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D i s m a l p e r f o r m a n c e o n l o w e r o c c u p a n c y …
Taj GVK reported its Q2FY12 results, which were in line with our estimate
on the revenue front, which remained flat (down ~1% YoY) at | 59.2
crore (I-direct estimate: | 57.4 crore) while PAT at | 4.3 crore was below
our estimate of | 7.7 crore. The muted topline growth can mainly be
attributed to lower growth in occupancy and average room rate (ARR)
across the Hyderabad region. However, operating profit increased by a
marginal 1% YoY on the back of a dip in raw material cost and other
expenses by 5% each, which led to a decline in the total operating cost
by 2% YoY. Operating margins during Q2FY12 surged by 68 bps YoY to
33%. Finally, PAT during the quarter saw a significant drop of 42% YoY to
| 4.3 crore, on the back of a rise in tax expenses by 82% YoY as the
company made deferred tax provision of | 7.03 crore in Q2FY12.
ƒ Topline hit by lean season coupled with political disruptions
Taj GVK’s topline was primarily hit by lower occupancy (down by
~550 bps YoY) and muted ARR across the Hyderabad region, which
suffered from the Telangana agitation. However, Chandigarh and
Chennai recorded higher occupancy levels of 67% and 63%,
respectively, for the quarter.
ƒ Cost control measure helps in margin expansion
The operating margin expanded by 68 bps YoY to 33% for the
quarter due to a decline in operating expenditure by 2% YoY to |
39.7 crore. Major cost driver such as employee cost and P&F cost
surged by 1% and 7% YoY, respectively, which was partially offset
by a decline in raw material cost & other expenses by 5% YoY each.
V a l u a t i o n s
At the CMP of | 92, the stock is trading at 8.1x and 6.8x its FY12E and
FY13E EV/EBITDA, respectively. We believe the concern on room supply
and political disruption in Hyderabad have been factored in the price.
The company is expected to maintain its market share in our forecast
period of FY11-13E due to its competitive room rates. Hence, we have
maintained our price target of | 110 (i.e. at 8x FY13E EV/EBITDA) with a
BUY rating
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i s m a l p e r f o r m a n c e o n l o w e r o c c u p a n c y …
Taj GVK reported its Q2FY12 results, which were in line with our estimate
on the revenue front, which remained flat (down ~1% YoY) at | 59.2
crore (I-direct estimate: | 57.4 crore) while PAT at | 4.3 crore was below
our estimate of | 7.7 crore. The muted topline growth can mainly be
attributed to lower growth in occupancy and average room rate (ARR)
across the Hyderabad region. However, operating profit increased by a
marginal 1% YoY on the back of a dip in raw material cost and other
expenses by 5% each, which led to a decline in the total operating cost
by 2% YoY. Operating margins during Q2FY12 surged by 68 bps YoY to
33%. Finally, PAT during the quarter saw a significant drop of 42% YoY to
| 4.3 crore, on the back of a rise in tax expenses by 82% YoY as the
company made deferred tax provision of | 7.03 crore in Q2FY12.
ƒ Topline hit by lean season coupled with political disruptions
Taj GVK’s topline was primarily hit by lower occupancy (down by
~550 bps YoY) and muted ARR across the Hyderabad region, which
suffered from the Telangana agitation. However, Chandigarh and
Chennai recorded higher occupancy levels of 67% and 63%,
respectively, for the quarter.
ƒ Cost control measure helps in margin expansion
The operating margin expanded by 68 bps YoY to 33% for the
quarter due to a decline in operating expenditure by 2% YoY to |
39.7 crore. Major cost driver such as employee cost and P&F cost
surged by 1% and 7% YoY, respectively, which was partially offset
by a decline in raw material cost & other expenses by 5% YoY each.
V a l u a t i o n s
At the CMP of | 92, the stock is trading at 8.1x and 6.8x its FY12E and
FY13E EV/EBITDA, respectively. We believe the concern on room supply
and political disruption in Hyderabad have been factored in the price.
The company is expected to maintain its market share in our forecast
period of FY11-13E due to its competitive room rates. Hence, we have
maintained our price target of | 110 (i.e. at 8x FY13E EV/EBITDA) with a
BUY rating
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