International Travel House (BSE Code - 500213)

Stock Opportunities
1

posted on behalf of Hitesh,hitstocks.blogspot.com

Hi Donald and friends,

Have a look at ITHL. Would like your feedback.
regards
hitesh.
INTERNATIONAL TRAVEL HOUSEBSE CODE 500213

Cmp 272 market cap 217 crores


Book value 92

ITHL commenced its operations in 1981 and has a full bouquet of travel services.It is a part of the ITC group which owns around 61% stake in the company.

The client group of ITHL includes NDTV, Siemens, Citibank,HCL, ABN, Samsung, Essel Group,3M among others.

The services offered include corporate travel, car rentals, destination management, World Class Holidays, Conference management, Incentive group travel and foreign exchange.The company owns a fleet of 900 cars which also includes outsourced ones.

ITHL has been appointed General Sales Agent of Globus/Cosmos, which is a leading Coach/Integrated travel company in the world with Holiday Programmes in US, Canada, Africa, Europe.The company expects to leverage on this relationship to develop outbound leisure business.

The company is also focussing on Medical Tourism as one of its growth drivers.It is nowalso concentrating on Confernces and Exhibition business.Travel Insurance also offers a good growth avenue.

MICE --- Meeting, Incentive, Conference and Exhibition tourism has picked up pace in recent years and the company is focussing on this segment.

FINANCIALS

YEAR

05

06

07

08

09

10

HY 11

SALES

47

60

74

79

104

108

68

NP

4.6

7

10.2

10.5

8.2

11.3

8.17

The company has shown steady growth in terms of sales and profits except for the hiccup in 09 due to global turmoil.

First Half for FY 11 has been excellent with company showing Sales of 68 crores against 46 cr for H1FY 10 and net profits of 8.17 crores vs 3.94 crores. Second half is usually better so the company should show net profits of around 18 crores which on an equity base of around 7.99 crores gives an EPS of around 22 which at cmp of around 272 gives a PE of around12.4 which for an ITC promoted company with good growth prospects looks attractive.

ITHL is a smaller player as compared to Cox and Kings and Thomas Cook but looking at strong parentage of ITC and recent developments, if the company manages to continue the growth shown in recent quarters, there might be a case for a rerating.


--
hitstocks.blogspot.com

2

Hi Hitesh,
On a relative valuation basis, yes it looks cheap as compared to its larger peers Cox & kings, and Thomas Cook.It deserves further study/discussion. Both Cox & Kings & Thomas Cook have shown very good bottomline growth in first half, with a 20-28% topline growth compared to 45% for international travel house.
See table below.

Int Trvl House

Cox & Kings

Thomas Cook

ITDC

Trade Wings

LTP

274.35

528.55

64.5

104.55

126.8

Change%

0.96

1.47

-0.31

4.97

-0.86

52 W H / L

316.00 / 101.10

659.70 / 304.10

78.50 / 55.05

104.55 / 104.55

259.20 / 86.45

Results(in Cr)

10-Mar

10-Mar

9-Dec

10-Mar

10-Mar

Sales

108.16

176.39

218.74

269.48

10.16

PAT

11.29

50.06

22.17

6.54

0.11

Equity

7.99

62.92

21.15

85.77

--

Ratios

OPM %

25.05

50.78

29.15

4.41

16.44

NPM%

10.44

28.38

10.13

2.43

1.08

EPS

14.13

9.77

1.06

--

--

CEPS

26.23

8.79

1.51

1.38

--

1HPAT

8.17

37.93

35.32

-10.78

-

Annualised EPS

20.45

12.06

3.34

-2.51

-

Annualised PE

13.42

43.84

19.31

-41.59

-

TTM EPS

19.79

9.32

1.89

0.54

-

TTM PE

13.86

56.71

34.13

193.61

-

BV

94.21

111.08

12.86

37.81

17.12

P/BV

2.91

4.76

5.02

2.77

7.41
Do we know why it is growing as fast, faster than the industry? new segments entered?
It can be a candidate for rerating like you say, if the growth continues. Its peers quote 2-3 times, while it is roughly half their size.
In these markets I go more by absolute valuation, while firming up opinion on undervaluedness. So lets try and understand more of the business
Donald

1 Like
3

Hi Donald

Thanks for the workup and comparision table.

