Thomas Cook India Ltd (TCIL) continues to be a leading player in the forex travel market with a network of 49 branches in 15 cities. The company has become very aggressive on the leisure travel front and its revenues from this business are on the rise. As a result the company's revenues from leisure travel business has gone up from 6 percent of turnover in 1996 to 11 percent in 1999.
TCIL will benefit from the growth in outbound travel as it has become a very prominent player in this market. India's outbound travel market has picked up considerably over the last couple of years. Last year 3.6m Indians went abroad, this market is growing at a healthy figure of 25%-30% per annum. This pick up in outbound travel can be attributed to availability of cheap and attractive holiday destinations in Southeast Asia.
Year ended 31st December
The strong growth is also due to the fact that Indian tourists are becoming more adventurous and are keen to explore unique destinations. Safari holidays and cruises have become very common now. As air fares and hotel tariffs in India are very high currently, tourists rather go out of the country on attractive deals.
These growth rates if they continue will benefit travel & tour companies. On the negative side however inbound traffic has been growing at only 5% per annum. In the past year only 2.4 m tourists visited India this is far lower than visitor arrivals to other South East Asian destinations. However in the current year inbound traffic is looking up and has grown at 9.2% YoY for the months of April and May'2000. As this trend is likely to continue as the economy is looking up, TCIL will see an improvement in its bottomline over the next year.
On the current market price of Rs408, TCIL is trading at a price earnings multiple of 20.2x on CY99 earnings. Its 52 week low is currently Rs 339.
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