Cox & Kings (Q4 FY13)

India Infoline News Service | Mumbai |

C&K reported 11.6% decline in Q4 consol revenues due to decline in education segment of HBR and flat international leisure sales yoy

CMP Rs120, Target Rs145, Upside 20.8%

  • C&K reported 11.6% decline in Q4 consol revenues due to decline in education segment of HBR and flat international leisure sales yoy

  • Lower other expenses (due to reclassification of other expenses in Education as COGS), +ve education EBIDTA and lower operating loss in Camping division drive 134% yoy surge in consolidated EBIDTA

  • India leisure revenues grew 5% yoy due to flattish inbound season; however FY13 leisure business grew a robust 26% yoy with strong growth in MICE business; India EBIDTA declined ~10% yoy to Rs389mn due to all round rise in cost base; full year EBIDTA growth of 29% was slightly ahead of revenues

  • International leisure revenues declined marginally by 1% yoy with flattish trends yoy in Australia and Europe though EBIDTA surprised positively with 15% rise yoy

  • Q4 is traditionally off season for education & camping businesses of HBR but notably education EBIDTA was +ve Rs40mn vs EBIDTA loss of Rs90mn in Q4 FY12 which the company attributed to cost control measures; Camping FY13 revenues (-7% yoy) impacted by London Olympics; for FY14, education is 76% booked while camping bookings are 6% ahead of last year with c90% bookings completed. Meininger update: new capacity of 720 beds in Brussels opened on May 1st taking total capacity to ~7,300 beds across 16 hotels

  • Reported loss includes ~Rs1.6bn on non cash expense (due to conversion of global nos in to Indian figures) and one time cost of Rs400mn (residing in Q4 interest expense)

  • Company had net debt of Rs36.1bn (down Rs2bn yoy) or 5x FY13 EBIDTA; FY14 guidance: capex at Rs2bn & Rs10bn in operating cash flow driven by reduction of India business working capital due to shortened (1 week) BSP cycle from July 1st by airlines and increased usage of corporate travel cards 

  • C&K management reiterated its confidence on growth potential of India outbound and domestic market; however, elevated gross debt level leads us to cut our FY15 target EV/EBIDTA multiple but we retain BUY for revised 9-mth target of Rs145 (earlier Rs170).  

Results table (consolidated)
(Rs m) Q4 FY13 Q4 FY12 % yoy FY13 % yoy
Net sales 2,306 2,608 (11.6) 18,087 115.9
Staff costs (1,546) (1,610) (4.0) (6,958) 80.6
Advt expenses (262) (195) 34.5 (1,251) 26.7
Other expenses (22) (600) (96.3) (2,654) 42.1
Operating profit 476 204 134.1 7,225 331.8
OPM (%) 20.7 7.8 1,285 bps 39.9 1,998 bps
Depreciation (172) (145) 18.5 (1,474) 200.0
Interest (1,073) (856) 25.3 (3,705) 101.1
Other income 347 141 146.7 588 65.3
PBT (421) (657) (35.9) 2,634 -
Tax 1,017 14 - (521) 24.7
Minority interest & Associate share 608 104 487.5 959 556.2
Adjusted PAT 1,204 (540) - 3,072 -
Adj. PAT margin (%) 52.2 - - 17.0 -
Exceptional items (1,698) 379 - (588) -
Reported PAT (493) (161) 206.3 2,484 497.2
Source: Company, India Infoline Research
 
Segment wise highlights
Revenues (Rs mn) Q4 FY13 Q4 FY12 % yoy
Leisure 2,130 2,100 1
Education 90 450 (80)
Camping 20 -  
Others 70 60 17
Total 2,310 2,610 (11)
       
EBIDTA (Rs mn) Q4 FY13 Q4 FY12 % yoy
Leisure 730 740 (1)
Education 40 (90)  
Camping (220) (360) (39)
Others (70) (90) (22)
Total 480 200 140
Source: Company, India Infoline Research
 
Financial summary
Y/e 31 March  (Rs m) FY12 FY13 FY14E
 

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