CMP: Rs. 211.65; Market Cap:
Rs. 5,385.46 Cr; 52 Week High/Low: Rs. 220.50 / Rs. 82.05
Total Shares: 25,44,51,587 shares;
Promoters : 18,56,53,725 shares – 72.96 %; Total Public holding : 6,87,97,862 shares
– 27.04 %; Book Value: Rs. 20.19; Face Value:
Rs. 1.00; EPS: Rs. 3.58; Dividend: 37.50 %; P/E: 59.12 times; Ind. P/E: 62.30;
EV/EBITDA: 21.97.
Total Debt: Rs. 180.25; Enterprise Value: Rs. 5,417.82 Cr.
THOMAS COOK (INDIA) LIMITED: The Company was founded
in 1881 and was incorporated in 1978, based in Mumbai, India. Thomas Cook
(India) Limited is a former subsidiary of TCIM Limited, UK. Thomas Cook (India)
Limited provides foreign exchange services, and travel and travel related
services in India and internationally. The company came with an IPO in Dec 1982
offering 2,80,000 Shares of Rs. 10 each issued at par. The company’s foreign
exchange services include retail purchase of foreign currencies and travellers’
cheques; bulk purchase-sale of foreign currencies from-to authorized dealers,
money changers, and franchisees; release-remittance of foreign exchange; and
encashment of mail-telegraphic transfers, demand drafts, and other forex
instruments. The company’s foreign exchange services also consist of collection
of foreign currency instruments drawn on banks; provision of Indian rupee-foreign
currency advances against credit cards; and provision of travel related foreign
exchange and payment solutions. It offers foreign exchange and payment
solutions for leisure and business travellers, students going abroad for higher
studies, people travelling for employment, medical treatment, emigration, etc.
The company also offers travel related services comprising outbound, inbound,
corporate, and domestic travel services; and meetings, incentives, conferences,
and events. In addition, it provides travel insurance services, and visa and
passport services. Further, the company operates its online portal
thomascook.in that offers a range of travel and travel related solutions to its
customers; and provides post graduate diploma in management in international
business focusing on tourism. Thomas Cook’s Subsidiaries include: Travel
Corporation (India) Ltd, TC Visa Services (India) Ltd, Thomas Cook Insurance
Services (India) Ltd, Indian Horizon Travel & Tours Ltd, Thomas Cook Lanka
(Private) Ltd, Thomas Cook Tours Ltd, Thomas Cook (Mauritius) Holding Company
Ltd, Thomas Cook (Mauritius) Holidays Ltd, Thomas Cook (Mauritius) Travel Ltd,
Thomas Cook (Mauritius) Operation Co Ltd. Currently, it has presence over 245
locations including 23 airport counters in 100 cities across India, Mauritius
and Sri Lanka and is supported by strong partner network of 133 Gold Circle partners
and 165 preferred sales agents in over 150 cities across India. 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 over 3000 people. Thomas Cook India Ltd is locally compared with Cox &
Kings Ltd, International travel Ltd, Trade Wings Ltd, Sharyans Resources Ltd, Ace
Tours Worldwide Ltd and Globally compared with Star Travel Corporation of
Taiwan, Reliance Pacific Berhad of Malaysia, Eurasia Travel Company Ltd of
Japan, Phoenix Tours International Inc of Taiwan, Zhanqjiajie Tourism Co of
China, Xi’an Toursim Co. Ltd of China, Nikko Travel Co., Ltd of Japan,
Karambunai Corporation Berhad of Malaysia, E-2 Capital Holding Ltd of Hong
Kong, Travel Expert (Asia) Enterprises Ltd of Hong Kong, Sanbumi Holdings
Berhad of Malaysian, South China Holdings Ltd of Hong Kong.
