Best Travel Stock: Thomas Cook vs Easy Trip Planners

The travel and tourism industry is experiencing a global renaissance.

Fueled by a rise in disposable income, technological advancements, and our insatiable human desire for exploration, travel is booming like never before.

In India, this trend is particularly evident. The travel and tourism sector stands as one of the country's largest service industries, contributing nearly 6% to the nation's GDP.

To ensure that the industry continues to support the country's growth, the Indian government is actively investing in infrastructure and transportation development.

All these factors could help the industry grow at a CAGR of 9% in the next five years, making the future of travel in India even brighter.

While the Indian travel market boasts numerous players, two established organisations stand poised to capitalise on this surging travel craze: Thomas Cook (India) and Easy Trip Planners.

Let's compare both these companies on various parameters to see which one's a better travel player.

Business Overview

# Thomas Cook (India)

Thomas Cook is a leading omnichannel travel company in India offering a wide range of services, including travel, financial, leisure, and hospitality services.

It offers domestic and international tour packages to B2B and B2C customers and forex services for retail and corporate purposes. It is currently a market leader in the Forex prepaid card segment with a 26% market share.

The company also offers hospitality services through its subsidiary, Sterling Holiday Resorts, which has 40 resorts across 38 destinations.

# Easy Trip Planners

Easy Trip Planners, India's second-largest online travel tech platform, offers travel-related products and services through its flagship brand, 'Ease My Trip'.

It also provides end-to-end travel solutions such as airline tickets, train tickets, bus tickets, hotels, holiday packages, and other value-added services.

The company also offers hospitality services through Spree Hospitality, which has a diversified portfolio of properties across 45 locations.

It also offers charter solutions to its customers through its subsidiary Nutana Aviation Capital.

Recently, the company ventured into the insurance sector through its subsidiary, EaseMyTrip Insurance Broker Private.

Particulars	Thomas Cook (India)	Easy Trip Planners
Market Cap (in Rs billion)*	92.1	77.6

Source: Equitymaster|*as of April 19, 2024

In terms of marketcap, Thomas Cook is a larger company with a marketcap of Rs 92.1 billion (bn), as against Rs 77.6 bn for Easy Trip Planners.

Even in terms of service provider network and reach, Thomas Cook is ahead. It has a network across 28 countries on five continents with over 800 touchpoints. Annually, the company handles over 1.5 million (m) customers.

Easy Trip Planners, on the other hand, has the largest agent network across India, with over 60,000 agents across B2E (business-to-employee), B2C (business-to-consumer), and B2B2C (business-to-business-to-consumer) distribution channels.

It also has international offices in several countries including Singapore, UK, UAE, Thailand, New Zealand, and USA. It has served over 20 million (m) customers until date.

If we compare the two companies in terms of their performance on the bourses, Thomas Cook has outpaced Easy Trip Planners. In the last year, shares of the company have zoomed over 190%.

Easy Trip Planners' shares, on the other hand, fell marginally by 2.5%, and the benchmark index Nifty 50 has given a 25% return in the last year.

# Revenue

Travel companies mainly earn their revenue from commissions and monitoring the revenue pattern tells whether the company is able to do higher business than what it did in the previous years.

In terms of revenue growth, Easy Trip Planners has outpaced Thomas Cook.

In the last five years, the company's revenue grew at a CAGR of 34.7%, whereas Thomas Cook's revenue fell at a CAGR of 5.2%.

The primary reason behind consistent revenue growth despite the pandemic-led lockdown is the company's strategic acquisitions and partnerships with hotels, airlines, travel technologies, and various other travel service providers in other countries.

These partnerships and acquisitions have helped the company diversify its revenue across multiple streams, such as ticket bookings, hotel bookings, holiday packages, and insurance.

Thomas Cook's revenue fell by over 90% during the pandemic. However, in the last three years, the company's revenue has grown steadily, driven by a rebound in the travel and tourism industries.

In the last three years, the revenue of the company grew at a CAGR of 85%. However, it couldn't rebound back to pre-Covid levels until financial year 2023.

In the financial year 2024, Thomas Cook has posted strong numbers in the first three quarters.

Revenue

Net Sales (in Rs m)	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023	5-Year CAGR
Thomas Cook (India)	66,033	68,326	7,950	18,882	50,477	-5.2%
Easy Trip Planners	1,011	1,414	1,385	2,354	4,488	34.7%

Data Source: Equitymaster

# Profitability

In terms of profitability, Easy Trip Planners is again leading.

In the last five years, the earnings before interest tax depreciation and amortisation (EBITDA) has grown at a CAGR of 258.3% driven by growth in revenue, and its focus on lowering the discounts at operational costs.

The net profit also grew at a CAGR of 35.6% during the same period. Easy Trip Planners also has high gross and net profit margins compared to Thomas Cook.

Thomas Cook's EBITDA grew at a CAGR of 5.5% in the last five years. The pandemic affected the company's profits and hence it reported losses in financial year 2021 and 2022.

With a rebound in travel, the company is expected to improve its margins going forward.

