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Aashish Tater

Aashish Tater

5.30 AM Jan 1st 1970

Thomas Cook

BSE ID : 500413     NSE ID : THOMASCOOK

RECOMMENDED PRICE 89.20

PEAK FROM RECO 302.90 239.57%

CURRENT PRICE 146.20 Resource id #12

Thomas Cook is one of the leading integrated travel and travel related financial services company offering a unique proposition of broad spectrum of services.

Thomas Cook (India)

About the company

Thomas Cook (India) Ltd is one of the leading integrated travel and travel related financial services company in the country offering a unique proposition of broad spectrum of services that includes Foreign Exchange, Corporate Travel, Leisure Travel, Insurance, Visa & Passport services and E-Business. TCIL's trace extends to over 240 locations in 99 cities across India, Mauritius & Sri Lanka and is supported by a strong partner network in over 150 cities across India.

Thomas Cook (India) Limited is promoted by Fairfax Financial Holdings Limited through its wholly-owned subsidiary, Fairbridge Capital (Mauritius) Limited. The new promoters once they took-over have been creating value to the group and adding synergies across the value chain. Recently Company made a strategic investment in Sterling Holidays & Resorts which adds lot to Thomas Cook competencies. The new promotions and avenues company is working with provide them an edge over peers.

Important Triggers & Fundamental Perspective:

The free float of the stock is getting squeezed (15 percent with Institutions 75 percent with promoters)

There is a likely possibility that parent would be delisting the company. The promoters bought stake, since then Fairfax have been creating value for the company. First, the company acquired 74 percent in IKYA group, and recently made strategic investment in Sterling Holiday and Resort. We were bullish on Sterling for target of 150 and now the synergies will reap benefit in near future and also provide strong positive cash flows.

Consider a person going to a Holiday Planner who offers him, Flight Tickets where all of them have best bargain as Airline has almost standard policies for commission + he is provided with list of Hotels and accommodation that is managed and operated by the vendor + currency + insurance + passport it's like a one stop shop. Thomas cook will be able to offer competitive rate as the properties will be owned by them and still have higher margin because of the legacy that is created today. Fairfax/Thomas Cook is spending aggressively on building the infrastructure as they know the future will belong to those players who have integrated services to offer.
 
Management focused on innovative ideas and launching schemes we feel the stock has great potential and thus have potential to give tremendous returns.

The company's strategic intent and investment in Sterling Holiday Resort in addition they have over 150 acre of land bank across 15 properties, which they will put to economic use in future in the most profitable manner given the track record. The existing promoter may be looking to give early exit to small shareholders and that's why we feel this could be a stock to buy at current levels from one year horizon. People focusing on Price to Book, Price Earnings multiples etc but look at high profile investors apart from promoters. Undoubtedly this is one stock which we feel has a potential to give decent returns, the stock is definitely a delisting play and the premium that will be offered to current price should be approximately 50 percent more than current price to delist the stock.

The delisting aspect may take time but since strong hands have cornered the shares and this is one premium business model which has capacity to generate strong free cash flows and also a unique proposition the management will be considering the delisting sooner than later.

Also company has been growing faster than the industry average and once the synergies in place we expect strong re-rating of the stock. So today the stock is trading at a hefty premium but some business which have 50-60 multiple to earnings because of strong foundation had grown at a very fast pace with consistencies in generating return.

Disclaimer: Aashish Tater is an equity analyst and investment adviser based in Kolkata, INDIA. At the time of writing this article, he, his firm and dependent family members have no position in the stocks mentioned above. The author invites readers to send him email and welcomes comments, feedback & queries at query@fortunewizard.com. This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information/ article.

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