Cox & Kings’ results are not directly comparable with our estimates due to adoption of new accounting standard IND-AS. During the quarter, the company reported gross sales (including cost of tours) of | 2,062.5 crore. Excluding cost of tours, net sales increased 2.5% YoY to | 699.2 crore (below I-direct estimate of | 749.7 crore) • Growth remained lower mainly due to muted growth in international operations. On the other hand, India-leisure growth remained healthy, growing 14.6% YoY to | 220 crore • The EBITDA margin declined 320 bps YoY to 44.8% (below I-direct estimate of 48.4%) led by an increase in other expenses (up 26.2% YoY due to forex loss of | 38.0 crore).

Valuation: They expect the company’s domestic leisure segment to remain healthy due to an improving macroeconomic outlook. However, high exposure to the European market (through Holiday Break), we expect overall revenue growth to remain muted. Further, elevated debt levels and higher cost will keep margins under check. Accordingly, maintain HOLD rating on the stock with a revised target price of | 200/share (i.e. valuing at 8x FY18E EPS). Any major debt reduction remains a key trigger from a longer term perspective.