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Indian Hotels Company (Q2 FY13)

India Infoline News Service | Mumbai |

Indian Hotels Company (Q2 FY13)

CMP Rs63, Target Rs57, Downside 9.8%

  • Q2 consolidated revs increased 9.4% yoy while standalone revenues rose 6% yoy weighed down by a combination of lean season (tepid demand) in domestic market and robust room supply (+23% yoy) in H1 FY13
  • OPM declined 543bps in standalone business as higher fuel prices, new hotel capacity led to ~24% jump in fuel costs; consolidated margin too fell 409bps yoy
  • Margin decline led to widening of consolidated pre tax loss in Q2 though lower interest costs partially mitigated the impact; lower margin yoy and higher depreciation due to new hotel commissioning led to pre tax loss of Rs95mn in standalone business though tax credit of Rs34mn narrowed the reported loss to Rs64mn
  • Although H2 is traditionally a strong half of the fiscal, we remain cautious as the state of domestic demand implies ARRs are unlikely to post significant upside; on the international front, revival in Pierre hotel (New York) is a must for any potential turnaround of US portfolio; revise our FY13/14 EPS estimates based on H1 numbers but retain our Market Performer rating with 9-mth target of Rs57
Results table (consolidated)
(Rs m)Q2 FY13Q2 FY12% yoyH1 FY13% yoy
Net sales8,1387,4399.416,66414.5
License fees(417)(329)26.7(840)25.9
Raw material(876)(841)4.2(1,776)10.5
Power & fuel(742)(610)21.6(1,433)22.2
Other overheads(2,545)(2,204)15.5(4,926)17.9
Operating profit384655(41.4)1,399(8.1)
OPM (%)4.78.8(409) bps8.4(207) bps
Other income213270(20.9)350(12.0)
Minority interest(169)(3)-(314)-
Adjusted PAT(678)(526)29.0(921)23.5
Extraordinary items10345128.013(70.0)
Reported PAT(575)(481)19.6(908)29.2
Source: Company, India Infoline Research
Note: Q2 FY13 figures are derived from H1 numbers

Financial summary
Y/e 31 March (Rs m)FY11FY12FY13EFY14E
yoy growth (%)13.519.910.611.0
Operating profit4,5245,4575,2756,065
OPM (%)15.815.913.914.4
Reported PAT(873)31248765
yoy growth (%)(36.2)-710.2208.4
EPS (Rs)(1.1)-0.31.0
P/BV (x)
EV/EBITDA (x)19.615.515.813.5
Debt/Equity (x)
ROE (%)(2.6)
ROCE (%)
Source: Company, India Infoline Research


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