Thomas Cook (India): Recovery on the way

22 Sep 2023 , 10:55 AM

• Thomas Cook (India) is one of the largest Travel and Ancillary service providers in India and the only listed company (post the closure of Cox and Kings (India).
• It has market leadership across the prepaid card business, MICE, India inbound and the outbound travel business. Over the years, the company has ventured into Ancillary businesses such as DEI and DMS.
• While TCIL was significantly affected during the pandemic, most businesses have returned to / surpassed the pre-pandemic levels. Outbound travel business remained affected due to visa issues and high airfares.
• Management of Sterling Holidays has also turned around the Leisure Hospitality and Resorts business. It has changed its business model from a room share / membership company to a resort model.
• While analysts of IIFL Capital Services find the valuations at 31x FY25 EPS reasonable, the near term growth is likely to be strong led by faster than expected recovery in the outbound travel business and continued margin improvements in Sterling Holidays.
• Once fully recovered post the pandemic, the company is expected to grow revenue at ~10-12% p.a., aided by industry tailwinds. Margins could rise on the back of operating leverage.