Update: In an earlier version of the story, the fall in Cox & Kings’ stock was not adjusted as per the company’s stock split in 2011. This has been corrected. We regret the error.
Having survived 260 years, Cox & Kings is the world’s oldest travel company. It pre-dates the formation of the United States of America, has survived two world wars, and almost all the global economic meltdowns in the history of modern civilisation. It has even migrated continents, moving from its birthplace of England to its current home in India.
To sum up the brand in one word—it is resilient.
Take 2009, for instance. Even as capital markets were crawling out from under the debris left by the financial crisis, Cox & Kings decided to cash in on its growth over the past decade. It had gone from an also-ran to second in the travel space behind only SOTC between 2000 and 2008, and now planned to go public in India.
Dalal Street welcomed the move with open arms as everyone was betting on tourism to grow in an emerging market like India. The Indian travel market is estimated to grow to $48 billion by 2020, according to a report from Google and the Boston Consulting Group. Investors were chomping at the bit. The company’s initial public offering (IPO) was oversubscribed more than six times and had a stellar listing. The stock ended its first day on the bourses at Rs 425 ($6)/share, a 28% gain from the issue price of Rs 330 ($4.6)/share.
The IPO was meant to arm Cox & Kings with the funds it needed to duke it out with new-age travel technology companies like US-based Expedia or homegrown rival MakeMyTrip. To, as it were, future-proof the company. But since listing, the company has not created any value for its shareholders and is trading at a 10% discount from its offer price.
On 14 February, the company posted its third quarter results for FY19, and it was a mixed bag.
Here’s a quick snapshot of Cox & Kings’ earnings:
The street didn’t take a liking to these numbers. The very next day, the stock dropped around 7%—falling below Rs 145 ($2)/share. At present, it’s trading near Rs 150/share. ICICI Securities, in a note on 15 February, also downgraded the rating on the stock from ‘Buy’ to ‘Hold’.
Cox & Kings’ predicament is especially poignant in the context of the rapidly growing Indian travel market. For a legacy business like Cox & Kings to not create any value for its shareholders in a period during which the industry has grown is peculiar.