Mumbai, June 15, 2024: CRISIL Ratings has upgraded its outlook on the bank loan facilities and corporate credit rating (CCR) of Thomas Cook India Limited (TCIL) to ‘Positive’ from ‘Stable’ while reaffirming the ratings at ‘CRISIL AA-/Positive CRISIL A1+’.
The upgraded outlook and reaffirmed rating of the long term at ‘AA-/Positive’ and short term at ‘CRISIL A1+’ follows the rating upgrade on the loan facilities of its parent, Fairfax by S&P Global Ratings to BBB+/Positive from BBB+/Watch Positive. TCIL’s rating benefits from strong support from Fairfax. The rating also factors in significant improvement in the Thomas Cook India group’s overall operating performance, driven by strong growth in revenues – expected to sustain over the medium term and structural reduction in cost leading to better operating margin and ROCE. The Company’s financial risk profile has also improved following sustained better operating performance, reflected in its adequate capital structure and strong liquid surpluses.
The Thomas Cook India Group witnessed a significant scale-up of operations by ~44% driven by sustained strong growth across all segments – travel, forex, Leisure & Hospitality, and digi-photo services. Overall, revenue for the group is estimated to continue growing at double digits over the medium term.
Operating margins improved to 6.0% in fiscal 2024 vs 5.3% in fiscal 2023 led by cost reduction initiatives across segments including right-sizing of branch network and automation/digitization of certain processes and benefits of operating leverage accruing. The margins are expected to sustain at similar levels over the medium term as the benefits from these structural cost-saving measures will continue.
The financial risk profile (on a consolidated basis) is expected to remain comfortable with healthy debt metrics. The Thomas Cook India Group’s liquidity has also improved; cash & cash equivalents of Rs.1518 cr. as on March 31, 2024 (Rs. 1009 crore as on March 31, 2023) Net cash accrual along with cash & cash equivalents would be adequate to meet capital expenditure (capex) requirements of Rs 100-120 crore per annum and repayment obligations of Rs 46 crore in fiscal 2025 and Rs 26 crore in fiscal 2026.
TCIL’s ratings factor in expectation of continued strong support from the parent, Fairfax.
CRISIL Ratings has combined the business and financial risk profiles of TCIL and its subsidiaries, including Sterling Holiday Resorts Ltd (Sterling), TC Tours Ltd (CRISIL A+/Positive/CRISIL A1), Travel Corporation India Ltd (CRISIL AA-/Positive), SOTC Travel Ltd (‘CRISIL AA-/Positive/CRISIL A1+’), Travel Circle International Ltd, Horizon Travel Services LLC, Travel Circle International (Mauritius) Ltd, and Digi-photo Entertainment Imaging group (DEI) –This is because all these entities, collectively referred to as the Thomas Cook India Group, are strategically important and have considerable operational integration with TCIL.
Mr. Madhavan Menon, Executive Chairman, Thomas Cook (India) Limited said, “CRISIL’s upgraded rating outlook and reaffirmed ratings at ‘CRISIL AA-/CRISIL A1+’ is a strong reiteration of the Thomas Cook India Group’s leadership strength across its business segments of Travel, Forex, Holidays, Hospitality and Digital Imaging services. These, factor in both the Group’s continued focus on cost management and its accelerated digital-first delivery, expected to drive momentum in the medium term. The TCIL Group reported its highest ever profits in FY24, with every business and geography contributing to the profitability. Given the unabated growth in travel and travel related services demand, we see a strong season and year ahead.’’
Author: Jaun Shahi
Journalist, Sub-Editor, Travellers’ World Jaun is a soft-spoken and gentle soul who thrives as a Journalist with his exceptional observation skills and an eye for intricate details. He is a true multitasker who efficiently handles various tasks and always brings a professional approach to everything he does. His genuine team spirit makes him an integral part of the TW family, as he consistently collaborates and supports his colleagues.
