Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
East India Hotels -High interest cost lowers bottomline growth…
East India Hotels (EIH) came out with better results on the topline front
this time compared to our estimates. EIH reported net sales of | 301.1
crore (I-direct estimate: | 273.1 crore) that remained above our
expectations. It grew by 26.4% YoY due to the peak season impact.
Operating costs also remained under control despite a 24% rise in raw
material costs. As a result, we have seen a margin expansion of 198 bps
to 34.7% for the quarter. However, with a sharp increase in the interest
cost (up 51% YoY), its net profit grew only 27% YoY to | 28.4 crore.
Revenue growth remains above our expectations
EIH’s topline has remained above our expectations on better
occupancies across its various properties and re-opening of Oberoi,
Mumbai during Q1FY11. Average occupancy levels across key
metro cities grew by 300 bps to 70% while average room rates
(ARRs) for the quarter improved 3.5% YoY. As a result, its operating
revenue grew 26.4% YoY to | 301.1 crore (I-direct estimate: | 273.1
crore).
Higher interest cost puts pressure on bottomline
Interest cost continued to remain higher during the quarter. It
increased by 40.2% YoY to | 40.3 crore on account of higher debt.
However, the better operating performance narrowed its impact, to
some extent, on the bottomline.
Valuations
With no major new room inventories by the company in the next two
years, we expect moderate revenue growth of 21.6% and 13.8% for
FY11E and FY12E, respectively. At the CMP of | 97, the stock is trading at
19.5x and 15.5x its FY11E and FY12E EV/EBITDA, (i.e. at a premium to its
peer companies). We have valued the stock at 15.0x FY12E EV/EBITDA)
and arrived at a target price of | 92 with a REDUCE rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
East India Hotels -High interest cost lowers bottomline growth…
East India Hotels (EIH) came out with better results on the topline front
this time compared to our estimates. EIH reported net sales of | 301.1
crore (I-direct estimate: | 273.1 crore) that remained above our
expectations. It grew by 26.4% YoY due to the peak season impact.
Operating costs also remained under control despite a 24% rise in raw
material costs. As a result, we have seen a margin expansion of 198 bps
to 34.7% for the quarter. However, with a sharp increase in the interest
cost (up 51% YoY), its net profit grew only 27% YoY to | 28.4 crore.
Revenue growth remains above our expectations
EIH’s topline has remained above our expectations on better
occupancies across its various properties and re-opening of Oberoi,
Mumbai during Q1FY11. Average occupancy levels across key
metro cities grew by 300 bps to 70% while average room rates
(ARRs) for the quarter improved 3.5% YoY. As a result, its operating
revenue grew 26.4% YoY to | 301.1 crore (I-direct estimate: | 273.1
crore).
Higher interest cost puts pressure on bottomline
Interest cost continued to remain higher during the quarter. It
increased by 40.2% YoY to | 40.3 crore on account of higher debt.
However, the better operating performance narrowed its impact, to
some extent, on the bottomline.
Valuations
With no major new room inventories by the company in the next two
years, we expect moderate revenue growth of 21.6% and 13.8% for
FY11E and FY12E, respectively. At the CMP of | 97, the stock is trading at
19.5x and 15.5x its FY11E and FY12E EV/EBITDA, (i.e. at a premium to its
peer companies). We have valued the stock at 15.0x FY12E EV/EBITDA)
and arrived at a target price of | 92 with a REDUCE rating.
No comments:
Post a Comment