The story first appeared in DNA Money edition on Wednesday February 09, 2011.
Cox & Kings Ltd, the tour operator, said it’s in the final stages of making more than one acquisition by June this year. Peter Kerkar, executive director, Cox & Kings, said the company is currently in negotiations.
“The advantage for us is that, we are in a position to act fast and conclude the transaction the moment the opportunity is appropriate. We expect to do so within the quarter ending June,” said Kerkar. The buyouts being looked at include in Europe, the UK, the US and China. Funding will largely be done through monies raised by the company in the recent past.
Cox & Kings currently has liquid funds of Rs1,052 crore, earmarked for acquisitions. Of this, approximately Rs640 crore is parked outside India. Anil Khandelwal, chief financial officer, Cox & Kings, said, the large sum is parked outside because there are certain jurisdictions where a serious discussion with an acquisition target cannot be had unless funds are shown as available.
Morgan Stanley analysts Nillai Shah, Hozefa Topiwalla, Girish Achhipalia and Ashwini Kamath in a recent report estimated that Cox & Kings is currently trading at 17 times its next fiscal’s earnings and has close to Rs1,200 crore of cash on its balance sheet. “While the markets seem overlyconcerned about it destroying capital through acquisitions, the company also has a successful track record in creating value from acquisitions, and this cash presents an attractive option value for investors. If it can deploy this cash at even half its current adjusted return on capital employed (RoCE), the returns thereon would double current profits,” the quartet said.
Cox & Kings recently announced its financial results for the third quarter ended December 31, 2010, where net sales rose 37% to Rs108.31 crore compared with Rs78.89 crore earlier. Net profit rose 20% to Rs23.34 crore compared with Rs19.53 crore in the year-ago period. Diluted earnings per share stood at Rs3.52 compared with Rs4.07 in the corresponding period of last fiscal year. “The decrease in earnings per share is due to fresh issue of shares during GDR in August 2010,” said top company official.
Cox & Kings Ltd, the tour operator, said it’s in the final stages of making more than one acquisition by June this year. Peter Kerkar, executive director, Cox & Kings, said the company is currently in negotiations.
“The advantage for us is that, we are in a position to act fast and conclude the transaction the moment the opportunity is appropriate. We expect to do so within the quarter ending June,” said Kerkar. The buyouts being looked at include in Europe, the UK, the US and China. Funding will largely be done through monies raised by the company in the recent past.
Cox & Kings currently has liquid funds of Rs1,052 crore, earmarked for acquisitions. Of this, approximately Rs640 crore is parked outside India. Anil Khandelwal, chief financial officer, Cox & Kings, said, the large sum is parked outside because there are certain jurisdictions where a serious discussion with an acquisition target cannot be had unless funds are shown as available.
Morgan Stanley analysts Nillai Shah, Hozefa Topiwalla, Girish Achhipalia and Ashwini Kamath in a recent report estimated that Cox & Kings is currently trading at 17 times its next fiscal’s earnings and has close to Rs1,200 crore of cash on its balance sheet. “While the markets seem overlyconcerned about it destroying capital through acquisitions, the company also has a successful track record in creating value from acquisitions, and this cash presents an attractive option value for investors. If it can deploy this cash at even half its current adjusted return on capital employed (RoCE), the returns thereon would double current profits,” the quartet said.
Cox & Kings recently announced its financial results for the third quarter ended December 31, 2010, where net sales rose 37% to Rs108.31 crore compared with Rs78.89 crore earlier. Net profit rose 20% to Rs23.34 crore compared with Rs19.53 crore in the year-ago period. Diluted earnings per share stood at Rs3.52 compared with Rs4.07 in the corresponding period of last fiscal year. “The decrease in earnings per share is due to fresh issue of shares during GDR in August 2010,” said top company official.
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