Cox & Kings : Result Update

I discussed Cox & Kings in April, 2012 here. There was so much pessimism regarding the Holiday Break acquisition and the stock was at 52W low. 

The first two quarters of FY13 were crucial in the sense, whether the consolidated numbers would add value to the shareholders or all profits be eaten away by the huge debt burden from the acquisition. 

It seems that the conviction has paid off and the company has delivered a stellar set of numbers in the last two quarters at the consolidated level, despite paying heavy interest costs. Let's jump to the numbers now.

Qtr/Half Year	Sep-11	Sep-12	YoY growth	H1 Sep-11	H1  Sep-12	YoY growth
Net Sales Turnover	136.72	688.96		293.65	1220.86
Other Income	9.79	-12.74		14.61	-5.71
Total Income	146.51	676.22	361.6%	308.26	1,215.15	294.2%
Total Expenses	84.38	352.95	318.3%	177.62	622.78	250.6%
EBIT	62.13	323.27	420.3%	130.64	592.37	353.4%
% Operating margin	45.4%	46.9%	3.3%	44.5%	48.5%	9.1%
Interest	19.66	86.52	340.1%	30.34	178.14	487.1%
Exceptional Items	-1.87			0.48
PBT	40.60	236.75		100.78	414.23
Tax	13.04	99.85		35.12	145.68
Net Profit	27.56	136.90	396.7%	65.66	268.55	309.0%
% Net margin	20.2%	19.9%	-1.4%	22.4%	22.0%	-1.6%
Basic EPS	2.01	10.03	399.0%	4.78	19.67	311.5%

What's heartening to see is that the company has managed to maintain margins. The next two quarters will again be subdued due to the seasonal nature of the business. 

The biggest concern naturally at this point is very high leverage. (H1FY13 D/E of 2.32x down from FY12E D/E of 2.98x) . The company recently raised $138million from Citi Venture Capital International (CVCI Private Equity) for a stake in its wholly owned subsidiary - Prometheon Holdings (UK). 

Although this dilutes earnings but is a right step towards addressing the high debt as the interest payouts were denting the bottom line. Overall the company is on the right path and should benefit from any fall in interest rates and reduction of debt burden.