Cox and Kings up 5% on strong Q1 operation performance

Cox and Kings has surged 5% to Rs 279 after reporting 27% year on year (yoy) jump in consolidated operating profit at Rs 351 crore for the quarter ended June 30, 2014 (Q1).

Tours and travel firm had operating profit of Rs 277 crore in the same quarter last fiscal. EBITDA or operating margins improved to 47.6% from 47.3%.

Consolidated net sales of the company rose to Rs 739 crore for the quarter under consideration as against Rs 586 crore for the same period year ago.

The consolidated net profit however, declined 5% at Rs 128 crore for the quarter against Rs 135 crore in the corresponding period of the previous fiscal.

Cox enjoys 30% market share in outbound travel market with 20-22% gross margins which is best in the industry.

Niket Shah and Sagar Shah, analysts at Motilal Oswal Securities recommended the stock with a ‘buy’ rating and target price of Rs 360.

With the recent sale of camping business, we believe Cox and Kings is on the path of de-leveraging its balance sheet with the net debt/equity expected to reduce from 2.4x in FY14 to 1x in FY17E, says analysts in a report.

We believe that Cox and Kings has a balanced portfolio now both in India and International business across categories, which is synergetic to post around 30% net profit CAGR over FY15E-17E, added report.

The stock opened at Rs 270 and touched a fresh 52-week high of Rs 284 on National Stock Exchange (NSE). The counter has seen nearly five-fold jump in trading volumes, with a combined 961,732 shares changed hands so far on NSE and BSE.