Thomas Cook jumps after Crisil keeps credit rating unchanged

Thomas Cook (India) rose 3.21% to Rs 144.85 on bargain hunting after Crisil kept credit rating of Thomas Cook India unchanged.

Shares of Thomas Cook (India) fell 10.31% in the past four trading sessions to settle at Rs 140.35 yesterday, 26 September 2019, from its close of Rs 156.50 on 20 September 2019.

Credit rating agency, CRISIL has confirmed that Thomas Cook (India) has no linkage with bankruptcy of Thomas Cook PLC in United Kingdom. Furthermore, CRISIL has reaffirmed the rating on debt programmes and bank facilities of Thomas Cook (India) at CRISIL AA with a stable outlook and CRISIL A1+ rating on the short-term bank facilities and short-term debt of the company. The announcement was made after market hours yesterday, 26 September 2019.

On 23 September 2019, winding up orders were made against UK's Thomas Cook Group PLC and associated companies. The court appointed the Official Receiver liquidator of the Thomas Cook companies in liquidation. All Thomas Cook UK's bookings, including flights and holidays, were cancelled. All of Thomas Cook UK's retail shops closed with immediate effect.

Following the news, Thomas Cook (India) clarified to the bourses that it is a completely separate entity from Thomas Cook UK post acquisition in 2012 by Canada based Fairfax Financial Holdings. The media updates on Thomas Cook UK have no correlation and hence no impact on Thomas Cook India. Thomas Cook (India) was acquired by Fairfax Financial Holdings via a 77% stake in 2012. Since then, Thomas Cook UK has no stake in Thomas Cook (India).

As on 30 June 2019, Fairbridge Capital (Mauritius) held 66.91% in Thomas Cook (India). Fairbridge Capital (Mauritius) is a wholly-owned subsidiary of Fairfax Financial Holdings.

Thomas Cook (India) said its cash and bank deposits balances stand at Rs 1,389 crore as of 30 June 2019. On a standalone basis Thomas Cook India is debt free upon pre-payment of Rs 67 crore debenture obligations ahead of schedule. It generates an average annual free cash flow of around Rs 250 crore.

Separately, media reports suggested that, the Ministry of Corporate Affairs (MCA) is probing Thomas Cook (India) in relation to a 'suspicious' money transaction with a Delhi-based forex trader, Aarush Forex. The ministry's Western Regional Director has commenced inspection of the world's oldest travel firm, reports added.

The company, however, clarified to the bourses on 23 September 2019 that the media reports were factually incorrect. The company said that it has not received intimation from the Ministry of Corporate Affairs and have no existing relationship with Aarush Forex.

Meanwhile, the S&P BSE Sensex was up 7 points or 0.02% to 38,996.66. The market surged recently after the Finance Minister Nirmala Sitharaman on Friday, 20 September 2019, slashed corporate tax rate to 22% without exemptions. The effective corporate tax rate after surcharge now stands at 25.17%. The step has significant positive implications for corporates' profitability, broader economy and market valuations.

As on 31 March 2019, Thomas Cook (India) paid corporate tax of 33.05%.

On the BSE, 15,661 shares were traded in the Thomas Cook counter so far compared with average daily volumes of 57,505 shares in the past two weeks. The stock hit an intraday high of Rs 148 and an intraday low of Rs 139.50 so far during the day.

The stock hit a 52-week high of Rs 263.85 on 23 April 2019. The stock hit a 52-week low of Rs 121 on 23 August 2019.

On a consolidated basis, Thomas Cook's net profit fell 67.7% to Rs 22.79 crore on a 11.2% increase in the net sales to Rs 2,317.55 crore in Q1 June 2019 over Q1 June 2018.

Thomas Cook (India) is a leading integrated transnational travel and travel related services company offering a broad spectrum of services that include Foreign Exchange, Corporate Travel, MICE, Leisure Travel, Insurance, Visa and Passport services and E-Business.

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