CRISIL upgrades rating of Thomas Cook India Ltd

CRISIL has upgraded its rating on the bank facilities of Thomas Cook (India) Limited (TCIL), India's leading omnichannel travel services company, at 'CRISIL AA- / Stable / CRISIL A1+'.

The upgrade of the long term to 'AA- / Stable' from 'CRISIL A+/ Stable' and short term rating to 'CRISIL A1+' from 'CRISIL A1' reflects the Thomas Cook India Group's strong scale up in revenue across businesses and expectations of sustained momentum driven by brisk revival in demand post pandemic induced disruptions.

The ratings are indicative of TCIL's strong business risk profile with leadership position in travel and foreign exchange segments and healthy presence in hospitality (Sterling Holiday Resorts) and digi-photo imaging (DEI) segments. The Company has also improved its financial risk profile following sharp revival in business activity. The upgraded ratings factor in the strong parental support from Fairfax Financial Holdings Ltd.

The Thomas Cook India Group witnessed significant scale-up of operations with material improvement in overall revenue - an increase of 164% to Rs. 50.91 Bn in fiscal 2023 from Rs 19.31 Bn. owing to strong resurgence in demand and robust recovery in all business segments. The revenue witnessed sustained momentum across segments in the first quarter of fiscal 2024 with an increase of 94% YoY to Rs.18.98 Bn. Driven by strong travel appetite, TCIL witnessed record growth with tripling of Operating Profits for Q1 FY24 to Rs 1.47 Bn (Operating EBITDA).

Structural reduction in costs have resulted in better margins and return on capital employed (ROCE). Operating margins having surpassed pre pandemic levels at 5.3% in fiscal 2023 (fiscal 2020: 3.2%), improved further to 6.5% during the first quarter of fiscal 2024 (first quarter of fiscal 2023:4.3%). This improvement was led by sharp cost reduction across segments, including right sizing of branch network and accelerated automation/digitisation. The margins are expected to sustain at similar levels over the medium term as the benefits from these structural cost saving measures will continue.

Mr. Madhavan Menon, Executive Chairman, Thomas Cook (India) Limited said, "CRISIL's upgraded ratings to 'AA- / Stable' is a strong endorsement of Thomas Cook India's leadership position across the sectors we operate in and our Balance Sheet strength.

Our rapid growth post pandemic, on the back of accelerated digital transformation and strong cost prudence has been pivotal in the delivery of record Operating Profits - for FY23; sustained for Q1 FY24.

Strong growth has been demonstrated across Forex, Travel Services, Hospitality and Digital Imaging and we see robust forwards for the upcoming festive season and ahead."

Shares of Thomas Cook (India) Limited was last trading in BSE at Rs. 119.55 as compared to the previous close of Rs. 120.00. The total number of shares traded during the day was 21437 in over 253 trades.

The stock hit an intraday high of Rs. 122.00 and intraday low of 118.05. The net turnover during the day was Rs. 2563082.00.

Source : Equity Bulls

Keywords

ThomasCookIndia INE332A01027 RatingUpgrade