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| India Infoline Research Team / 16:07 , May 31, 2011 |
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CMP Rs83, Target price Rs79, Downside 4.8%
- EIH Q4 PAT surged 163% yoy driven by other income of Rs933mn vs Rs22mn in Q4 FY10; revenue growth of 17% yoy was probably led by a combination of higher occupancies and modest ARR rise across key markets, in our view; EBIDTA subdued at +12% yoy impacted by increased overheads; EIH Q4 revenue growth trailed both Indian Hotels (+20% yoy) and Hotel Leela (+18% yoy)
- Company has retired ~Rs4.6bn debt out of a targeted Rs9bn from the Rs11.8bn rights issue concluded in Marβ 11 which would improve D/E to 0.3x in current year from 1x in FY10
- On consolidated basis, EIH posted Rs52mn loss in FY11; cost pressures-staff & other exp-suppressed EBIDTA growth despite a 24% yoy jump in revenues
- EIH would benefit from savings in interest cost on lower debt burden in FY12 even as domestic ARR recovery may pick steam in H2 FY12, which would help improve margin; We factor in debt repayment and raise FY12/13 PAT estimates by 11%/3% and upgrade to Market Performer with a revised 9-mth TP of Rs79 (earlier Rs93).
Result table (standalone)
| (Rs m) |
Q4 FY11 |
Q4 FY10 |
% yoy |
FY11 |
% yoy |
| Net sales |
3,223 |
2,745 |
17.4 |
10,446 |
16.1 |
| Raw materials |
(397) |
(347) |
14.4 |
(1,385) |
16.4 |
| Fuel, Power & Light |
(161) |
(163) |
(0.9) |
(727) |
23.5 |
| Personnel costs |
(811) |
(689) |
17.8 |
(3,189) |
30.3 |
| Other expenditure |
(916) |
(709) |
29.1 |
(2,788) |
23.0 |
| Operating profit |
938 |
838 |
12.0 |
2,357 |
(5.9) |
| OPM (%) |
29.1 |
30.5 |
(140) bps |
22.6 |
(527) bps |
| Depreciation |
(222) |
(210) |
5.8 |
(874) |
28.5 |
| Interest |
(412) |
(285) |
44.4 |
(1,552) |
53.8 |
| Other income |
933 |
22 |
- |
983 |
1,219.7 |
| PBT |
1,237 |
364 |
239.8 |
914 |
2.7 |
| Tax |
(335) |
(109) |
207.2 |
(225) |
(29.3) |
| Effective tax rate (%) |
27.1 |
30.0 |
(287) bps |
24.6 |
(1,112) bps |
| Adjusted PAT |
902 |
255 |
253.7 |
690 |
20.5 |
| Adj. PAT margin (%) |
28.0 |
9.3 |
1,870 bps |
6.6 |
- |
| Extra ordinary items |
(231) |
- |
- |
(44) |
- |
| Reported PAT |
670 |
255 |
162.9 |
645 |
12.8 | Source: Company, India Infoline Research
Note: Q4 figures derived from full year numbers
Financial Summary
| Y/e 31 March (Rs m) |
FY10 |
FY11E |
FY12E |
FY13E |
| Revenues |
10,383 |
12,880 |
13,296 |
14,304 |
| yoy growth (%) |
(2.5) |
24.1 |
3.2 |
7.6 |
| Operating profit |
2,944 |
3,013 |
3,231 |
3,576 |
| OPM (%) |
28.4 |
23.4 |
24.3 |
25.0 |
| Pre-exceptional PAT |
1,986 |
(8) |
982 |
1,202 |
| Reported PAT |
1,986 |
(52) |
982 |
1,202 |
| yoy growth (%) |
16.8 |
- |
- |
22.3 |
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| EPS (Rs) |
5.1 |
(0.1) |
1.7 |
2.1 |
| P/E (x) |
16.4 |
- |
48.5 |
39.6 |
| P/BV (x) |
2.3 |
1.9 |
1.8 |
1.8 |
| EV/EBITDA (x) |
15.7 |
17.1 |
16.7 |
15.1 |
| Debt/Equity (x) |
1.0 |
0.4 |
0.3 |
0.3 |
| ROE (%) |
14.1 |
- |
3.8 |
4.6 |
| ROCE (%) |
12.2 |
5.7 |
5.8 |
6.8 | Source: Company, India Infoline Research
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