Indian Hotels Company (Q3 FY13)

India Infoline News Service | Mumbai |

Lack of adequate demand and incoming supply led to tepid Q3 standalone revenues at +4.4% yoy in what is seasonally a strong quarter for the industry

CMP Rs62, Target Rs57, Downside 8.7% 
  • Lack of adequate demand and incoming supply led to tepid Q3 standalone revenues at +4.4% yoy in what is seasonally a strong quarter for the industry; weak topline growth indicate ARRs/occupancies remained subdued across key luxury/ business markets 

  • Standalone EBIDTA margin improved 87bps to 27.8% on ~10% yoy decline in staff costs due to actuarial valuation of benefits liability; a 20% yoy reduction in interest costs led to 10% rise in pre tax, pre exceptional standalone income

  • Consolidated Q3 revenues were muted at +5.3% yoy while margin remained essentially flat at 19.8%; reported PAT flat yoy as benefit of lower interest expenses was somewhat negated by higher effective tax rate 

  • We continue to remain cautious on the stock as state of domestic demand implies ARRs are unlikely to post significant upside; on the international front, company remains satisfied with the performance of major properties barring Pierre in NY which continues to remain lackluster; management has reiterated that bridging the ARR gap with peers is the key in potential turnaround of the property; retain our Market Performer rating with 9-mth target of Rs57 

Results table (consolidated)
(Rs m) Q3 FY13 Q3 FY12 % yoy 9m FY13 % yoy
Net sales 10,605 10,067 5.3 27,268 10.8
License fees (697) (559) 24.6 (1,537) 25.3
Raw material (1,024) (1,031) (0.7) (2,799) 6.1
Personnel (3,172) (3,107) 2.1 (9,462) 11.1
Power & fuel (722) (650) 11.2 (2,155) 18.3
Other overheads (2,890) (2,675) 8.0 (7,816) 14.1
Operating profit 2,100 2,044 2.7 3,499 (1.9)
OPM (%) 19.8 20.3 (51) bps 12.8 (166) bps
Depreciation (723) (600) 20.4 (2,174) 14.8
Interest (428) (569) (24.7) (1,246) (25.6)
Other income 131 205 (36.0) 481 (20.1)
PBT 1,079 1,079 - 560 (7.2)
Tax (480) (395) 21.5 (567) (14.8)
Minority interest (84) (148) (43.2) (399) 171.5
Adjusted PAT 516 537 (3.9) (406) 93.9
Extra ordinary items (18) (47) (61.1) (5) 35.9
Reported PAT 498 490 1.5 (411) 92.9
Source: Company, India Infoline Research
Note: Q3 FY12/13 figures are derived from respective 9m & H1 FY12/13 financials 
 
Financial summary 
Y/e 31 March (Rs m) FY11 FY12 FY13E FY14E
Revenues 28,625 34,327 37,952 42,119
yoy growth (%) 13.5 19.9 10.6 11.0
Operating profit 4,524 5,457 5,048 5,728
OPM (%) 15.8 15.9 13.3 13.6
Reported PAT (873) 31 89 529
yoy growth (%) (36.2) - 189.3 497.1
         
P/BV (x) 1.7 1.5 1.6 1.6
EV/EBITDA (x) 19.5 15.5 16.6 14.3
Debt/Equity (x) 1.5 1.3 1.3 1.3
ROE (%) (2.6) 0.1 0.3 1.8
ROCE (%) 3.5 4.5 3.9 4.8
Source: Company, India Infoline Research
 

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