Thomas Cook (India) Ltd. share price target

Integrated Model Driving Sustainable Growth

Travel is the core segment of the company contributing ~90% of the revenues and 60% of the EBIT (Refer Exhibit 4). Thomas Cook operates across geographies in the leisure outbound, leisure inbound, DMS, domestic and corporate travel. Domestic travel is fragmented industry and has been growing at 20-25% every year (this momentum is expected to continue); the company operates in the domestic travel industry under two brands SOTC and Thomas Cook (acquired rights for using the brand in India, Sri Lanka and Mauritius). It also operates outbound business in Hong Kong...

Event - Restructuring of business to simplify holding structure: The Board of Thomas Cook India (TCIL) has approved corporate restructuring exercise where travel and related businesses, such as leisure travel services, foreign exchange, destination management services (SOTC) and vacation ownership business (Sterling Holidays) will be part of TCIL...

Thomas Cooks (TCIL) board has approved the proposal of a corporate restructuring exercise that would enable the company to focus on Travelrelated businesses and give its shareholders direct exposure to Quess. The contours as well as the timeline of the deal are yet to be disclosed.

Q3 sales grew 51% YoY to Rs 30 bn. Overall EBIT margin improved 130 bps YoY to 2.9% on better margin in travel (+260 bps YoY), HR (+30 bps YoY), and VO (swing from loss to profit). Forex continues to disappoint; sales declined 11% YoY

Thomas Cook India is not an investment, it is strategic. We invested in Thomas Cook with a view that its future cash flow can be used to purchase further investments in India. Thomas Cook will look for companies run by great management teams that are good clean businesses, run for the long term.