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H i g h e r c o s t d e n t s m a r g i n s …
Kamat Hotel’s Q2FY12 results were marginally below our expectation
wherein the company’s net sales improved ~6% YoY to | 29.8 crore (Idirect estimate: | 30.9) while PAT was up by 2% YoY at ~ | 0.16 crore (Idirect estimate: ~| 0.19 crore). The revenue growth was on the back of
marginal growth in average occupancy level (up ~100 bps YoY to 63%)
while ARR across major operating regions remained flat. The EBITDA
margin declined ~509 bps YoY to 28.3% mainly on the back of 14% YoY
growth in operating expenses to | 21.3 crore. However, with the lower
interest outgo and depreciation cost, the company reported ~2% YoY
jump in its net profit to ~| 0.16 crore supported by a sharp rise in other
income.
ƒ Topline growth in the grip of subdued ARR
During Q2FY12, Kamat Hotel’s topline grew by only 6% YoY to |
29.8 crore mainly due to the lean season and decline in MICE
activity across the company’s main operating region Mumbai, which
contributes over 85% of topline. Occupancy levels across Mumbai
remained subdued at 63% (up ~100 bps YoY) while ARR grew by a
mere 2-3% across regions.
ƒ Margin shrinks on higher operating cost
Operating costs for Q2FY12 grew 14% YoY to | 21.3 crore. Among
operating cost components, raw material, employee cost and power
& fuel cost increased by 13%, 19% and 25% YoY, respectively. As a
result, operating margins declined 509 bps YoY to ~28%.
V a l u a t i o n s
At the CMP of | 110, the stock is trading at 10.2x and 8.7x its FY12E and
FY13E EV/EBITDA, respectively. We believe the company’s main
operating region Mumbai is yet to witness transition from occupancy led
cycle to the recovery in room rates. We expect revenue CAGR of 22% in
our forecast period FY11-13E on the back of addition of new rooms in
Orchid Mumbai. We value the stock at 10x FY13E EV/EBITDA with a
revised target price of | 116 (earlier target price: | 95) and a HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h e r c o s t d e n t s m a r g i n s …
Kamat Hotel’s Q2FY12 results were marginally below our expectation
wherein the company’s net sales improved ~6% YoY to | 29.8 crore (Idirect estimate: | 30.9) while PAT was up by 2% YoY at ~ | 0.16 crore (Idirect estimate: ~| 0.19 crore). The revenue growth was on the back of
marginal growth in average occupancy level (up ~100 bps YoY to 63%)
while ARR across major operating regions remained flat. The EBITDA
margin declined ~509 bps YoY to 28.3% mainly on the back of 14% YoY
growth in operating expenses to | 21.3 crore. However, with the lower
interest outgo and depreciation cost, the company reported ~2% YoY
jump in its net profit to ~| 0.16 crore supported by a sharp rise in other
income.
ƒ Topline growth in the grip of subdued ARR
During Q2FY12, Kamat Hotel’s topline grew by only 6% YoY to |
29.8 crore mainly due to the lean season and decline in MICE
activity across the company’s main operating region Mumbai, which
contributes over 85% of topline. Occupancy levels across Mumbai
remained subdued at 63% (up ~100 bps YoY) while ARR grew by a
mere 2-3% across regions.
ƒ Margin shrinks on higher operating cost
Operating costs for Q2FY12 grew 14% YoY to | 21.3 crore. Among
operating cost components, raw material, employee cost and power
& fuel cost increased by 13%, 19% and 25% YoY, respectively. As a
result, operating margins declined 509 bps YoY to ~28%.
V a l u a t i o n s
At the CMP of | 110, the stock is trading at 10.2x and 8.7x its FY12E and
FY13E EV/EBITDA, respectively. We believe the company’s main
operating region Mumbai is yet to witness transition from occupancy led
cycle to the recovery in room rates. We expect revenue CAGR of 22% in
our forecast period FY11-13E on the back of addition of new rooms in
Orchid Mumbai. We value the stock at 10x FY13E EV/EBITDA with a
revised target price of | 116 (earlier target price: | 95) and a HOLD rating.
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