My guess is that the increased revenues and profits are due to higher occupancy rates in hotels which leads to higher car rental usage. Plus the MICE segment – meeting, conference etc seems to be the growth driver going ahead. And with the tie up with cosmos et all should provide the company with a firm footing in the outbound leisure travel from India, where it seems to be lagging far behind cox and kings and which is a big business nowadays from the foreign tours taken up by people atleast in my home state Gujarat.

What attracts me to this company is that they can grow with very little additional capex and the concerns about ITC squeezing margins from it seem to be misplaced. Since the stock has had a sharp run up, there is bound to be consolidation but if the company continues to give good results even in dec quarter and then onwards, this one is bound to catch market fancy. It looks similar to hertz rent a car mentioned in peter lynch book.

My estimates for FY 11 conservatively would be around EPS of 21-22 per share.

4

ITHL q3 results update

sales at 38 cr vs 29 cr (q3 fy 10)

net profit at 4.7 cr vs 4.2 cr

9m sales at 104.7 cr vs 76.3 cr

9M net profit at 12.9 cr vs 7.9 cr

9m eps (not annualised) is 16.11 vs 9.9

Looks on target to achieve EPS of around 20-22 for full year fy 11.

5

Looks like a good company which one can study further but just not yet cheap enough yet.

6

It’s fallen from quite the heady days of November from Rs. 272 to Rs. 197.

I am a little confused on the stock -

a) Seems like a consumer story. More businesses and more tourism will improve revenues and profitability of the company. On a comparative relative valuation with its peers, it looks very cheap.

b) On the other hand, I am worried about the i) variation in cashflows ii) Ratio of Personal expenses to overall expenditure. i) and ii) lead me to a hypothesis whether this scalability can be managed well and margins be improved in the future. CFO has been decreasing constantly y-o-y for the past 5 years. Very little safety due to cash too (10%).

Will this be re-rated and run away to match its peers? I am not too sure - but I think they are some way off from that.

However, I need to research this further. No concrete opinion on this yet.

7

Hi,

Hi did take a glance at the co…though the sector is very interesting but it seems they are limited to corporate car rentals and scalability seems to be an issue.

Views Invited

Regards,

Ayush

8

i have seen one IATA office in Madhapura,Hyderabad

9

Hitesh bhai,

you are very +ve on this counter,please give some more insight information

10

I am very positive on the stock. Its large revenue comes from car rentals… and even car rentals are highly scalable. Avis is a great stock market story on wall street, there is no reason why you cannot have avis on Indian bourses. By the way, Avis is also operating in India (not publicly listed as yet) and competing with ITH.The company is increasing its presence in packaged holidays. With more and more Indians are taking outbound holidays, it is in a good position to tap that market.

The surprising part is its valuation. When compared to Cox & King and Thomas Cook, it is very cheaply priced. Agreed that they have better brand visibility, and tremendous advantage in india bound tour of foreign visitors… but that economics has changed… now more Indians are going for outbound tours than India bound visitors. It is seen that ITH is growing at a faster pace than C&K and Thomas Cook. The revenue of these three companies are comparable, and i will not be surprised if with this pace ITH revenue may be higher in a few years time. Margin of Cox & King and Thomas Cook is better as India bound tours provide better margins, where they have major share.

I expect operating margin of ITH to rise, and 30% is attainable. Further the company can grow without much capital expenditure. I think it is a good long term investment.

11

Hi Rajesh,

Have tried understanding ITHL earlier also but couldn’t get much info orvisibility…I think they are only into corporate car rentals…right?

12

It is an integrated travel company. The space is largely unorganised in India, and development of a organised player in an unorganised market can be really rewarding in stock market.

It is a travel agency (they call themselves travel consultant)… the work involves arranging tickets, visa etc.They serve many corporate clients in the space. It is also into car rentals, holiday packages, organizing conferences/seminars. They have 42 offices all over India. All such information is available at their web site.

