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We had initiated a Value Pick on Cox & King on 9
th
March with
price target of Rs. 475. Looking at the result highlights we
maintain our BUY recommendation and price objective. At CMP of
Rs. 379, stock is quoting around 15x and 13x for FY 12e and
FY13e earnings.
Result Highlights
Yearly Performance – Review
Standalone performance is robust, top line grew by 33.6% while
bottom line achieved growth of 53% in the year 2011. Indian
business contributes around 48% in total revenue.
However, on consolidated basis C&K total revenue jumped by
around 24% while bottom line is more or less flat because of
mainly Egypt crisis and exchange loss.
C&K interest amount increased sharply YoY basis but the blended
cost of interest is around 6% and company is not expecting any
extra burden in interest cost going forward and also stating that
cost would be more or less at the same level even if the change in
interest rate scenario. This is mainly due to negligible capex of Rs.
15-20crs for FY12 as stated by the company.
Japanese operation contributes around 9% of total revenue while
5% in total bottom line. Even if there is slowdown in Japan, it will
not impact company’s profitability in a very big way.
Quarterly Performance - Review
Standalone performance is looking very good as both top line and
bottom line grew substantially. Total revenue and PAT has grown
by 40% and 48% in Q4, 11 from Q4, 10.
On a consolidated level company is able to achieve growth of 15%
while PAT is marginally up by 2.5%.
Valuation
Looking at the industry growth and the company’s
performance, at CMP of Rs. 379 the scrip is trading at 15x
and 13x FY 12e and FY 13e with consolidated EPS of
24.50 and 29.18 respectively which is at a discount to
global peers. We maintain our 12 month price objective i.e.
Rs. 475.
