Crisil upgrades Thomas Cook India’s credit rating

  • The travel service provider said its revenue increased 164% to 50.91 billion in fiscal 2023 from 19.31 billion the previous year owing to the strong resurgence in demand and robust recovery in all business segments

Naman Suri
First Published5 Oct 2023
With the resurgence in demand, TCIL said it has been able to improve its financial risk profile (Photo: AFP)
With the resurgence in demand, TCIL said it has been able to improve its financial risk profile (Photo: AFP)

New Delhi: Ratings agency Crisil said on Thursday it has upgraded Thomas Cook India Limited’s (TCIL’s) rating to AA-/Stable for the long-term and to CRISIL A1 for the short-term. The upgrade comes on the back of Thomas Cook’s sharp revival after the pandemic and a significant increase in revenues across segments as it continues to maintain healthy operating margins benefitting cash generation, Crisil said in a statement.

“Crisil’s upgraded ratings to ‘AA-/Stable’ is a strong endorsement of Thomas Cook India’s leadership position across the sectors we operate in and our balance sheet strength,” said Madhavan Menon, executive chairman, TCIL. “Our rapid growth post-pandemic on the back of accelerated digital transformation and strong cost prudence has been pivotal in the delivery of record operating profits for FY23, which were sustained in Q1 FY24.”

With the resurgence in demand and business activities, TCIL has also been able to improve its financial risk profile. The company said its strong business risk profile has helped limit debt, which in turn has aided a healthy capital structure as high customer advances continued supporting liquidity. The upgraded ratings, the company said, factor in the strong support from its parent firm, Fairfax Financial Holdings Ltd.

“The ratings are indicative of TCIL’s strong business risk profile with a leadership position in travel and foreign exchange segments and healthy presence in hospitality (Sterling Holiday Resorts) and digi-photo imaging (DEI) segments,” it added.

The travel service provider said it saw a significant scale-up of operations with a material improvement in overall revenue – an increase of 164% to 50.91 billion in fiscal 2023 from 19.31 billion – owing to the strong resurgence in demand and robust recovery in all business segments.

“Revenue witnessed sustained momentum across segments in the first quarter of fiscal 2024 as well, with an increase of 94% yoy to 18.98 billion. Driven by a strong travel appetite, TCIL has also witnessed record growth as operating profits (operating EBITDA) tripled in Q1 FY24 to 1.47 billion ,” it added.

TCIL was also able to maintain its margins and return on capital employed (ROCE) as it had structural reductions in costs, the company said. “Operating margins, having surpassed pre-pandemic levels at 5.3% in fiscal 2023, improved further to 6.5% during the first quarter of fiscal 2024,” it said. These margins are expected to remain at similar levels over the medium term as benefits from these structural cost-saving measures will continue to accrue, TCIL added.

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