International Travel House-500213 : A Safe under value stock of ITC Group company at CMP of Rs 170 one year Target Rs 220

    About Company: International Travel House is an associate company of ITC Limited operating in premium travel segment. ITH is in operations since last 35 years. It has grown to be the largest complete travel management company in India, with each of its products and services bearing the distinct ISO 9001 quality benchmarking. With a network of 10 IATA travel offices, 16 car rental offices and 15travel counters across India as well as a global tie-up that extends the company’s reach to almost all the major travel destinations of the world, providing access to 75 partners in 63 countries through the Global Star Travel Management System, International Travel House stands tall as India’s leading Travel Management Company.

Financial Performance of Company: Company has maintained profitability in last 5 years and consistently paid dividend for last five years.

	2016-E		2015	2014	2013	2012	2011
Revenue	198		180.63	171.71	164.33	163.1	146.07
Other Income	5		2.85	4.74	3.3	3.39	1.69
Total Income	203		183.48	176.45	167.63	166.49	147.76
Expenditure	-166		-150.43	-140.47	-130.64	-128.03	-112.16
Interest	0		-0.1	-0.02	-0.04	-0.08	-0.23
PBDT	37		32.95	35.96	36.96	38.38	35.37
Depreciation	-12		-6.74	-9.89	-11.05	-10.61	-10.02
PBT	25		26.21	26.08	25.91	27.77	25.35
Tax	-7.4		-7.83	-7.97	-7.99	-8.71	-8.64
Net Profit	17.6		18.38	18.11	17.92	19.06	16.71
Equity	8		8	8	8	7.99	7.99
EPS	20		22.99	22.65	22.41	23.84	20.9
CEPS			31.42	35.01	36.23	37.13	33.45
OPM %			18.3	20.95	22.51	23.58	24.37
NPM %	9%		10.17	10.55	10.9	11.69	11.44
Dividend	42.50%		42.50%	42.50%	42.50%	42.50%	38%

Positives:

a)        Strong promoters viz : ITC

b)        Debt free company

c)         Increasing book value : 2015-16 expected BV of Rs 190

d)       Dividend yield at CMP(165-170) :2.5%

e)        Low Valuation : CMP at low PE of 8-8.5 Based upon expected EPS Of Rs20 for FY-2015-16

f)        Technically bottom out

g)       Cheapest among peers such as cox and kings, Thomas Cook

h)       Low fuel cost, increase in inbound tourism due to recent E-visa introduction by GOI should help in improving margins and revenue.

i)         Improving economy should help in overall  business improve

j)         Other Investments in  mutual funds should fetch better returns with improvement in stock indices

Major concerns:

1)       Decreasing EBITDA margins

2)       Low revenue growth in last 5 years

Technical:

Stock has technically bottom out at 165 and seen a reversal at that level.

Long term investor can start accumulating this stock at current levels of 170-172 with a time frame of one year with a price target of Rs 220 which could easily give a safe return of 30-35% in one year.