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Indian Hotels Company Ltd
Domestic Trends Improve; International Performance Remains Elusive
Impact on our views: IHCL reported F3Q11
standalone revenue of Rs 4.9 bn (up 11% YoY), EBITDA
of Rs 1.4 bn (down 5% YoY) and adjusted net profit of
Rs 528 mn (down 20% YoY). While revenue and
EBITDA were better than our estimate, net profit was
about 28% lower than our estimate due to lower other
income and higher tax provision. In our view, domestic
operating trends are improving which is reflected in
strong revenue growth; however, high expenses
(especially staff and advertising cost) dampened the
impact at the EBITDA level.
What's new: The company has reported 9MF2011 ARR
of Rs 8,975 (up 7% YoY) and OR of 64% (up 3 ppt). In
our view, the Vivanta and Gateway brands are doing
well; however, the high-end segment (Taj) is still under
pressure. ORs have improved and are moving closer to
2008 levels. Total room launches during F2011 will
aggregate to 1,077 rooms and the company has 2,556
rooms in its pipeline (Exhibits 3 and 4). Management
believes that the international portfolio (especially the
US properties) will take more time to break-even given
the current market scenario (refer Exhibit 5 for ARR and
OR data).
The current equity infusion of about Rs 5 bn from Tata
Sons will be used to repay debt of Rs 6 bn maturing in
May 2011, while the additional equity of Rs 3.7 bn that
will be received on warrant conversion (anytime until
June 2012) will be used to repay debt then.
Investment thesis: While operating trends in the
domestic market are improving, consolidated results will
remain weak due to losses in the US portfolio. However,
we believe valuations (EV/EBITDA) have corrected and
are trading at near long-term mean levels.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Indian Hotels Company Ltd
Domestic Trends Improve; International Performance Remains Elusive
Impact on our views: IHCL reported F3Q11
standalone revenue of Rs 4.9 bn (up 11% YoY), EBITDA
of Rs 1.4 bn (down 5% YoY) and adjusted net profit of
Rs 528 mn (down 20% YoY). While revenue and
EBITDA were better than our estimate, net profit was
about 28% lower than our estimate due to lower other
income and higher tax provision. In our view, domestic
operating trends are improving which is reflected in
strong revenue growth; however, high expenses
(especially staff and advertising cost) dampened the
impact at the EBITDA level.
What's new: The company has reported 9MF2011 ARR
of Rs 8,975 (up 7% YoY) and OR of 64% (up 3 ppt). In
our view, the Vivanta and Gateway brands are doing
well; however, the high-end segment (Taj) is still under
pressure. ORs have improved and are moving closer to
2008 levels. Total room launches during F2011 will
aggregate to 1,077 rooms and the company has 2,556
rooms in its pipeline (Exhibits 3 and 4). Management
believes that the international portfolio (especially the
US properties) will take more time to break-even given
the current market scenario (refer Exhibit 5 for ARR and
OR data).
The current equity infusion of about Rs 5 bn from Tata
Sons will be used to repay debt of Rs 6 bn maturing in
May 2011, while the additional equity of Rs 3.7 bn that
will be received on warrant conversion (anytime until
June 2012) will be used to repay debt then.
Investment thesis: While operating trends in the
domestic market are improving, consolidated results will
remain weak due to losses in the US portfolio. However,
we believe valuations (EV/EBITDA) have corrected and
are trading at near long-term mean levels.
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