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Indian Hotels (Q1 FY13)

Indian Hotels continues to report tepid performance with standalone revenues up just ~7% yoy along with pressure on margins (down 170bps yoy)

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs60, Target Rs57, Downside 5%

  • Indian Hotels continues to report tepid performance with standalone revenues up just ~7% yoy along with pressure on margins (down 170bps yoy)
  • Lower margin and other income on yoy basis combined with higher interest cost resulted in an ~80% fall in standalone PAT
  • On consolidated basis too net loss widened yoy to Rs334mn on increased depreciation, minority/associate losses and Rs91mn in FX loss; revenue growth of ~20% yoy helped by merger of Piem Hotels in May 2011 and some improvement in domestic portfolio
  • Although H1 is usually lean season for hospitality players, the weak standalone growth and margin decline compared to previous year nonetheless suggests demand remains lackluster which in turn preclude any material rise in ARRs; based on Q1 consolidated results, we cut FY13/14 estimates and do not foresee any near term catalyst. Retain Market Performer rating with 9-mth tgt of Rs57  
Results table (consolidated)
(Rs m) Q1 FY13 Q1 FY12 % yoy
Net sales 8,526 7,116 19.8
License fees (424) (339) 25.2
Raw material (899) (766) 17.4
Personnel (3,116) (2,609) 19.4
Power & fuel (691) (563) 22.8
Other overheads (2,381) (1,973) 20.7
Operating profit 1,015 868 16.9
OPM (%) 11.9 12.2 (29) bps
Depreciation (714) (602) 18.7
Interest (438) (490) (10.7)
Other income 137 129 6.6
PBT (0) (96) (99.9)
Tax (97) (129) (24.6)
Minority interest (146) 4 -
Adjusted PAT (243) (220) 10.5
Extra ordinary items (91) (3) -
Reported PAT (334) (223) 49.8
Source: Company, India Infoline Research

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 5,427 6,149
OPM (%) 15.8 15.9 14.3 14.6
Pre-exceptional PAT (671) 35 354 823
Reported PAT (873) 31 354 823
yoy growth (%) (36.2) - - 132.5
         
P/BV (x) 1.6 1.5 1.5 1.5
EV/EBITDA (x) 19.1 15.1 15.0 12.9
Debt/Equity (x) 1.5 1.3 1.3 1.2
ROE (%) (2.6) 0.1 1.2 2.7
ROCE (%) 3.5 4.5 4.4 5.4
Source: Company, India Infoline Research

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