THOMAS COOK RIDES TRAVEL RECOVERY WAVE TO STELLAR Q1 PERFORMANCE

Thomas Cook India Ltd is a prominent integrated travel company and a part of the Fairfax Group, which holds a 72.34% stake in the Indian venture. The company follows an integrated model with a premier brand portfolio and an omni-channel strategy. Thomas Cook engages in holidays, leisure hospitality, foreign exchange, and corporate travel. Another significant business segment, MICE, includes meetings, incentives, conferences, and exhibitions. Clear emerging post-Covid trends are evident in tourism and travel, reflecting customer preferences. While destinations and aspirations have improved, customers now seek frequent breaks, are open to credit-based travel, and crave adventure experiences.
Furthermore, with a younger travel population, travel companies are willing to experiment and adapt to changing preferences. In Q1FY24, the company delivered excellent quarterly earnings, achieving a consolidated net profit of Rs 70.9 crores on a total income of Rs 1931.8 crores.

Remarkably, in the same quarter of the previous year, it had incurred a loss of Rs 6.9 crores, with the total income at Rs 989.8 crores. EBITDA experienced substantial growth, reaching Rs 147.7 crores in Q1FY2024 compared to Rs 55.6 crores in the same quarter of the preceding year. This growth was primarily driven by foreign exchange, the travel business (both Thomas Cook and SOTC), and the hospitality segment (Sterling Holidays).

Segment-wise, the corporate travel division’s turnover surged by 25% YoY, with the ticket size growing by 29% YoY due to the acquisition of 13 new accounts across various sectors. The leisure travel segment achieved significant sales growth of 208% QoQ and 137% YoY. The company introduced “India’s Incredible Short Breaks” to capitalize on demand, launched exotic new overseas destinations, and expanded spiritual journeys and travel darshans. The MICE segment also experienced a growth of 139% YoY, attributed to handling large groups and being selected as the event partner for India’s G20 meetings.

In the leisure hospitality segment, Sterling Resorts achieved its highest-ever PBT for Q1FY24, with growth of 147% QoQ and 27% YoY, along with a 16% YoY increase in EBITDA. Turnover saw a 13% YoY increase, and strong revenue and profit growth resulted in a 24% YoY growth in free cash flow. The future outlook for Thomas Cook is highly positive, with a robust order book indicating strong growth in the holidays and MICE segments in Q2FY24. The company’s management is focused on driving volumes while effectively managing margins and costs.

Analysts are optimistic about the company’s future growth over the coming quarters, driven by a healthy order book and future trends in the leisure and business segments. The current stock price of Thomas Cook is Rs 106 on the stock exchanges, and it is projected to appreciate by over 50% within the next 18 months. Fund managers and analysts recommend adding Thomas Cook stock to investors’ portfolios for potential smart gains.

Rajiv Kapoor is a share broker, certified mutual fund expert, and MDRT insurance agent.

(Disclaimer: Investors must do their own due diligence before buying any stock.)