Cox and Kings India IPO Analysis

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The Cox and Kings brand has evolved through over 250 years of history and today is one of the recognized holiday brands that cater to the overall travel needs of an Indian and International traveler. Cox and Kings (India) Limited has won several awards and recognition for its service. Their business can be broadly categorized as Leisure Travel, Corporate Travel, Forex and Visa Processing.

Company profile: Cox and Kings

The Cox and Kings brand has evolved through over 250 years of history and today is one of the recognized holiday brands that cater to the overall travel needs of an Indian and International traveler. Cox and Kings (India) Limited has won several awards and recognition for its service.

Their business can be broadly categorized as Leisure Travel, Corporate Travel, Forex and Visa Processing. Cox and Kings also provide value added services viz., customizing travel plans for our NRI customers, travel arrangements for Trade Fairs, providing private air charter services, etc. Besides, we offer travel related foreign exchange & payment solutions.

Cox And Kings have global presence with their operations in 19 countries besides India through their subsidiaries, branch offices and representative offices. They have subsidiaries in UK, Australia, New Zealand, Japan, US, UAE, Singapore and Hong Kong. They also operate from Moscow (Russia), Maldives and Tahiti through their branch offices and Spain, Sweden, Germany, Italy, France, Taiwan, South America and South Africa through their representative offices.

The company is a shareholder member of Radius Inc, which is a consortium of leading travel agents around the world. On the international map, Cox & Kings has its presence also through these 90 Radius members from more than 80 prominent countries across the globe with over 3,600 locations.

Strong Reason to Invest in Cox and Kings IPO

  • Cox and Kings Brand has evolved over a period of 250 years and is one of the oldest brands in the Travel & Tourism industry today.
  • They are led by an experienced management group that has worked and has been associated with the travel industry for many years and has the required skill, expertise and vision to continue to expand our business in new markets.
  • They have global presence with their operations in 19 countries besides India through our subsidiaries, branch offices and representative offices.

Reasons to Avoid Cox and Kings IPO

  • The company growth will depend on their ability to sustain their brand and failure to do so will have a negative impact on their ability to compete in this industry.
  • The company is operating in geographies / overseas markets and products / services which are new to them and some of their subsidiaries and joint venture have not yet commenced commercial operations.
  • The international nature of their business exposes them to several risks many of which are beyond their control

Risks Involved with IPO

  • The Company and their Associate Company are involved in a number of legal and regulatory proceedings that, if determined against the Company, could have a material adverse impact on their Company.
  • The Company had negative cash flows in recent fiscals.
  • Their 10 group companies have incurred losses and 6 group companies had negative Net Worth in the past.
  • The Travel and Tours Industry is cyclical and sensitive to changes in the economy and this could have a significant impact on our operations and financial results.
  • They have in the last 12 months, issued Equity Shares at a price that could be lower than the Issue Price.

Objective of the IPO:

As part of their growth strategy they want to increase their presence and reach in India and overseas by pursuing organic and inorganic growth with effective and efficient utilization of the resources available to them.

The Objects of the Fresh Issue are to provide funding for the following:

1. Repayment of Loans
2. Acquisitions & Other Strategic Initiatives
3. Investment in Overseas Subsidiaries
4. Investment in Corporate Office & Upgrading our existing Operations
5. General Corporate Purposes
6. Meeting Fresh Issue related Expenses

Some facts and figures:

Start Date: 18 Nov 2009
End Date: 20 Nov 2009
Issue Size: 15752160
Price Band (Rs.): 316.00 – 330.00
Market Lot: 20
Minimum Bid Qty: 20
Maximum Bid Qty: 15752160

IPO grading

This Issue has been graded by Credit Analysis & Research Limited (CARE Limited) as 4/5, indicating above average fundamentals.
Registrar to the Issue: KARVY COMPUTERSHARE PRIVATE LIMITED
Book Running Lead Manager/s: INDIA INFOLINE LIMITED

Should you invest?

Cox and Kings IPO which will open for subscription on the 18th November, 2009 has been in the travel sector for long and with history of evolution of over 250 years. They have their global presence in over 19 countries, their widespread presence can be a significant advantage for customers, close proximity to their customers means faster service delivery and more personalized attention. They have made few acquisitions in the recent past in our quest to spread their global reach. For the three months period ended June 30, 2009 and for the year ended March 31, 2009, 2008 and 2007 our total income as per our consolidated financials was Rs. 1159 million,Rs.2936 million, Rs.1883 million, and Rs.994 million respectively.

Our restated profits after tax for the same period as per our consolidated financials was Rs. 406 million, Rs.628 million, Rs.426 million and Rs. 297 million respectively. Given the higher risk of operating in geographies / overseas markets and products / services which is new to them, the issue price seems to be steep. The recent IPO’s has been a flop since the present open market price is lower than the issue price. But taking into consideration the experienced management team with a track record of project execution the issue is worth to invest for long-term.