Cox & Kings IPO : Invest at Cut Off

Issue details
Issue opens : November 18, 2009
Issue closes : November 20, 2009
Issue size : Rs584.5 crore to Rs610.4 crore
Offer size : 1.85 crore shares, forming29.4% of post-issue shares
Face value : Rs10
Price band : Rs316-330 per share

Cox and Kings Ltd (CKIL) is coming out with the public issue of 1.85 crore shares. Of the total issue, the offer for the sale of shares by the existing stakeholders (including Lehman Brothers Opportunity, Deutsche Securities Mauritius and Merrill Lynch Capital Markets Espana, SA, SV) constitutes around 30 lakh shares. The remaining fresh issue of 1.55 crore shares would help the company to raise Rs488.2 crore to Rs510 crore (at the lower and the upper end of the price band respectively).

At the lower end and at the upper end of the price band CKIL is discounting its trailing 12-month earnings per share (EPS; based on pre-IPO equity capital) estimate by ~17.1x and ~17.9x respectively compared with 48.5x for its closest Indian peer, Thomas Cook (India).

Comparing it’s position in the industry and compelling valuation make us to recommend this IPO. Invest at CutOFF.

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