Stock Review: Cox & Kings

Travel and ticketing company Cox & Kings India reported robust earnings over the past two quarters on the back of increasing foreign and domestic travel. For the quarter ended March, the company's net profit stood at . 26 crore, nearly double that of the previous quarter.

The financial performance was driven by rise in contribution of India-specific revenues in the company's total revenues. Revenue from India has increased to about 50% in FY11 from about 45% a year ago. Continued focus on the Indian region would be remunerative for the company, going forward.

Domestic passenger traffic is growing at 18% on a year-on-year basis, according to directorate general of civil aviation website. Also, foreign tourist arrival has increased over 10% on a year-on-year basis. The healthy growth in domestic passenger traffic and the arrival of foreign tourists have been the main revenue-generators for the company, which derives more than 68% of its revenues from leisure travel. Outbound travel is the major contributor to the company's revenues. In 2010, the number of flight departures from India were about 1.24 crore. The number of flight departures from India in the past one year has increased by about 13%. Going forward, outbound travel is seen as the main revenue driver for the company. In the next five years, the number of departures from India will likely rising at a compounded annual growth rate (CAGR) of 15%.
Currently, the number of flight departures from India is estimated at 75% of the total number of visa applications while 25% is rejected. Going ahead, the number of flight departures from India is seen rising which will boost the company's revenue in the coming quarters.

In the coming quarter, analysts expect the negative impact of the Japan earthquake on its consolidated earnings. However, continued buoyancy in outbound travel would ensure the momentum in the company's earnings in the coming quarters. In the past one year, the company's stock has fallen by 5% to . 428 against a gain of about 6% in the movement of the benchmark Sensex.