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Taj GVK Hotels
L o w e r o c c u p a n c y h i t t o p l i n e …
Taj GVK’s growth in Q1FY12 remained lower than our expectations with
decline in revenue by 3.4% YoY. The company posted net revenues of |
58.9 crore as against our estimated net revenues of | 69.8 crore. The
growth remained subdued mainly due to subdued occupancy level and flat
room rates (ARRs). However, operating expenses at | 38.4 crore remained
flat YoY as growth in employee cost and fuel cost by 6% YoY and 2% YoY
was offset by a decline in raw material cost and other cost by 4% and 1%,
respectively. Operating margins during Q1FY12 declined by 222 bps YoY to
34.8%. Net profit for the quarter surged by 19% YoY to | 12 crore, due to
tax benefit for capital expenditure incurred for Taj-Begumpet.
ƒ Occupancy de-growth, flat ARR dent topline
The decline in revenues during Q1FY12 was mainly led by a
downward pressure in occupancy and flat ARR due to political
disruption in the Hyderabad region. Hyderabad reported average
occupancy levels of 56% for the quarter while Chandigarh and
Chennai recorded higher occupancy levels of 75% and 63%,
respectively, for the quarter.
ƒ Margin pressure continues on lower topline growth
The operating margin stood at 34.8% for the quarter that remained
under pressure on account of lower-than-expected growth in sales.
However, reduction in raw material costs (down 4% YoY) and other
expenses (down 1% YoY) restricted further erosion in margins.
V a l u a t i o n s
At the CMP of | 99, the stock is trading at 8.6x and 6.7x its FY12E and
FY13E EV/EBITDA, respectively. Despite concerns over rise in room supply
in Hyderabad, Taj GVK is expected to maintain its market share in our
forecast period of FY10-13E as it is competitively positioned in terms of
room rates against its competitors. Hence, we have maintained our HOLD
rating on it with a target price of | 110 (i.e. at 7.3x FY13E EV/EBITDA).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Taj GVK Hotels
L o w e r o c c u p a n c y h i t t o p l i n e …
Taj GVK’s growth in Q1FY12 remained lower than our expectations with
decline in revenue by 3.4% YoY. The company posted net revenues of |
58.9 crore as against our estimated net revenues of | 69.8 crore. The
growth remained subdued mainly due to subdued occupancy level and flat
room rates (ARRs). However, operating expenses at | 38.4 crore remained
flat YoY as growth in employee cost and fuel cost by 6% YoY and 2% YoY
was offset by a decline in raw material cost and other cost by 4% and 1%,
respectively. Operating margins during Q1FY12 declined by 222 bps YoY to
34.8%. Net profit for the quarter surged by 19% YoY to | 12 crore, due to
tax benefit for capital expenditure incurred for Taj-Begumpet.
ƒ Occupancy de-growth, flat ARR dent topline
The decline in revenues during Q1FY12 was mainly led by a
downward pressure in occupancy and flat ARR due to political
disruption in the Hyderabad region. Hyderabad reported average
occupancy levels of 56% for the quarter while Chandigarh and
Chennai recorded higher occupancy levels of 75% and 63%,
respectively, for the quarter.
ƒ Margin pressure continues on lower topline growth
The operating margin stood at 34.8% for the quarter that remained
under pressure on account of lower-than-expected growth in sales.
However, reduction in raw material costs (down 4% YoY) and other
expenses (down 1% YoY) restricted further erosion in margins.
V a l u a t i o n s
At the CMP of | 99, the stock is trading at 8.6x and 6.7x its FY12E and
FY13E EV/EBITDA, respectively. Despite concerns over rise in room supply
in Hyderabad, Taj GVK is expected to maintain its market share in our
forecast period of FY10-13E as it is competitively positioned in terms of
room rates against its competitors. Hence, we have maintained our HOLD
rating on it with a target price of | 110 (i.e. at 7.3x FY13E EV/EBITDA).
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