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PRIME BROKING

March 30, 2011


THOMAS COOK INDIA (TC) CMP: Rs.55 HOLD
Q4CY10 Update
Update Target price: Rs59

Reuters code THOM.BO


.
CY10 CONSOLIDATED PERFORMANCE
Thomas Cook reported revenues of Rs. 3,104 mn for the year, up 17.4% YOY.
Bloomberg Code
BSE
TC.IN
500413
. EBITDA was at Rs 687 mn, up 9.3% YoY. Margins for the quarter were at
22.1% for the year as compared to 23.8% in the previous year.
Sensex 19,317 . Other income for the year was at Rs 295mn compared to Rs 94mn in CY09,
52week H/L (Rs) 78/43 up 213.1% YoY. The company sold property in Q3, thereby leading to a signifi-
cant jump in other income for the current year.
Monthly H/L (Rs)
MktCap (Rs mn)
58/43
11,830
.The company received Rs 100mn as compensation toward termination of
their non compete agreement for the LKP FOREX acquisition.
MktCap (US$ mn)
EV (Rs mn)
262
12,632
.PBT for the year witnessed a jump at Rs 736mn YoY, on account of the
exceptional item income, and is up 81.9% YoY.
Valuation Parameters (CY11) .PAT for the year stood at Rs 472mn for the year, up 88.5% YoY.
EV/EBITDA 13.4 Q4CY10 CONSOLIDATED PERFORMANCE
Quarter Highlights:
MktCap/EBITDA
EV/Sales
12.5
3.5
.Thomas Cook reported revenues of Rs. 667 mn in Q4CY10, down 25.7%
QoQ and 17.1% YoY.
Mkt Cap/Sales
Price Chart
3.3
. EBITDA was at Rs 53 mn down 80.3% QoQ, and 40.3% YoY. Margins for the
quarter were significantly low 7.9%, mainly due to increased operational ex-
penses.
. Other Income for the quarter was at Rs 42 mn from Rs 165mn in the
previous quarter, down 74.5% QoQ, and up 18.9% YoY.
. Depreciation was at Rs 36mn for the quarter, up 0.5% QoQ and 18.5% YoY,
where interest for the quarter did not change much from the previous quarter.
. PAT came in at Rs 15 mn, down 93.2% QoQ and 40.1% YoY.
VALUATION
Shareholding Pattern
Thomas Cook CY10 performance in the current year has improved as com-
pared to CY09. Growth in outbound business, FOREX, and corporate travel
has picked up. We expect the inbound business to pick up in the current
quarter. Further we expect the company’s e-commerce business to grow be-
tween 25-35% going forward. However the pace of overall growth is still not
optimal.
We have revised our estimates. We expect the company’s CY11E and CY12E
revenues to grow by 16% and 17% respectively. Our estimated CY11E and
CY12E EPS is Rs. 2.0 and Rs. 2.7 respectively. The company is currently trading
at P/E of 28x and 21x, and EV/EBITDA of 13.4x and 11.3x times its CY11E
Priyanka Patkar and CY12E numbers respectively. Our target price on the stock is Rs 59 at a
91-22-2498 1515 P/E multiple of 22x its CY12E earnings.
priyanka@primesec.com

THOMAS COOK (INDIA) LIMITED 1


PRIME BROKING

Fiscal Year CY09 (A) CY10(A) CY11 (E) CY12 (E)

Revenues (Rs. mn) 2,643 3,104 3,598 4,213


EBITDA (Rs. mn) 628 687 944 1,204
EBITDA (%) 23.8 22.1 26.3 28.6
PAT (Rs. mn) 250 472 421 571
Net Profit (%) 9.1 13.9 11.4 13.3
No. of Shares (mn) 211 212 212 212
EPS (Rs.) 1.2 2.2 2.0 2.7
P/E 23.4 28.1 20.7
EV/EBITDA 16.3 13.4 11.3

