in this field .It is available at a mouth watering cmp of Rs.28. What is your take?
Skeptical about the management.
DeleteDear V P
ReplyDeleteYour view about Granules
No change in previous views on Granules.
Deletesir your view on ajanta pharma,suven life
ReplyDeletethank you
Not tracking both
DeleteDear VP ji,
ReplyDeletePlease share your thoughts on Gujarat Pipavav if you are tracking it.
Regards,
Vishesh
Not tracking Pipavav
DeleteWhats your view on epc sep result
ReplyDeleteHold the stock for long term,if you have patience.
DeleteDear VP,
ReplyDeleteAcrysil's results were not that great. What are your views on the same?
Still I expect better performance going forward
DeleteShould I keep holding Cummins India or exit?
ReplyDelete~ Lopa, WB
Good one for long term
DeleteDear sir,
ReplyDeleteKindly comment about your views on the stunning results produced by your earlier pick Astra microwave.
Dear sir,
ReplyDeleteyour esteemed views on Granules india results & Astra Microwave Results, & wishing you a happy Diwali.
Granules closing Singapore unit, results still not reflecting expansion, do you still see a silver line to black cloud?
ReplyDeleteRgds
Girish
What Singapore Unit brother ? ,there is no unit there ,it is only a subsidiary floated there and no operations so far.
DeleteDear Value Pick , What is your comment on Engineers India LTD
ReplyDelete