Cox & Kings stock is a good investment

Cox & Kings stock is a good investment

By Rajiv Kapoor | 26 March, 2016
The availability of attractive travel offerings throughout the year is gradually influencing Indian customers to make travel plans, domestic and international, even outside the busy summer holiday season. At a time when fledging companies spring up and fade away faster than you can say “start – up”, perhaps the richest inheritance a business can receive is a long and compelling history. In its 256 years of existence, travel phenomenon Cox & Kings (CKL) has thrived in the cut-throat travel industry on key competitive advantage. With a 30% market share among the organised players, Cox & Kings is today the largest travel provider in the country with operating margins of 20% compared to 12% of Thomas Cook or average 10% of the smaller players. The company’s acquisition of leading European education and leisure specialist travel company Holidaybreak (HBR) has incorporated good synergies in the form of a wider reach and expanded the product portfolio model and has a great mix of the markets such as India, Europe, Australia, New Zealand and the Middle East. Though the cost of spreading its international presence might have left the company struggling in the clutches of debt but these very global subsidiaries have also given it cross selling bargaining power in the domestic space. CKL has been restructuring by trying to reduce debt to manageable levels with a focus on maximising revenue and trimming costs. Cox & Kings has reported a consolidated net profit of Rs 106 crore for the third quarter ended December 2015 and revenue during the same period under review of Rs 510 crore. The shareholding pattern of CKL shows an increased stake of promoters in spite of a decreasing trend in FII’s holdings over the past few quarters. This clearly indicates the management’s confidence in the company. With the holiday season round the corner, CKL is poised to post excellent performance in the next few quarters. On the consumption side, one should clearly look at the travel and tourism space as stocks like CKL could be potential buy candidates among the mutual fund and foreign investor community.  The stock currently quoting at Rs 180 on the bourses could be accumulated for short-term perspective of around six months with a price target of Rs 235. The underlying trend of the Nifty has been sharply up on Wednesday last and the consolidation seen is expected to have a further impact on the stock market ahead. The Indian stock market will see a moderate opening of trading on Monday after a truncated week and the Nifty is expected to reach the upside levels of 7,800. With not much adverse news expected from the global markets in the next few days about the economy, all market men will be looking at the RBI for further direction on the interest rates. Investors can hold on to their positions in the short-term for a small upside and traders can look at banking related stocks like SBI and HDFC bank for trading.
 

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