Thomas Cook - Travel Industry Tailwinds To Drive Topline: Systematix

Systematix Research Report

We attended the Thomas Cook India Ltd. Capital Market Day to better understand the company's strategy to benefit from the ongoing industry tailwinds. The key takeaways were:

1. Financial services growth will be driven by increased travel forex, international education and remittances, focus has been moved from Tier I airports to Tier II and III airports led by favorable business economics, RBI’s propositions and consolidation of forex industry is likely to benefit players such as Thomas Cook.

2. In travel, the growing share of GenZ and millennial travelers, growing digital adoption, crossing selling opportunities in corporate travel and the focus on increasing non-air revenue shall drive growth for the segment.

3. In Sterling, company plans to add 20-22 resorts in coming 18 months. The business's objective remains to strengthen its footprint in the hospitality sector, with a particular emphasis on organic growth in its existing portfolio and the generation of additional revenue streams through asset right expansions.

4. DEI business will remain focused on theme parks, tourist attractions and luxury resorts where the growth will be led by expansion in existing countries and entry into new regions.

5. ROE is expected to move towards the aspiration of 20% from current ~13.7% driven by growth in business volumes, margin stability and continuous investment across businesses.

The stock is currently trading at PE of 27.8 times FY26E earnings per share. We value the company at 35 times FY26E EPS with a target price of Rs 270 and a Buy rating.

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