Cox & Kings (Q3 FY13)

India Infoline News Service | Mumbai |

Consolidated revenues increased ~26% yoy while EBIDTA margin improved 544bps to 13.4% which drove >2x jump in operating profit to Rs479mn

CMP Rs129, Target Rs170, Upside 31.8%

  • C&K posted strong growth in its India business with standalone revenues up 42% yoy as domestic market continued its robust momentum; standalone EBIDTA too jumped 67% yoy led by ~670bps rise in margin to 44.2%

  • Consolidated revenues increased ~26% yoy while EBIDTA margin improved 544bps to 13.4% which drove >2x jump in operating profit to Rs479mn; Q3 is a lean quarter for HBR but aided by Rs530mn in FX gain (offset by Rs157m in redundancy costs in Camping business), C&K posted a nominal profit vs loss last year despite FX gain of Rs583mn in Q3 FY12  

  • In segment wise revenues, Leisure (77% of Q3 consol revenues) revs/EBIDTA up 33%/28% yoy while Education revs were up 7% yoy and EBIDTA loss widened 75% yoy to Rs70mn; however Camping division managed to reduce operating loss to Rs260mn in a seasonally lean quarter  

  • Q3 saw C&K stake in Prometheon Holding (UK-based subsidiary owning HBR) diluted due to equity infusion by PE fund CVC to the tune of US$138mn which was used to retire debt of Rs6.5bn; current consol gross debt stands at Rs40.5bn with C&CE at Rs10bn

  • In its post earnings call, C&K management retained its optimism on domestic market and expects synergy benefits with HBR to add Rs150-200mn in FY14. Its 9-mth free CF amounted to US$30mn and expects to close FY13 with free CF in the region of US$50mn which would be used for debt reduction. Introduce FY15 estimates and retain BUY for revised 9-mth target of Rs170 (earlier Rs185).  

Results table (consolidated)
(Rs m) Q3 FY13 Q3 FY12 % yoy 9m FY13 % yoy
Net sales 3,572 2,846 25.5 15,781 173.5
Staff costs (1,685) (1,393) 20.9 (5,412) 141.4
Advt expenses (383) (512) (25.2) (989) 24.8
Other expenses (1,025) (714) 43.6 (2,632) 107.7
Operating profit 479 227 111.0 6,748 359.2
OPM (%) 13.4 8.0 544 bps 42.8 1,730 bps
Depreciation (277) (233) 19.0 (1,301) 276.3
Interest (851) (683) 24.6 (2,633) 166.8
Other income 298 64 365.6 241 12.0
PBT (352) (625) (43.8) 3,055 768.6
Tax (81) (80) 1.8 (1,538) 256.7
Minority interest & Associate share 93 46 99.9 351 723.3
Adjusted PAT (340) (659) (48.4) 1,868 -
Exceptional items 373 583 (35.9) 1,110 80.9
Reported PAT 33 (76) - 2,978 416.2
Source: Company, India Infoline Research

Leisure revenues grew 33% yoy led by strong India performance
Revenues (Rs mn) Q3 FY13 Q3 FY12 % yoy
Leisure 2,750 2,060 33
Education 780 730 7
Camping - -  
Others 40 60 (33)
Total 3,570 2,850 25
       
EBIDTA (Rs mn) Q3 FY13 Q3 FY12 % yoy
Leisure 830 650 28
Education (70) (40) 75
Camping (260) (360) (28)
Others (30) (20) 50
Total 470 230 104
Source: Company, India Infoline Research

Financial summary
Y/e 31 March  (Rs m) FY12 FY13E FY14E FY15E
Revenues 8,379 18,911 20,638 22,706
yoy growth (%) 68.7 125.7 9.1 10.0
 

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