KEY RISKS
The key downside risks are:
1) Continued global economic crisis may impact travel related activity
2) Concerns about terrorism
3) Foreign exchange fluctuations
4) Upside potential exists on any possible delisting by parent company

THOMAS COOK (INDIA) LIMITED 2


PRIME BROKING

Annexure I: Consolidated Yearly Performance


Rs mn FY10 FY09 Var (%)
Sales 3,104 2,643 17.4
EBITDA 687 628 9.3
margin (%) 22.1 23.8
Depreciation 135 116 16.0
PBIT 847 606 39.7
Interest 211 201 4.7
Other income 295 94 213.1
EO 100 0
PBT 736 405 81.9
Tax 265 155 71.1
Effective Tax Rate 17.0 38.2
PAT 472 250 88.5
NPM (%) 15.2 9.5
Share in profit in associates/JV 0 0
Minority Interest and Other Related Items 0 0
Net Income attributable to the shareholders of TC 472 250
Source: Company, Prime Broking

Annexure II: Quarterly Consolidated Performance


Var (%)
Rs mn Q4CY10 Q3CY10 Q4CY09 QoQ YoY
Sales 667 898 570 -25.7 17.1
EBITDA 53 280 92 -80.3 -40.3
margin (%) 7.9 31.2 16.2
Depreciation 36 35 30 0.5 18.5
PBIT 60 410 98 -85.0 -36.9
Interest 59 57 43 2.8 37.3
Other income 42 165 35 -74.5 18.9
EO - - -
PBT 3 352 55 -99.3 -95.2
Tax -13 128 29 -109.8 -142.9
PAT 15 225 25 -93.2 -40.2
Share in profit in associates/JV 0 0 0
Minority Interest 0 0 0
Exceptional Items 0 23 0
Adjusted PAT 15 225 25 -93.2 -40.2
PAT % 2.1 21.1 4.2
Source: Company, Prime Broking

THOMAS COOK (INDIA) LIMITED 3


PRIME BROKING

Annexure III: Consolidated Profit & Loss Statement


Rs mn CY09 (A) CY10 (A) CY11 (E) CY12 (E)
Total Income (incl. Other Income) 2,738 3,399 3,685 4,293
Total Expenses 2,015 2,417 2,653 3,008
PBITDA 723 982 1,031 1,284
PBITDA Margin (%) 26.4 28.9 28.0 30.0
Depreciation 116 135 147 171
PBIT 606 847 885 1,120
PBIT Margin (%) 22.1 24.9 24.0 26.1
Interest 201 211 257 268
EO 0 100 0 0
PBT 405 736 628 852
PBT Margin (%) 14.8 21.7 17.0 19.8
Tax 155 265 207 281
PAT 250 472 421 571
Add: Income from investment from associates 0 0 0 0
Less: Minority Interest 0 0 0 0
Adjusted PAT 250 472 421 571
Net Profit Margin (%) 9.1 13.9 11.4 13.3
No. of shares 211 212 212 212
EPS 1.2 2.2 2.0 2.7
Source: Company, Prime Broking; (A) Audited; (E) Estimated

Annexure IV: Consolidated Balance Sheet Statement


Rs mn CY09 (A) CY10 (E) CY11 (E) CY12 (E)
Share Capital 217 217 217 217
Reserves & Surplus 2,803 3,202 3,623 4,194
Networth 3,020 3,420 3,840 4,411
Loan Funds 1,700 2,016 2,250 2,250
Deferred Tax Liabilities (net) 29 75 75 75
Total Liabilities 4,750 5,510 6,165 6,736
Net Fixed Assets 2,192 2,307 2,440 2,549
Investments 356 167 167 167
Cash and Bank Balances 1,501 1,827 1,449 531
Debtors 2,071 2,225 2,579 3,020
Loan, Advances & Other Current Assets 1,086 1,365 1,582 1,853
Current Liabilities 2,456 2,380 2,052 1,383
Net Current Assets 2,202 3,037 3,559 4,021
Total Assets 4,750 5,510 6,165 6,736
Source: Company, Prime Broking; (A) Audited; (E) Estimated

