Value Pick - Cox & Kings Limited: AnandRathi Research

Cox & Kings Limited by AnandRathi Research, Buy with a target price of Rs 358.

Highlights

Diversified, Multinational Travel Conglomerate: Cox & Kings Ltd (C&K) is a premium brand established in 23 countries including India, U. K., USA, UAE, Australia and Japan among others. The company's business can be broadly categorized as Leisure India, Leisure International, Education and Meininger.

Organic growth has been complemented by corporate actions, both strategic as well as opportunistic

Focus to Serve the New-age Consumer: The new-age consumer is more intent on learning and growing through personal experience rather than purchasing goods for self-satisfaction. Within consumer services, travel and education will be the most sought-after avenues of personal investment.

Strengthening of Balance sheet through a slew of measures: The company has reduce net debt by Rs.1,815 crores in FY15. Indebtedness is now well under control, driven by (1) Qualified institutional placement of equity shares worth gross Rs. 1,000 Crores in November 2014, (2) Sale proceeds from the sale of Camping business (gross consideration GBP 89.2 million), (3) Warrant application money from promoters to the extent of Rs.56 Crores, (4) Reduction in value of foreign currency debt in rupee terms (Rs. 161 Crores) due to appreciation of rupee.

Recently, the company hived off its UK adventure holiday unit Explore World Wide to Hotelplan for Euro 25.8m to rebalance its leisure international portfolio. C&K also bought Late Rooms for 12m Euro to boost its online B2C business.

C&K is looking to add around 721 beds in current year which will be ready for operation in FY17 and 781 beds in FY17 to be ready for operation in FY18 in Education segment. Royal Gun Powder Mill is planning phase. The center of about 1000 bed will get ready in phase manner by 2019.

We expect future business growth to be driven mainly by Education and Meininger. Increasing shift towards B2C in the leisure segment would drive growth.

We believe C&K's top line will grow with CAGR 10% over the period FY16E & FY18E. At CMP the stock is trading at 10.2x FY16E EPS and 8.1x FY17E EPS. We have assigned PE of 12xs to the FY17E earnings, here by arriving at a target price of Rs.358.

Shares of Cox & Kings Limited was last trading in BSE at Rs.241.85 as compared to the previous close of Rs. 240.4. The total number of shares traded during the day was 34769 in over 882 trades.

The stock hit an intraday high of Rs. 246 and intraday low of 241.15. The net turnover during the day was Rs. 8456054.

Source : Equity Bulls

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