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Thursday, November 25, 2010

Thomas Cook (India) LTD ; BUY ON EVERY DECLINE - TARGET Rs.76.00

Scrip Code: 500413 / THOMASCOOK .
CMP: Rs. 60.45; Buy at Rs.55 - 60 levels .
Target: Rs. 66.00 within next 3-6 weeks ; Long term - Rs.76.00.
Market Cap: Rs. 1279.59 cr.
52 Week High / Low: Rs. 78.65 / Rs. 55.65.
Total Shares: 211677560 shares; Promoters : 163471449 shares – 77.22 % .
Total Public holding : 48206111 shares – 22.77 %.
Book Value: Rs. 11.90; Face Value : Rs. 1.00; EPS : Rs. 1.89.
Div : 37.50 %;P/E : 31.98 times; Ind P/E : 59.60; EV/EBITDA: 23.31 . Total Debt : Rs. 167.65 cr; Enterprise Value: Rs. 70.57 per share.
Total Assets : Rs. 440.11 cr.

Thomas Cook India (TCIL) is India’s largest travel and financial services company. The Company launched its Indian operation in 1881 & incorporated in 1978. Currently, it has presence in 55 cities spreading across 200 locations. On pan India level, the company has office located at Mumbai, Pune, New Delhi, Gurgaon, Chandigarh, Agra, Ahmedabad, Bangalore, Baroda, Bhubhaneshwar, Chennai, Cochin, Goa, Hyderabad, Jaipur, Jalandhar, Kolkata, Trivandrum and Vishakapatnam. With over 125 years of presence in India TCIL is focused on providing a broad spectrum of travel-related services that include foreign exchange, corporate travel, leisure travel, and insurance. The company’s overseas subsidiaries offices are located at Sri Lanka, Mauritius, Germany, France, Spain, Canada, UK, USA, Australia, Japan, Korea and China. The company has employee strength of 3000 people.

Business Division
Travel- The company provides different traveling destinations for domestic inbound/ outbound holidays. The company operates over 40 Group Inclusive Tours (GIT) spread across 5 continents.
Corporate Travel Management- The Company provides travel solutions and travel budgets of several large national and multinational companies
Foreign Exchange- The company is leading foreign exchange provider offering wide range of product and services.
Travel Insurance- Being the only travel company that has license to sell insurance co-brand travel insurance products with TATA AIG General Insurance Company.

Business Outlook
The company has entered into tie up with with cruise line operator Indian Ocean Cruises of London based Foresight Smart Ventures in order to market heritage cruise Ms Ocean Odyssey in India and Mauritius.
The company has announced the Gold Circle Programme (GCP), which is in place of nearly 3 years now and the idea behind this is to build franchise programme. The company have taken this upto 42 franchises over this period with the purpose to cover all markets within city or outside the city. The new GCP that has been appointed in Bangalore is primarily done to supplement companies coverage within the city. This is the policy that the company has followed for three years.
The company targets to settup in 120 cities, over the next two years. Which is at present 72 and hopes to achieve 100 in the year 2011 and to 120 by 2012. Essentially they are using foreign exchange business to drive the growth and the leisure business follows. So today they operate in 72 cities, the leisure operates in 42 cities which are targeted to grow by another 10 cities while growing GCP infrastructure by a larger number by during the same period.

Friday, November 19, 2010


Price Band- Rs.340 - Rs.375, Face Value- Rs. 10 , 5 % Disc to Retailers
Issue opens on- 26th NOV 2010;
Issue closes on- 1st DEC 2010,
QIB Book- 1,64,64,000 shares (50 % of Net issue)
Retail Book -  1,15,24,800 shares (35 % of Net issue)
Non-Institutional Bidders - 4939200 shares (15 % Net issue)
Employee Reservation- 6,72,000 shares (2 % of Total issue)
Net Public Offer - 3,29,28,000 shares (98 % of Total issue)
Total No. of Shares offered- 3,36,00,000  shares or 20 % of Paid up capital
Equity Shares outstanding after the Issue- 16,80,00,000 Sh
Equity Shares outstanding prior Issue- 16,80,00,000 Sh
Total Size of the Issue- Rs.1142.4 Crs - Rs.1260 cr. 

