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Cox & Kings, worth the Invesment?

This article was posted on Dec 13, 2009 and is filed under Stock Views

Cox & Kings one of the newly listed stock in NSE (COX&KINGS) and BSE (533144) made is debut on Firday, 11th Dec’09. The Stock on the listing date touched an high of 433, after opening at 304.10. The stock zoomed 30% on its first day closing 95rs higher in NSE.

Cox and Kings is one of the oldest traveling and Largest company in India. It presence in 19 countries and provides international and domestic travel related services through its Indian offices, global subsidiaries based in UK, Japan, UAE and Singapore among others as well as representative offices.

Cox and Kings had priced its initial public offering (IPO) at the top end of the Rs 316 to Rs 330 price band. The IPO, which remained open between 18 and 20 November, was subscribed 6.31 times. The QIB portion was subscribed 9.93 times. The portion reserved for non-institutional investors (HNI) was subscribed by 10.74 times and the retail individual investors’ share was fully subscribed.

Performance & Operations

Its India operations are headquartered in Mumbai and has the status of a limited company. It has over 12 fully owned offices in India across key cities such as New Delhi, Chennai, Bangalore, Kolkata, Ahmedabad, Kochi, Hyderabad, Pune, Goa, Nagpur and Jaipur .

Cox & Kings operates both group and tailor-made tours around the world. It generates revenues from three product lines namely, leisure travel, corporate travel and forex. Within the travel business, it operates in three segments namely inbound, outbound and domestic of which, outbound travel contributed around three-fifth of total revenues earned in leisure travel. Leisure travel alone contributed 90 per cent of total consolidated revenues in 2008-09.

Cox & Kings is a fundamentally strong company, it manged to post good results last years as well as in June 09 quarter.

Notably, it managed to post robust revenues last year (2008-09) as well as in the June 2009 quarter with operating profit margins in excess of 40 per cent, despite a relatively weak environment. However, in order to fund its growing operations, the company has resorted to higher borrowings, which resulted in a three-fold year-on-year rise in interest costs to Rs 20 crore in 2008-09. Thus, net profit margins were down 300 basis points to 22 per cent in 2008-09. Since the company plans to repay about Rs 130 crore of its total debt of Rs 432 crore (as of June 2009) which are due for repayment to banks and financial institutions, expect the interest costs to subside going ahead.

According to the Ministry of Tourism, the inflow of foreign travelers has dropped 7 per cent to 4.02 million in the first ten months of 2009 compared to same period last year. This situation seems to be changing, and over the past few months it has shown a considerable increase.

Cox & Kings seems a good bet for Long term, but at current price is seems costly. It would be better to wait for a dip and then make a investment in it.

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