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TajGVK is the market leader in the Hyderabad market, where it has a share of
nearly 30% in premium-segment rooms. The company will start operations at its
Begumpet property in 3QFY2012, which will strengthen its foothold further and
help the company to tap mid-market room demand.
TajGVK is adding 189 rooms at its Begumpet property, using an asset-light strategy.
This would require a lower capital outlay as compared to a Greenfield expansion.
We expect TajGVK's debt-equity ratio to be comfortable at 0.2x in FY2013E, which
provides the company adequate room to plan further expansions, without hampering
its balance sheet quality.
We maintain our positive outlook on the entire hotel industry, as increasing FTAs
and economic growth will lead to a further increase in demand for hotel rooms.
With the tourist season coming in, TajGVK is expected to take full advantage from
its expansion plans in Hyderabad, which will take its owned rooms to 1,086 in
3QFY2012 from 897 currently.
The stock is currently trading at attractive valuation of 8.5x its FY2013E EPS.
We maintain our Buy view with a target price of `121, valuing it at 12x FY2013E EPS.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TajGVK is the market leader in the Hyderabad market, where it has a share of
nearly 30% in premium-segment rooms. The company will start operations at its
Begumpet property in 3QFY2012, which will strengthen its foothold further and
help the company to tap mid-market room demand.
TajGVK is adding 189 rooms at its Begumpet property, using an asset-light strategy.
This would require a lower capital outlay as compared to a Greenfield expansion.
We expect TajGVK's debt-equity ratio to be comfortable at 0.2x in FY2013E, which
provides the company adequate room to plan further expansions, without hampering
its balance sheet quality.
We maintain our positive outlook on the entire hotel industry, as increasing FTAs
and economic growth will lead to a further increase in demand for hotel rooms.
With the tourist season coming in, TajGVK is expected to take full advantage from
its expansion plans in Hyderabad, which will take its owned rooms to 1,086 in
3QFY2012 from 897 currently.
The stock is currently trading at attractive valuation of 8.5x its FY2013E EPS.
We maintain our Buy view with a target price of `121, valuing it at 12x FY2013E EPS.
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