THOMAS COOK(TC) - RESTRUCTURING SCHEME QUESS CORPORATION(QC

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by FUNDOO, Apr 6, 2018.

  1. FUNDOO

    FUNDOO New Member

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    THOMAS COOK(TC) - RESTRUCTURING SCHEME RELATED TO QUESS CORPORATION(QC) ****** If an investor buys 100 shares of TC at CMP of Rs. 280/- , he pays Rs. 28000/-, for which he gets 20 shares of QC valued at Rs. 21000/- at CMP of Rs. 1050/-. Thus your residual 100 TC shares will cost you Rs. 7000/- at Rs. 70/- per share. On record date, the price of TC will also fall as QC is a major contributor to the Operating Profit of TC. Looking at the current paid up capitals of both cos., holding of TC in QC and market prices of both the shares, value of QC per share of TC comes to about Rs. 205. Taking holding Co. discount of 40%, the QC shares could be considered to be currently discounted by about Rs. 80/-. It is this discount which is likely to disappear immediately on implementation of the restructuring scheme, pushing the TC price by the same amount. I would therefore expect effective price of Rs. 360/- for TC. ( Value QC at 21000 and TC at 15000). Thus purchase of TC at CMP of Rs. 280/- can yield a return of about 25% on implementation of the scheme in next 3 to 6 months.
     
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  2. FUNDOO

    FUNDOO New Member

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    THOMAS COOK(TC) - RESTRUCTURING SCHEME RELATED TO QUESS CORPORATION(QC) : The scheme has since been announced. One gets 18.89 shares of QC for 100 shares in TC. Based on CMPs, QC price remaining at 1255, a buy of TC @283 results in residual cost of 46 for TC. Is TC ex-QC worth only that? Its a large conglomerate dealing in travel, forex, hospitality. Although no one classifies it in that manner, it is true consumption story. Demand picks up with prosperity and is aspirational. It was on acquisition spree for last five years. Has started stabilization process now. QC de-subsidiarization is the first big step. Results for Q4 2018 had 10 months with QC and 2 months without it. In a TV interview, MD of TC advised a YOY growth of 30%+ in travel business of SOTC and other travel businesses in current quarter. He also told about Sterling Resorts becoming EBITDA positive by Q2 of 2019. Forex business continues to do well. As per a press release it expects to save about 30 cr on interest due to reduction in debt from proceeds of stake sale in QC through QIP. All this sounds too good to leave the price at 46. Although I find it bit difficult to analyse this co on SOP basis, I will not be surprised to see it at around 125-150 ex QC. MF are acquiring huge chunks. QC itself is on many buy lists. In a recent press interview its MD indicated doubling the revenue from USD 1 billion to USD 2 billions in next 3 years. A higher price of QC at the time of restructuring could make this story even more appealing. I believe TC a good buy @283
     
    Last edited: Jun 16, 2018
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  3. FUNDOO

    FUNDOO New Member

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    Thomas Cook : One very positive factor TC is also one of the few midcap shares which has not lost anything in the midcap-small cap mayhem in the current calendar year. It is actually up by 5% so far.
     
  4. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    Thomas cook is very good blue chip stock. Excellent management is there. Ut is portfolio stock :)
     
  5. FUNDOO

    FUNDOO New Member

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    HDFC SECURITY in it's report dated 28/05/18 has arrived at a sum of parts valuation of TC ex-Quess of RS. 125 - lower end of figure quoted by me. Adding this to value of QC 232 at CMP, the TP comes to 357.
     
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