The IPO of Cox & Kings (India) Limited is the second from reputed companies in the Travel/ Holidays sector this year, the first being the Mahindra Holidays IPO.
The company can be better compared to Thomas Cook as it is primarily into Travel Services like Thomas Cook while Mahindra Holidays is into Time Share, etc.
If Thomas Cook started its India operations, with its first office being set up in Kolkata in 1881, Cox & Kings (India) Ltd. was incorporated as ‘Eastern Carrying Company Limited’ on June 7, 1939. The name was subsequently changed to ‘Cox and Kings (India) Limited’ on February 23, 1950.
There is no questioning the reputation of the company both in India and abroad. What is left to be discussed is the valuation of the IPO.
The company had reported Net Profit of Rs.62.76 crores in FY 2008-09 which on an equity of Rs.47.47 crores yields an EPS of Rs.13.22. However, post IPO the equity capital will bulge to Rs.62.92 crores and the fully diluted EPS would reduce to Rs.10. However, this does not consider the results for the quarters ending June 2009 and September 2009 which could have gone either way.
Thomas Cook with a TTM EPS of Rs. 1.50 quotes steadily around Rs.60 in the bourses which is at a PE of 40. It is not unfair to give such a valuation to Cox & Kings considering its parentage and reputation.
Personally, I feel that the IPO has left some money on the table like Oil India IPO.
As the market sentiment too has marked upwards, it may not be unrealistic to expect a Rs.400 price for the share (Rs.10 fully diluted EPS post IPO multiplied by 40) post listing.
Since the sentiment of individual investors towards IPOs has been poor due to some overpriced IPOs, the chance of oversubscription is low and hence the chance of allotment is better in the individual investor category.
I think an individual investor can apply to this issue.
There is No comparison between Thomas Cook I Ltd. & Cox N Kings. Since you have talked about parentage , the comapny is promoted by the Family(Kerkar`s) which has been accused of siphoning of funds not once but TWICE in past , ie. Taj Hotels case & Centaur Juhu Case.
So how can investor be sure about his/her investments, is a big question??? And thru series of advtg Cox N Kings has tried to create an impression that they are market leaders in Domestic, Inbound & Outbound segment of business which is TOTALLY misplaced FACT... away from Truth!!
It was heartening to note that retail investor portion of Cox & Kings IPO has not been oversubscribed. In retail individual investors category, the company got bids for 62.84 lakh shares (0.98 times), while it had reserved 64.03 lakh equities for them.
This should mean that ALL retail investors should get allotment of ALL the shares that they had applied for.
There are a number of methods for calculating the reasonable valuation for the company.
First, the TTM EPS. TTM net profit (including June 2009 quarter) is Rs.85 crores which gives a fully diluted EPS of Rs.13.51 on post-IPO equity of Rs.62.92 crores. At Rs.330, the PE is 24.42 and if PE of 40 is to be applied, the fair price of Rs.540 is arrived at.
Next the future EPS forecasts for FY 2010-111 and FY 2100-12. Various brokerages have made forecats that average Rs.20 for FY 2010-11 and Rs.27.5 for FY 2011-12.
I am tempted to apply PEs of its peer Thomas Cook to these EPS forecasts, but I will desist from doing so for two reasons:-
1. These financial years are far away and `there`s many a slip twixt the cup and the lip`. Meaning many things can go wrong between now and one or two years into the future.
2. Stock prices are not always logical and need not always follow PE principles.
I would only sum up to say that - I AM NOT SELLING THIS IPO ALLOTMENT IN A HURRY.
Yes all retail investeors shall get full allotment
I agree with your views about price.
there are chances of listing appreciation and further price increase.
so i also will not make hurry to sell on listing.
let us see.
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