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Thomas Cook 3Q net flat

Oct 12, 2000

Thomas Cook (India) Ltd, a leading forex and tourism company has reported a 16% YoY growth in sales to Rs 195 m for 3QFY01. Year to date the total revenues are up 14% YoY. Due to higher expenses the the company's operating margins have dropped by 5.6% to 36.3% in 3QFY01. The expenses which rose rapidly were a 56% increase to staff costs and a 46% increase to advertising costs.

(Rs m) 3QFY00 3QFY01 Change
Sales 168 195 16.0%
Other Income 9 6 -33.4%
Expenditure 98 124 27.1%
Operating Profit (EBDIT) 70 71 0.5%
Operating Profit Margin (%) 41.9% 36.3%
Interest 12 4 -70.8%
Depreciation 12 15 24.1%
Profit before Tax 55 58 5.6%
Other Adjustments 0 3
Tax 20 20 0.0%
Profit after Tax/(Loss) 36 36 1.0%
Net profit margin (%) 21.3% 17.2%
No. of Shares (eoy) (m) 8.8 14.6
Diluted number of shares 14.6 14.6
Diluted Earnings per share* 9.8 9.9

As a result of lower interest costs in 3QFY01, TCIL's profit before tax went up by 5.6% YoY in the third quarter. However due to amortisation of start up costs for its wholly owned subsidiary Thomas Cook (Mauritius) Holding Company Ltd of the amount of Rs 3m in 3QFY01 the company's net profit remained flat at Rs 36.3 m for the 3QFY01.

TCIL has dropped plans of acquiring Travel Corporation (India) Ltd. TCIL is not very strong in the area of inbound travel. TCIL was hoping by this acquisition it would gain significance presence in the inbound travel market. However this has fallen through now.

The company is once again on the lookout for a suitable partner, as this fits in well with TCIL's strategy of becoming a "one stop travel shop" as it is currently strong in the areas of foreign exchange and outbound travel.

The tourism industry is doing well in the current year. This is positive for the company's revenues. Inbound tourist arrivals have been buoyant (9% growth reported in the 1QFY01). Outbound travel is growing at a rate of 25%-30% per annum, this too will boost the company's earnings.

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.

On the current price of Rs 288, TCIL is trading at 23x FY2000 EPS of Rs 12.4.

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