THOMAS COOK (INDIA) LIMITED 4


PRIME BROKING

Annexure V: Consolidated Cash Flow Statement


Rs mn CY09 (A) CY10 (E) CY11(E) CY12 (E)
Profit Before Tax 405 736 628 845
Depreciation 116 135 147 171
Interest 201 211 257 268
Other Items 16 0 0 0
Change in Working Capital 227 -419 -900 -1,380
Income Tax Paid -164 -265 -207 -279
Exceptional Items 0 -100 0 0
Cash Flow from Operations 802 298 -75 -370
Change in Net Fixed Assets -165 -250 -280 -280
Change in Investments -354 189 0 0
Interest Received 6 0 0 0
Cash Flow from Investing -513 -61 -280 -280
Change in Capital 620 17 0 0
Debt Raised -908 315 234 0
Interest Paid -216 -211 -257 -268
Dividend Paid -105 -79 0 0
Change in Deferred Tax Liability 0 46 0 0
Cash Flow from Financing -609 88 -22 -268
Change in Cash -321 326 -378 -918
Opening Cash & Bank Balance 1,819 1,501 1,827 1,449
Closing Cash & Bank Balance 1,498 1,827 1,449 531
Source: Company, Prime Broking; (A) Audited; (E) Estimated

Annexure VI: Key Financial Ratios


CY09 (A) CY10 (E) CY11 (E) CY12 (E)
Net Sales Growth -14.7% 17.4 15.9 17.1
EBITDA Growth -32.8% 9.3 37.5 27.5
EBIT Margin 19.4% 17.8 22.2 24.5
Net Profit Margin 9.1% 13.9 11.4 13.3
Debt to Equity Ratio 0.6 0.6 0.6 0.5
Interest Coverage Ratio 2.5 2.6 3.1 3.9
Return on Asset 5.3% 8.6 6.8 8.5
Return on CE 22.3% 17.6 19.4 19.3
Source: Company, Prime Broking; (A) Audited; (E) Estimated

THOMAS COOK (INDIA) LIMITED 5


PRIME BROKING

EQUITY SALES / DEALING TEL.: +91-22-24982525

Vinay Motwani Head of Sales & Distribution vinay@primesec.com

Nitin Khivasara VP - Equity Sales nitinkhivasara@primesec.com

Sumeet Rewari VP - Equity Sales sumeetrewari@primesec.com

Amir Merchant Dealer - Equities amir@primesec.com

Nitin Shah Dealer - Equities nitin@primesec.com

STOCK OWNERSHIP / CONFLICT DISCLOSURE

Prime / Prime Subsidiaries No

Key Prime Management &/or Other Employees No

Any Other Corporate Finance Conflict of Interest No

ANALYSTS’ RATINGS DEFINITIONS

STRONG BUY Expect  25% CAGR return


BUY Expect a CAGR return  15% and  25%
HOLD Expect  15% CAGR return
SELL Expect  5% CAGR return

CONTACT NUMBERS
Dealing: +91 22 24982525 Research: +91 22 24981515
This document has been prepared by Prime Broking Company (India) Limited (“Prime”). The information, analysis and estimates contained herein
are based on Prime’s assessment and have been obtained from sources believed to be reliable. This document is meant for the use of the intended
recipient only.This document, at best, represents Prime’s opinion and is meant for general information only. Prime, its Directors, Officers or Employees
shall not in any way be responsible for the contents stated herein. Prime expressly disclaims any and all liability that may arise from information,
errors or omissions in this connection. This document is not to be considered as an offer to sell, or a solicitation to buy any securities. Prime, its
affiliates and their employees may from time to time hold positions in the securities referred to herein. Prime or its affiliates may from time to time
solicit from or perform investment banking or other services for any company mentioned in this document.

THOMAS COOK (INDIA) LIMITED 6