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H i g h e r o p e r a t i n g c o s t d e n t s m a r g i n s …
Kamat Hotels reported net sales of | 32.9 crore (up 5% YoY, 1.2% QoQ).
This remained in line with our expectations (I-direct estimate: | 34.2
crore). The growth in revenue came on the back of an increase in
occupancy level in Orchid and VITS. On the other hand, operating costs
for the quarter remained higher and grew 30.7% YoY to | 23.1 crore.
Among operating costs components, raw material and employee costs
increased 27.4% and 47.4% YoY, respectively. The company reported a
net loss of | 1.35 crore (I-direct estimate: profit of | 3.9 crore) mainly due
to a sharp rise in interest cost to | 5.6 crore from | 1.6 crore in Q4FY10.
ƒ Muted topline growth
Kamat Hotels’ Q4FY11 topline grew by a mere 5% YoY to | 32.9
crore despite a gradual pick-up in demand for hotel rooms from
corporate travellers and recovery in demand from the MICE
segment compared to the last quarter. Occupancy levels have
improved across all four brands. Revenue growth remained lower
on subdued ARR growth in Orchid Mumbai.
ƒ Higher employee and raw material cost takes toll on margins
Operating costs for Q4FY11 remained higher and grew notably by
30.6% YoY to | 23.1 crore. Among operating cost components, the
raw material and employee costs increased 27.4% and 47.4% YoY,
respectively. As a result, operating margins declined by 1377 bps
YoY to 29.7%.
V a l u a t i o n s
We expect FY11-13E revenue CAGR of 25% taking into account addition
of nearly 128 rooms at its existing property in Mumbai. At the CMP of |
97, the stock is trading at 10.1x and 8.3x its FY12E and FY13E EV/EBITDA,
respectively. We remain positive on the company on account of the
favourable long-term room demand-supply scenario in Mumbai
compared to other metros. We value the stock at 9.0x FY13E EV/EBITDA
and arrive at a target price of | 118 with a BUY rating
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h e r o p e r a t i n g c o s t d e n t s m a r g i n s …
Kamat Hotels reported net sales of | 32.9 crore (up 5% YoY, 1.2% QoQ).
This remained in line with our expectations (I-direct estimate: | 34.2
crore). The growth in revenue came on the back of an increase in
occupancy level in Orchid and VITS. On the other hand, operating costs
for the quarter remained higher and grew 30.7% YoY to | 23.1 crore.
Among operating costs components, raw material and employee costs
increased 27.4% and 47.4% YoY, respectively. The company reported a
net loss of | 1.35 crore (I-direct estimate: profit of | 3.9 crore) mainly due
to a sharp rise in interest cost to | 5.6 crore from | 1.6 crore in Q4FY10.
ƒ Muted topline growth
Kamat Hotels’ Q4FY11 topline grew by a mere 5% YoY to | 32.9
crore despite a gradual pick-up in demand for hotel rooms from
corporate travellers and recovery in demand from the MICE
segment compared to the last quarter. Occupancy levels have
improved across all four brands. Revenue growth remained lower
on subdued ARR growth in Orchid Mumbai.
ƒ Higher employee and raw material cost takes toll on margins
Operating costs for Q4FY11 remained higher and grew notably by
30.6% YoY to | 23.1 crore. Among operating cost components, the
raw material and employee costs increased 27.4% and 47.4% YoY,
respectively. As a result, operating margins declined by 1377 bps
YoY to 29.7%.
V a l u a t i o n s
We expect FY11-13E revenue CAGR of 25% taking into account addition
of nearly 128 rooms at its existing property in Mumbai. At the CMP of |
97, the stock is trading at 10.1x and 8.3x its FY12E and FY13E EV/EBITDA,
respectively. We remain positive on the company on account of the
favourable long-term room demand-supply scenario in Mumbai
compared to other metros. We value the stock at 9.0x FY13E EV/EBITDA
and arrive at a target price of | 118 with a BUY rating
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