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Overweight Cox & Kings on in-line Q2: Barclays

Published: November 20, 2014 2:51:14 AM

Cox & Kings reported in line EBITDA of Rs 450 crore and adjusted PAT of Rs 1700 crore.

Cox & Kings reported in line EBITDA of R450 crore and adjusted PAT of R1700 crore. The company has seen a strong season for its operations in the UK along with a visible uptick in India travel.

With the sale of the camping operations being completed in September, we expect the balance sheet consolidation to gather steam.

Management continues to guide for a steady reduction in debt on the back of strong cash flows. We adjust our EPS for the impact of the camping sale along with the higher depreciation charges in H1 FY15 than we expected. Our EPS is lowered by 6% but EBITDA for FY16 is lowered by only 2%. We raise our 12-month price target by 7% to R360 and reiterate our overweight rating.

Key conference call takeaways are management continues to guide for a 20%revenue uptick in India standalone operations as sentiment improves; overseas companies (PGL and Meininger) increased capacities and improved fills are expected to drive a 15% EBITDA growth in FY16 and FY17; management re-iterated its target of R500 crore in debt reductions p.a. in FY16 and FY17;  bookings for both PGL and NST remain robust with over 97% utilisation (season time) with 44% advance bookings for FY16 as well; and  the company has received permission from its board to raise R1,200 through QIPs.

By Barclays

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