The best part is consistent growth in sales and profit, without any debt and equity dilution. We can be hopeful, and despite all research in stock market, we cant be certain of any future.

13
[quote="Donald, post:2, topic:538043827"] > Hi Hitesh, > > On a relative valuation basis, yes it looks cheap as compared to its larger peers Cox & kings, and Thomas deserves further study/discussion. Both Cox & Kings & Thomas Cook have shown very good bottomline growth in first half, with a 20-28% topline growth compared to 45% for international travel house. > > See table below. > > -0.86 > > 52 W H / L > > | > > 316.00 / 101.10 > > | > > 659.70 / 304.10 > > | > > 78.50 / 55.05 > > | > > 104.55 / 104.55 > > | > > 259.20 / 86.45 > > - > > Annualised EPS > > | > > - > > Annualised PE > > | > > - > > TTM EPS > > | > > - > > TTM PE > > | > > 7.41 > > Do we know why it is growing as fast, faster than the industry? new segments entered? > > It can be a candidate for rerating like you say, if the growth continues. Its peers quote 2-3 times, while it is roughly half their size. > > In these markets I go more by absolute valuation, while firming up opinion on undervaluedness. So lets try and understand more of the business > > Donald [/quote]

Cook.It
I was just going through their P&L statement for the last 3 yrs. I noticed the depreciation charged as 10.02 cr against

Int Trvl House

Cox & Kings

Thomas Cook

ITDC

Trade Wings

LTP

274.35

528.55

64.5

104.55

126.8

Change%

0.96

1.47

-0.31

4.97

Results(in Cr)

10-Mar

10-Mar

9-Dec

10-Mar

10-Mar

Sales

108.16

176.39

218.74

269.48

10.16

PAT

11.29

50.06

22.17

6.54

0.11

Equity

7.99

62.92

21.15

85.77

--

Ratios

OPM %

25.05

50.78

29.15

4.41

16.44

NPM%

10.44

28.38

10.13

2.43

1.08

EPS

14.13

9.77

1.06

--

--

CEPS

26.23

8.79

1.51

1.38

--

1HPAT

8.17

37.93

35.32

-10.78

20.45

12.06

3.34

-2.51

13.42

43.84

19.31

-41.59

19.79

9.32

1.89

0.54

13.86

56.71

34.13

193.61

-

BV

94.21

111.08

12.86

37.81

17.12

P/BV

2.91

4.76

5.02

2.77
14

**

ITHL q3 results update

sales

** 10)net **

** cr9m **

** cr9M **

** cr9m **

** 9.9Looks **

**
**

Just have a look at the depreciation charged for the FY 11. It is 10.02 cr against a net block of 32 cr.Very conservative i must say. If they have 900cars(including the nes on rent), they can buy 100 new cars every year (@10 lakh per car) with this kind of depreciation. Plus the 18 cr they have got in liquid investments…company seems to be in a sweet financial position.

regards,

ranvir dehal (new to this forum)

**

15

Hi All,

As per AR 2011 ITH has spent ~ 7.96 cr for addition of commercial vehicles.They’ve spent similar amount in earlier 2 years.

Is this for buying new cars ? if yes, does it mean there fleet of cars is increasing every year ? is there a way to know how much was there fleet 2 years back ? Can some one help me to understand the capital expenditure of ITH and how much is for growth ?

16

I had bought this stock few years ago seeing the dividend and promoter quality but exited completely last year.
Any corporate guy will confirm that Uber / Ola are going to take away share from these “admin” - email 1 day in advance - kind of booking car companies. They cant compete with the new age cab companies

17

They are in process of developing app and web platform for last 4 years but not yet launched. Latest AR or AGM can throw some light on this. They know and conscious about app base taxi business.

As on March 2015 their Fixed Asset increase from some 32 Cr to 48 Cr. I think they have already invested in IT related infrastructure and are ready to launch it.

Until now they are more focused on Corporate business but with this app and website they are slowly diverting to retail clientele.

Now key question is will this work and can ITHL become brand?