Investment Rationale:
Outlook and Valuation:
Thomas Cook
India Ltd is one of India’s top three travel service providers and the
country’s largest non-banking foreign exchange dealer, with an Authorized
Dealer Category II license from the RBI. The forex and travel services
businesses complement each other by creating marketing and distribution
synergies as well as cross-selling opportunities and scale benefits. The company has a strong backing of the promoter group
the FairFax group promoted by Prem Wastsas and he has experience of over
25 years & has demonstrated a strong financial track record to achieve an
annual appreciation in Book Value per Share of 24.7 % annually. He is also
known as Warren Buffet of Canada. Tours & Travels industry is a major
contributor to the world’s major economy’s including India. In Asia Pacific
region specifically, the direct contribution of Travel and Tourism to the
region’s GDP in 2012 was USD 614 billion which is 2.7 % of GDP and is estimated
to be at USD 646 billion in 2014. India and China are expected to emerge as two
of the leading tourism markets in next 10 years. The industry is showing signs
of recovery following the last economic recession, which saw falling demand for
tourism activity as consumers postponed trips to concentrate their household
budgets & on more essential areas. As disposable incomes rise and a social
trend towards travelling and exploring new destinations grows, the global
tourism industry is attracting greater number of consumers who are eager to
travel and experience life in other countries or just optimize time off work to
unwind by taking holidays. Industry analysts believe that an increase in vacation
ownership will also depend upon the prevailing economic climate. Membership
growth has been sluggish in past quarters due to the current financial climate,
as a person will only invest a few lakh rupees in time-share holidays and
vacation ownership if he has surplus cash. Indian economy is witnessing auto
sales falling and the property market not moving. These factors have an impact
on the resort business. Sterling Holiday was passing through trying times with
high debt till Bay Capital took it over in 2009. Since then, the company has
been making a return of sorts by refurbishing its resorts. It has increased
occupancy levels to 52 % from a lowest of 16 % a few years back. And with the
two rounds of equity infusion helped the company repay debt and renovate
existing properties. Post general election results, India has been a
talking point across the globe and this has helped India in huge surge in
foreign tourists coming to India both for business and leisure holidays. In
recent past India has been a laggard to attract foreign tourism when compared
to countries like Singapore or Thailand. Foreign tourism is likely to pick up
in India on all counts be its rich cultural heritage, exotic locations, medical
tourism or business related tourism. Government’s renewed focus on travel and tourism and
Swach Bharat Abhiyan is likely to boost Thomas Cook’s travel and travel related
financial services arm which contributed around 25.50 % of
consolidated revenue in FY’14. Though it is a high margin business but it
suffers from wide fluctuations on account of foreign exchange movements. Thomas Cook India Ltd’s
acquisition of IKYA Human Capital Solutions Limited is yielding rich dividends.
IKYA
has recently
signed an agreement to acquire Hofincons Infotech and Industrial Services Ltd.
which
is headquartered in Chennai. The company employs more than 6000 people
providing a full spectrum of asset management services under operation and
maintenance, technology and consulting and facility management. It had reported
Revenue of Rs. 131.30 crores and PAT of Rs. 8.23 crores in FY’13. Thomas Cook is
expected to deliver strong set of numbers in FY’15 & FY’16 across its
business verticals as it leverages on its strong synergies across businesses
given the fact that sentiments have turned positive and economy looks poised to
return back on growth path. It can be expected from the company to rationalize
and get rid of overlapping expenses while achieving better operating
efficiency. Thomas Cook is a quality play on the huge growth opportunity in the
Indian leisure industry along with an exposure to the fast growing HR and
office management business. With an expectation of a 30 % plus growth over the
next three to four years and free cash flows exceeding Rs. 1,000 crore
cumulatively in the next three years, chances of Thomas Cook India getting re-rated. Any value unlocking in the Quess Corp would also
act as a key trigger for Thomas Cook India Ltd’s stock price. This leaves scope for a 40 %
upside in the next 9-12 months from the current levels factoring on fully
diluted equity capital of Rs. 36.45 crore. It is expected that the company’s surplus scenario is likely to continue for the next three years & will keep its growth story intact for the coming quarters also.
| KEY FINANCIALS | FY14 | FY15E | FY16E | FY17E |
|---|---|---|---|---|
| SALES (₹ Crs) | 1,702.40 | 3,130.80 | 3,558.30 | 4,387.00 |
| NET PROFIT (₹ Cr) | 65.03 | 166.70 | 229.50 | 368.90 |
| EPS (₹) | 2.66 | 5.60 | 5.00 | 8.10 |
| PE (x) | 45.12 | 27.80 | 38.50 | 24.00 |
| P/BV (x) | 6.40 | 3.40 | 4.40 | 3.70 |
| EV/EBITDA (x) | 27.90 | 17.00 | 15.10 | 9.90 |
| ROE (%) | 12.20 | 13.30 | 16.30 | 22.60 |
| ROCE (%) | 18.70 | 19.80 | 22.10 | 29.20 |
*As the author of this blog I disclose that I do not hold THOMAS COOK (I) ltd in my investment portfolio.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Disclaimer:
Disclaimer:
This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
*Dear Reader friend, if you enjoyed this article, please do share it with your Friends and Colleagues through Facebook and Twitter, and drop in your valuable thoughts in comment box..
READ HERE TO KNOW MORE ON LONG TERM INVESTING - CLICK HERE
VIEW THE POWER POINT PRESENTATION ON
