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B e t t i n g o n A s s e t V a l u e …
Kamat Hotels reported net sales of | 30.3 crore (up 6.3% YoY, down 7.8%
QoQ) for the quarter ended June’11. This remained marginally below our
expectations (I-direct estimate: | 31.6 crore). The growth in revenue came
in from Nashik (growth of 13% YoY) and Pune region (growth of 20%
YoY) while growth in Mumbai (growth of 5% YoY), which is a key driving
factor remained subdued. Operating costs for the quarter also remained
higher and grew 12% YoY to | 21.3 crore. Among operating costs
components, raw material, employee costs and power and fuel cost
increased 22%, 11% and 15% YoY, respectively. However, with the lower
interest outgo, the company reported ~105% YoY jump in its net profits
to | 0.35 crore (I-direct estimate: profit of | 0.2 crore).
ƒ Demand continues to remain sluggish
Kamat Hotels’ Q1FY12 topline grew by only 6% YoY to | 30.3 crore
on account of subdued demand for hotel rooms especially in
Mumbai, contributing over 85% of topline. Occupancy levels for
Orchid Mumbai increased marginally by 100bps YoY to 71%, while
VITS Mumbai reported 400bps YoY drop in average occupancy
levels to 79% on account of subdued demand.
ƒ Higher employee and raw material cost takes toll on margins
Operating costs for Q1FY12 grew by 12% YoY to | 21.3 crore.
Among operating cost components, the raw material and power and
fuel cost increased by 22% and 15% YoY, respectively. As a result,
operating margins declined by 366 bps YoY to ~30%.
V a l u a t i o n s
At the CMP of | 80, the stock is trading at 10.9x and 7.4x its FY12E and
FY13E EV/EBITDA, respectively. We believe the Mumbai region is still in
the nascent stage of recovery and is yet to make the transition from
occupancy led cycle to the one supported by rising room rates. We lower
our F12E and FY13E EPS by ~36% and ~19% respectively. We value the
stock at 9.0x FY13E EV/EBITDA and lower our target price to |. 95 with a
Buy rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B e t t i n g o n A s s e t V a l u e …
Kamat Hotels reported net sales of | 30.3 crore (up 6.3% YoY, down 7.8%
QoQ) for the quarter ended June’11. This remained marginally below our
expectations (I-direct estimate: | 31.6 crore). The growth in revenue came
in from Nashik (growth of 13% YoY) and Pune region (growth of 20%
YoY) while growth in Mumbai (growth of 5% YoY), which is a key driving
factor remained subdued. Operating costs for the quarter also remained
higher and grew 12% YoY to | 21.3 crore. Among operating costs
components, raw material, employee costs and power and fuel cost
increased 22%, 11% and 15% YoY, respectively. However, with the lower
interest outgo, the company reported ~105% YoY jump in its net profits
to | 0.35 crore (I-direct estimate: profit of | 0.2 crore).
ƒ Demand continues to remain sluggish
Kamat Hotels’ Q1FY12 topline grew by only 6% YoY to | 30.3 crore
on account of subdued demand for hotel rooms especially in
Mumbai, contributing over 85% of topline. Occupancy levels for
Orchid Mumbai increased marginally by 100bps YoY to 71%, while
VITS Mumbai reported 400bps YoY drop in average occupancy
levels to 79% on account of subdued demand.
ƒ Higher employee and raw material cost takes toll on margins
Operating costs for Q1FY12 grew by 12% YoY to | 21.3 crore.
Among operating cost components, the raw material and power and
fuel cost increased by 22% and 15% YoY, respectively. As a result,
operating margins declined by 366 bps YoY to ~30%.
V a l u a t i o n s
At the CMP of | 80, the stock is trading at 10.9x and 7.4x its FY12E and
FY13E EV/EBITDA, respectively. We believe the Mumbai region is still in
the nascent stage of recovery and is yet to make the transition from
occupancy led cycle to the one supported by rising room rates. We lower
our F12E and FY13E EPS by ~36% and ~19% respectively. We value the
stock at 9.0x FY13E EV/EBITDA and lower our target price to |. 95 with a
Buy rating on the stock.
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