Standalone Result as on – 31st March 2010
Total Income - Rs. 1,087.853 cr
Net Sales - Rs. 969.395 cr
Net Profit Before Tax - Rs. 706.793 cr
Net Profit After Tax – Rs. 465.62 cr
Share Capital – Rs. 168 cr
Reserves & Surplus – Rs. 1508.716 cr
Earning Per Share – Rs. 27.72/sh.
Book Value – Rs. 99.80/sh.
Cash on Books - Rs.1700.14 cr , Rs. 100/sh.

MOIL, India’s biggest & 5th largest in the world in manganese ore production & a public sector company setup in 1896, having its mines in MP& Maharashtra with an combined capacity of 1.093 million tonnes of manganese ore which constitutes 50% of total requirement of the country . The company operates at 60 % plus margins. MOIL is a profit making company for last 15 years and a Debt - Free Company with a cash reserve of Rs.1700 cr is coming with an IPO of about Rs. 1500 cr or 20 % of dilution (may offer 3.38 cr shares). Through this IPO the Central government will divest 10 % of its stake in the company, while Madhya Pradesh & Maharashtra government will divest 5 % each. The entire amount from the IPO will go to central & state governments. Central government holds 81.5 % in MOIL, whereas state government of Maharashtra holds 9.62 % & State government of Madhya Pradesh holds 8.8 % in MOIL.
The company plans to invest Rs.770 cr to expand its production capacity from current 10,93,363 tonnes to 1.475 million tonnes in next 5 years which is a 35 % of increase in its production capacity. MOIL has set up a Ferro Manganese Plant of 10,000 tonnes per year capacity & Electrolytic Manganese Dioxide (EMD) with an annual capacity of 1,000 tonnes per year
MOIL wants to acquire mines in Turkey, South Africa & Gabon. Company operates 10 mines - 6 in Maharashtra & 4 in MP. In recent years, the requirement of manganese has increased due to raise in Steel production; this has lead to greater demand for ore.
The company has a joint venture worth Rs.600 cr with SAIL & Rashtriya Ispat Nigam Ltd for setting up steel plant which is to be commissioned by June – July 2011. These two companies would be undertaking production of steel & MOIL will supply manganese ore. The Debt – Equity ratio in this JV is 1:1.
MOIL has been allotted 814 hectares of land for mining manganese ore in & around Nagpur. Most of these mines are underground (they have reached at 309 meters in depth) and are more than 100 years old; the company has all the required clearances from the Union Environment Ministry for both the states.
Net Asset Value - Rs.99.8 (31 March 2010) ; Rs.110.71 (30 June 2010).
Net Worth - Rs. 1676.716 Cr (31 March 2010) ; Rs.1859.963 Cr (30 June 2010)
EV/EBITDA - 6.283 (31 March 2010) reasonably valued.
EV/EBITDA - NMDC - 18.05

Monday, November 15, 2010


On November 3, 2010. Federal Reserve chairman Ben S Bernanke decided to have a second round of Quantitative Easing (QE2). He decided to pump in $600 billion into the US economy by buying an additional Treasury Bond through June in order to reduce unemployment & avoid deflation by printing money. And printing more & more money would be more “Debasement of your Currency”. This will lead to surging commodity prices & asset bubbles not only in the US but also in Emerging Markets. The US Fed reserve calls it liquidity into the financial system by merely printing more & more dollars, which are not backed by real assets such as Gold. Technically, there is no limit to this printing, i.e. No supply restriction on paper currencies. This is what economists called “Debasement of Currency”.

Gold has a unique characteristic of a store of value which is not with paper currencies, which tend to lose value over a period of time due to inflation (loss of purchasing power) caused by an oversupply of printed money.

We will compare the Currency in Circulation issued and the underlying Gold held by concerned Central Banks in developed countries. Divide the Gold reserves (in tonnes) held by Central Banks with the currency in circulation (in billion $) of the respective countries will give us a ratio, a Gold to currency ratio.

