Tuesday tidbits

Adani Enterprises has been consistently moving lower over the last few days today due to the adverse reports about IT dept’s sudden and probably unwarranted interest in it and has now come below 300.Though the budget had some positive news for Adani (reduction in Custom duties on coal), the overall gloom in the market hasn’t helped Adani recover. Technical analysts forecast anywhere around 250 or lower in the coming days/weeks. As analyzed earlier, nothing has really changed in the last few days/weeks to warrant such a drastic reaction (a drop of about 25-30% from the price then). So my personal thinking is that this or further down is as good as any chance to buy in. It must be noted that it has zoomed in a matter of weeks earlier on.

Cox & Kings is the only other (and probably major) listed operator (inbound and outbound tours) after Thomas Cook (TC) in the Travel & Tourism sector, with strong brand equity. In Sept ’11 they acquired a leading UK-based tour operator Holidaybreak plc (HBR) utilizing the huge cash on its books. HBR is a theme travel company in education space. This company does camps, educational tours etc with robust cash flows in a fairly recession proof industry. C&K has a track record of successful acquisitions earlier (once for Visa processing services and also a JV with our very own IRCTC for luxury tourism). Though the lean season period for HBR coupled with losses in Japan (due to tsunami destruction) and Middle-East troubles resulted in losses for C&K, it is expected to benefit going ahead, once the situation in these regions stabilizes. There were reports that it was in the running for Thomas Cook (though the company reportedly denied it). It remains to be seen whether that actually happens. Similar to TC, this has never been a cheap stock and once TC is out (bought out by someone and/or delisted this year) will remain so due to a good brand equity and scarcity premium in this business for a listed entity.