InvestorQ : Cox & Kings has fallen sharply in the last few weeks and I wanted to check if the stock can be purchased at these prices? After tourism is good business, so no harm right?
Mitali Bhutta made post

Cox & Kings has fallen sharply in the last few weeks and I wanted to check if the stock can be purchased at these prices? After tourism is good business, so no harm right?

Answer
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K V RAO answered.
1 year ago


Further Cox and Kings balance sheet as on 31/3/2019 showed cash and equvivalents of Rs. 1800 crores. But in April /May it defaulted on its debt repayments. That gives rise to a suspi whether accounts have been fudged.


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Dawn Cherian answered.
1 year ago


It is not just about the tourism industry or the prospects of the tourism industry. The company has serious cash flow problems and has been constantly defaulting on its regular loan repayments. In fact, last week Cox & Kings defaulted on CPs and this week it has again defaulted on CPs. What is worse is that the rating agencies have been downgraded to speculative status and that means bank funding route is almost closed for Cox & Kings.

In the last few months, Cox & Kings has been trying aggressively to borrow in the long term market and repay its short term markets. But, with its poor credit rating, Cox and Kings was not able to raise funds in the market, which is what led to the second default. You must have seen this in the case of IL&FS and Dewan Housing before that it does not really matter if the prospects of the industry are good. What really matters is that the company should have cash flows available and once the ratings are downgraded to default status, it is impossible to get any further funding either from the banks or from the bond markets. Such stocks are best avoided unless you see some genuine improvement in the way the company monetizes its assets and manages to reduce its debt burden.