18

There are few listed players in this business.if they focous on holuday business then they can create value in this distruptive world

19

I think International Travel House deserves a closer look now.

It is an ITC group company. The equity is Rs.8 crores. The market cap is Rs.42 crores. The current market price is Rs.51. The book value is Rs.188.15. It has no debt. It also has real estate. The FY20 annual report is not yet out. As per the FY19 annual report, J M Financial Services Limited bought 50,000 shares in FY19 and has a total holding of 70,000 shares, a little under 1%. Not sure if they have it even now. They have freehold land and building of Rs.36.73 lakhs (book value) and leasehold land and building of Rs.182.86 lakhs. There
are two other freehold buildings of Rs.45.64 lakhs and Rs.7.90 lakhs which are yet to be transferred to their name. The process is on.

They have been severely impacted by Covid. The air travel business has halted and car rental business has reduced. As per their FY20 results, they had current assets of Rs.145 crores and current liabilities of Rs.40 crores. Income tax assets were Rs.12 crores. So, their net working capital was about Rs.170 crores as of March 31, 2020. They reported a net
loss of Rs.3.90 crores in Q4. Depreciation was Rs.2.79 crores. So the cash loss was about Rs.1 crore. In June quarter they reported a loss of Rs.16 crores. Depreciation was Rs.2.7 crores. The cash loss is of about Rs.13 crores. We can now estimate their net working capital to be about Rs.150 crores.

Most of their receivables are from ITC and other major corporate names. So most should be recoverable. They have about 1000 cars in their fleet. They have 39 branches across the country.

Their website is https://www.internationaltravelhouse.in/

Their profitability has not been great in the last five. Their sales have been stagnant, around Rs.200 crores in last few years while net profit has been going down. Prior to that, they used to have a net profit of about Rs.18-20 crores every year.

ITHL_financials
ITHL_financials1229×540 40.8 KB

ITHL is among the most affected companies in the travel industry. My reasoning is that if the debts do not go bad, it means their working capital is safe.

This is a competitive business with not as much pricing power. There is no moat to speak of. If some of their competitors are driven out of business and people prefer cleaner cars, there will be some amount of pricing power. Meanwhile they have to maintain their cars, pay employees. That will be a drain on the company. We do not know their cost structure.

If travel demand recovers even somewhat and air travel opens up, they will benefit. Demand for car rental may improve. Ola and Uber have taken a big hit. Some of the demand will move to quality care rentals. They have a ‘safe car promise’ program. Let’s take the worst case scenario. They lose Rs.5 crores every quarter and this crisis lasts for one year more. That’s a
burn of Rs.20 crores. By that time they will have been forced to cut costs, shut unprofitable locations and can emerge leaner and stronger. They are debt free, have good working capital and have real estate which they can monetize if they need money. They have been spending money on IT over the past many years to improve their services. Corporate governance standards and managerial skill will be high.

Avis Cars, their competitor is in financial trouble. They have defaulted on salaries

The News Minute – 4 Jul 20

‘Not paid salary for last 3 months’: AVIS India drivers file police complaint

Uncertainty looms over the fate of 52 drivers in Hyderabad working for a chauffeur rental services company as their employers have failed to provide salary for the past three months. The employees said that AVIS India, failed to credit any salary for…

There was a time when Ramesh Damani used to recommend ITHL stock in his chats. I don’t know if he has any stock now.

Do share your opinion and help me decide whether to buy more, sell or hold!

20

The latest annual report of ITHL is out. Massive cost cutting seems to be happening.

1.Ajay Kumar, their CEO who was being paid Rs.1.58 crores pa has resigned wef April 30 and now B Hariharan is in charge who is being paid.

  1. Janaki Aggarwal who was being paid Rs.40 lakhs per annum has resigned and Mr. Vivek Kumar has taken charge.

They have also reduced trade receivables of Rs.30 crores. They have Rs.12 crores in tax refunds due.

Net cash flow from operating activities was Rs.23.62 crores.

They expect demand for car rental and the exhibition related business to improve much faster.

ITHL_screenshot_AR