Profitability

EBITDA (in Rs m)	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023	5-Year CAGR
Thomas Cook (India)	1,350	672	-3,569	-1,914	1,764	5.5%
Easy Trip Planners	3	176	779	1,331	1,771	258.3%
PAT (in Rs m)	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023	5-Year CAGR
Thomas Cook (India)	888	-177	-2,952	-2,539	104	-34.9%
Gross Profit Margin	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023
Thomas Cook (India)	2.0%	1.0%	-44.9%	-10.1%	3.5%
Easy Trip Planners	0.3%	12.4%	56.2%	56.5%	39.5%
Net Profit Margin	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023
Thomas Cook (India)	1.3%	-0.3%	-37.1%	-13.4%	0.2%
Easy Trip Planners	29.0%	23.3%	44.1%	45.0%	29.9%

Data Source: Equitymaster

# Debt Management

It's important to monitor the debt of a company to understand its financial obligations. A high debt implies high interest cost, which ultimately reduces the net profit.

Thomas Cook had a debt-to-equity ratio of 0.1x at the end of financial year 2023.

Despite undertaking several acquisitions in the last five years to improve and expand its service offerings, the company has managed to reduce its debt by half to Rs 1.4 bn in the last five years.

The company is planning to invest Rs 600 m in capex for the next two years entirely from internal accruals.

Easy Trip Planners, on the other hand, is a debt-free company. The company has acquired multiple businesses in the hospitality and travel sectors in the last five years to expand its service offerings.

It plans to continue to expand its business through acquisitions in the future as well. At present, it has no significant capex planned, but has enough cashflows to meet any big investment that comes its way.

Debt Management

Debt to Equity Ratio (x)	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023
Thomas Cook (India)	0.0	0.1	0.1	0.1	0.1
Easy Trip Planners	0.0	0.0	0.0	0.0	0.0

Data Source: Equitymaster

# Return Ratios

In terms of return ratios, Easy Trip Planners has outpaced Thomas Cook.

In the last five years, the RoCE and RoE of Easy Trip Planners averaged 59.5% and 38.9%, respectively. The return ratios are lower if we compare it with pre-Covid levels, but they are higher than Thomas Cook.

For Thomas Cook, the RoCE is higher than pre-Covid levels at 6.3%, whereas RoE is marginally lower than five years ago. With the improvement in profitability, the return ratios are also expected to improve.

Financial Efficiency

ROCE	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023
Thomas Cook (India)	2.0%	1.8%	-22.4%	-14.5%	6.3%
Easy Trip Planners	73.4%	55.8%	55.0%	61.9%	51.5%
ROE	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023
Thomas Cook (India)	1.0%	-1.1%	-20.2%	-15.2%	0.6%
Easy Trip Planners	43.2%	32.6%	37.5%	44.9%	36.2%

Data Source: Equitymaster

# Dividend

Both Thomas Cook and Easy Trip Planners are not dividend paymasters. They pay low dividends to their shareholders, and the dividends are not consistent either.

In financial year 2023, Thomas Cook paid a dividend of 0.4 per share, with a dividend payout ratio of 181.5%, whereas Easy Trip Planners did not pay any dividend FY23.

Dividend

Dividend Per Share (Rs)	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023	5-Year CAGR
Thomas Cook (India)	0.3	0.0	0.0	0.0	0.4	5.9%
Easy Trip Planners	0.0	0.0	0.1	0.1	0.0	0.0
Dividend Yield	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023
Thomas Cook (India)	0.2%	0.0%	0.0%	0.0%	0.6%
Easy Trip Planners	0.0%	0.0%	0.5%	0.1%	0.0%
Dividend Payout Ratio	Mar -2019	Mar -2020	Mar -2021	Mar -2022	Mar -2023
Thomas Cook (India)	15.6%	0.0%	0.0%	0.0%	181.5%
Easy Trip Planners	0.0%	0.0%	17.8%	10.3%	0.0%

Data Source: Equitymaster

# Valuation

The P/E and P/B ratio of Thomas Cook is 45.2x and 6.7x respectively. For Easy Trip Planners, the P/E and P/B ratios are 51.8x and 12.2x, respectively.

Shares of Easy Trip Planners are overvalued compared to Thomas Cook. If we compare the valuation with their five-year averages, both companies are undervalued.

However, when compared to the industry average, both companies are overvalued.

Valuation

Valuations	Thomas Cook (India)	5-Year Average	Easy Trip Planners	5-Year Average
P/E (x)	45.2	103.2	51.8	65.8
P/B (x)	6.7	1.6	12.2	26.5

Data Source: Equitymaster

Which Travel Stock is Better: Thomas Cook or Easy Trip Planners?

In terms of revenue growth, profit growth, profit margins, debt management, and financial efficiency, Easy Trip Planners has outpaced Thomas Cook.

The company is offering end-to-end travel solutions and has grown primarily through acquisitions in the last few years.

It has ventured into hotels, holiday packages, rail tickets, bus tickets, and most recently into insurance.

It was the first company to come up with a convenience fee strategy, which helped the company reduce its discount costs.

The company has no significant capex planned but is always on the lookout for opportunities that could help the business grow.

Thomas Cook, on the other hand, is a well-established player in the travel industry. Apart from providing end-to-end travel solutions, the company offers forex services and digital imaging solutions to its customers.

Over the next two years, the company planned a capex of over Rs 600 m to expand its reach in various countries.

The travel and tourism industry is all set to grow at a steady rate due to the government's efforts to boost tourism, good infrastructure development, the rising influence of social media, and the growing need to experience new cultures.

Given that both companies are well-established players and well-equipped to capitalise on this growth, we can expect both companies to benefit in the medium term.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here.