In 1973, Gold held by the US central bank was 8,584 tonnes & the currency in circulation was $61 billion. Dividing the gold held by the currency in circulation, we get a ratio of 140.2 for that year. i.e. 140.2 tonnes of gold was held per $1 billion of currency in circulation. In the year 2007, the US central bank held 8,133 tonnes of Gold & the money in circulation was a whopping $759 billion. The ratio comes to 10.7 .i.e. only 10.7 tonnes of gold held per billion dollars in circulation.

If the US were to get back to the 1973 ratio of gold held per billion $ in circulation, it would have to increase its Gold Reserve to whopping 1,07,153 tonnes from the current 8,133 tonnes, an increase of more than 13 times in potential demand. With the financial crisis not over yet, Central Banks like FED would continue to inject more & more money into the financial system. Thus the debasement of currency will continue, making real assets like GOLD & SILVER more & more attractive as a hedge against reducing purchasing power & loss of faith & confidence in paper currencies.

We should thank GOD that the US does not have a printing press for Gold. The YELLOW metal may be the only Savior of our wealth over the longer term. That sure makes a case to buy GOLD. As far as our INDIA is a concern, India’s M3 supply in INM3MS=ECI as of July 16,2010 was Rs.57,821.41 billion from Rs.56,770.76 billion (June 18,2009) & Rs.4984.46 billion on July 3,2009. GOLD RESERVE AS ON SEPTEMBER 10, 2010 – 557.7 tonnes.

Read my previous post on GOLD - CLICK HERE -  MORE ON GOLD

Friday, November 5, 2010


HI Friends!! Many a times we have heard about the power of compounding, we have also learnt some of them too….but the things we learn from practical life can not be taught by textbooks…..Similarly I came across one investor who is about 60 yrs of age retired teacher who invested way back in 1980’s kept hold onto it and made….HOW MUCH….GUESS!!!!!!!! Lakhs…Millions…Crores….Just imagine…

He invested 30 years back by just investing Rs.1,000/- initially. He subscribed in 10 shares of this Company with a face value of Rs. 100/- in 1980…

• In 1981 company declared 1 : 1 bonus = he had 20 shares
• In 1985 company declared 1 : 1 bonus = he had 40 shares
• In 1986 company split the share to Rs. 10 = he had 400 shares
• In 1987 company declared 1 : 1 bonus = he had 800 shares
• In 1989 company declared 1 : 1 bonus = he had 1600 shares
• In 1992 company declared 1 : 1 bonus = he had 3200 shares
• In 1995 company declared 1 : 1 bonus = he had 6400 shares
• In 1997 company declared 1 : 2 bonus = he had 19,200 shares
• In 1999 company split the share to Rs. 2 = he had 96,000 shares
• In 2004 company declared 1 : 2 bonus = he had 2,88,000 shares
• In 2005 company declared 1 : 1 bonus = he had 5,76,000 shares
• In 2010 company declared 3:2bonus = he have 9,60,000 shares

At the in 2010 he has 9,60,000 shares of this company

Any guesses about the company?

His present valuation is about Rs. 41.86 Cr. & the company is ‘WIPRO’ - Western India Vegetable Products Ltd.

This is the power of compounding. Take a look below - 

What this simple but astonishing table shows is how if money is allowed to quietly compound, it attains enormous proportions. See how a sum of Rs. 1 lakh per annum over a period of 25 years at a rate of return of 25 % becomes an incredible Rs. 2.64 crores. Imagine if you could save 10 lakhs every year, in 25 years you would have 26 crores !!

Wipro managed to rope in many shareholders and helped them reap profits. The process started with just 17,000 shares that Wipro issued to the public at Rs. 100 each in 1947. In 1971, the company issued one bonus share for every three share held. In 1981, it was a one for one offer and this history of bonus shares kept on moving with time.

Other such examples ….....
CIPLA = Investment of Rs. 10,000/- in 1979 will fetch Rs. 95 cr.+
INFOSYS = Investment of Rs. 10,000/- in 1992 will fetch Rs. 1.5 cr.+
RANBAXY = Investment of Rs. 1,000/- in 1980 will fetch Rs. 1.9 cr.+
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