Feb/15 Mar/15 Apr/15 May/15 Jun/15 Jul/15 Aug/15 Sep/15 Oct/15 Nov/15 Dec/15 Jan/16 Trade Wings Limited CMP: 105.00 January 29, 2016 Stock Details BSE code 509953 BSE ID TRADWIN Face value ( ) 10 No of shares (m) 6 52 week H/L 119.45/77.85 Market cap ( m) 315 30 days avg vol (No) 18 Free float ( m) 22.1 Stock performance (%) 1M 3M 12M Absolute 4.5% 4.5% 36.9% Rel. to Sensex 8.3% 11.0% 51.6% Shareholding Pattern* (%) Promoters FIIs DIIs Others 74.97% % % 25.03% *As of September 2015 Relative Chart 140 120 100 80 60 40 20 0 Source: Bloomberg Trade Wings Ltd Sensex 30,000 29,000 28,000 27,000 26,000 25,000 24,000 23,000 22,000 Company Overview Trade-Wings, was incorporated in 1949. It was one of the first travel agencies to start operations in independent India. Trade-Wings is now one of the largest travel agency networks in the country, having more than 85 owned locations in India. The company is engaged in travel, tourism, money changing and logistics business. The company have outlet throughout the country. The company is operating in this segment from last 6 decades. Industry Overview The travel and tourism industry in India comprises both domestic (85% of the market) and international inbound travel (15%). The industry is estimated to grow at a CAGR of 12% to $27.5 bn in 2016 from $19.7 bn in 2013. Financial Performance Trade Wing reported revenue of 365.6 million, up by 5.7% YoY, form 345.9 million in FY14. The company has reported a net profit of 5.8 million in FY 15, when compared to the profit of 0.8 million in FY 14. For the second quarter of FY16 the company reported a top line of 38.0 million, while bottom line was negative 4.77 million. Table1: Key Financials (Y/e March) 2Q FY15 2Q FY 16 Sales ( m) 153.2 345.9 365.6 46.40 38.00 YoY Growth (%) -4.5% 125.8% 5.7% 18%.0-17%8 EBITDA ( m) 93.3 222.1 223.5 8.30 1.44 EBITDA Margin 60.9% 64.2% 61.1% 17.9% 3.8% PAT ( m) 1.5 3.3 (1.9) 3.10-4.8 EPS ( ) 0.5 0.6 0-.5 0.45-1.59 YoY Growth (%) -62.6% 125.1% -158.7% 0 NM Source: Company, Karvy Investment Advisory 1
Background and Business Description Trade-Wings, was incorporated in 1949. It was one of the first travel agencies to start operations in independent India. Trade-Wings is now one of the largest travel agency networks in the country, having more than 85 owned locations in India. The company is engaged in travel, tourism, money changing and logistics business. The company have outlet throughout the country. The company is operating in this segment from last 6 decades. The group operates in industry verticals such as Business & Leisure Travel, Hospitality, Catering, Banqueting, Moneychanging, Logistics and Training in all these verticals in class-room as well as E-learning formats! Key Strengths Increase in spending in the economic. Technological advancement. Risks & Concerns Intense competition from e-commerce companies. Board of Directors Table 2: Composition of Board Name Dr. Shailendra P.Mittal Mr. Vinayak S. Ubhayakar Mr. R Vaidhyanathan Mr. Rajan N. Dani Mr. A.G. Merchant Ms. Jyoti G. Gupta Source: Company Relation with Company Chairman & chief Finance Officer Managing Director & CEO Director Director Director Additional Director 2
Industry Overview The travel and tourism industry in India, comprises both domestic (85% of the market) and international inbound travel (15%). The industry is estimated to grow at a CAGR of 12% to $27.5 bn in 2016 from $19.7 bn in 2013. Within the domestic travel and tourism industry, the online travel segment has significantly grown over the past few years. The online travel market in India, estimated at $9.1 bn (2014), comprised air travel ($5.1 bn), rail travel ($3.1 bn), hotels ($0.8 bn), and others ($0.1 bn). Online penetration in travel and tourism bookings is estimated to increase from 41% in 2014 to 46% in 2017, according to Phocuswright, a leading travel data aggregator. Following factors to drive growth for traveling industry: Increase in purchasing power of the middle class Increase in the number of Internet and smartphones users, coupled with increasing e-commerce penetration Better connectivity between cities and travelling destinations Evolving and improving lifestyles Competition analysis Company CMP ( ) Mcap ( m) Rev ( m) OPM (%) EPS ( ) PE (x) Trade Wings Ltd 105.0 315.0 156.0 18.1% (4) NM Cox & Kings Ltd 227.1 38,451.4 4,805.9 65.5% 9.6 23.4x International Travel House Ltd. 195.4 1,562.1 1,806.3 18.3% 22.9 8.5x Source: BSE 3
Financial Analysis For the period ending 31 March, 2015, Trade Wings reported revenues of 365.6 million, representing 5.7% gain when compared to the revenues in FY 14. The company s EBITDA increased to 223.5 million in FY 15 from 222.1 million in FY 14, primarily attributable to increase in revenues. Profitability ratios were at very comfortable levels with return on equity and return on capital employed at 2% and 645.1% respectively in FY 15. Year end March Income statement ( million) Revenue 153.2 345.9 365.6 % growth -4.5% 125.8% 5.7% EBITDA 93.3 222.1 223.5 % EBITDA margin 61% 64% 61% Depreciation and Amortisation 2.0 13.0 23.6 EBIT 91.4 209.1 199.9 Interest 17.4 21.1 26.9 PBT 2.2 6.6 (2.3) Tax (credit) expense 0.8 3.3 (0.4) Net profit 1.5 3.3 (1.9) % growth net profit -62.6% 125.1% -158.7% Balance sheet ( million) Shareholder fund 66.1 (84.4) (86.5) Long term liabilities 44.5 88.7 117.5 Current liabilities 384.6 492.4 486.5 Fixed assets 43.3 199.4 214.1 Current assets 384.6 492.4 486.5 Cash & cash equivalents 28.7 27.2 26.2 Cash flow statement Cash flow operations -5.2 50.9 59.5 Cash flow from investing 1.9 (31.2) (40.1) Cash flow from financing (19.5) (24.1) (20.3) Per share data EPS ( ) 0.45 0.6 0-.5 CEPS ( ) (0.9) 8.8 10.3 DPS ( ) NA NA NA BVPS ( ) 11.5-14.7-15.0 Financial Ratios % ROE 2% -4% 2% ROCE 82.6% 4865.6% 645.7% Debt/Equity 0.7-1.1-1.4 Interest coverage ratio 5.2 9.9 7.4 Current ratio 1.0 1.0 1.0 Cash ratio 0.1 0.1 0.1 Source: Company, Karvy Investment Advisory 4
Financial Snapshot Revenue growth (%) EBITDA margin (%) 40 30 20 10 15% 10% 5% % -5% 25 20 15 10 5 65.0% 64.0% 63.0% 62.0% 61.0% 6% 59.0% Revenue ( m) % growth EBITDA ( m) % EBITDA margin Net Profit Margin (%) BVPS & EPS 4.0 2.0-2.0-4.0 1.5% 1.0% 0.5% % -0.5% -1.0% 15.0 1 5.0-5.0-1 -15.0-2 0.8 0.6 0.4 0.2 Net Profit ( m) % net profit margin Book value per share ( ) EPS diluted ( ) Liquidity ratios Profitability ratios 8 80% 6 4 2 60% 40% 20% 0 % -20% Current ratio Cash ratio ROE ROCE Source: Karvy Investment Advisory 5
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