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H i g h e r i n t e r e s t c o s t d e n t s b o t t o m l i n e …
Kamat Hotel reported its Q3FY12 numbers which were in line with our
estimate. Company reported net sales of | ~ | 34.7 crore during Q3FY12
(I-direct estimate: | 35 crore) and EBITDA of | 11.6 crore (I-direct
estimate: | 12.1 crore). The revenue growth was on the back of marginal
growth in average occupancy level while ARR growth remained muted,
whereas operating expenses grew by 10% YoY to | 21.1 crore during the
same period. As a result its EBITDA margin declined ~172 bps YoY to
33.5%. Besides this interest cost also saw a sharp increase of over 60%
YoY to | 9.3 crore as the company started charging interest cost on debt
pertaining to the Mumbai expansion to the P&L, post its launch in current
quarter. Consequently, company reported net loss of | 0.04 crore (I-direct
estimate: | 2.5 crore).
Topline growth in the grip of subdued ARR
During Q3FY12, Kamat Hotel’s topline grew by only 7% YoY to | 34.7
crore mainly due to incremental revenue from room additions.
Occupancy level in Mumbai improved by 100 bps YoY while ARR during
the period remained subdued due to supply of additional rooms and
lean season for business activity across the company’s main operating
region Mumbai, which contributes over 85% of topline.
Margin shrinks on higher operating cost
Operating costs for Q3FY12 grew 10% YoY to | 23.1 crore. Among
operating cost components, raw material, employee cost and power &
fuel cost increased by 9%, 17% and 11% YoY, respectively. As a result,
operating margins declined 172 bps YoY to ~33.5%.
V a l u a t i o n s
We believe the company’s main operating region Mumbai is yet to
witness transition from an occupancy led cycle to the recovery in room
rates. At the offer price of | 135, the stock is trading at 20.3x and 13x its
FY12E and FY13E revised EV/EBITDA, respectively. We believe it is fairly
valued at the open offer price. Hence, we recommend that investors
tender their shares in full
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Click here for PDF LINK
H i g h e r i n t e r e s t c o s t d e n t s b o t t o m l i n e …
Kamat Hotel reported its Q3FY12 numbers which were in line with our
estimate. Company reported net sales of | ~ | 34.7 crore during Q3FY12
(I-direct estimate: | 35 crore) and EBITDA of | 11.6 crore (I-direct
estimate: | 12.1 crore). The revenue growth was on the back of marginal
growth in average occupancy level while ARR growth remained muted,
whereas operating expenses grew by 10% YoY to | 21.1 crore during the
same period. As a result its EBITDA margin declined ~172 bps YoY to
33.5%. Besides this interest cost also saw a sharp increase of over 60%
YoY to | 9.3 crore as the company started charging interest cost on debt
pertaining to the Mumbai expansion to the P&L, post its launch in current
quarter. Consequently, company reported net loss of | 0.04 crore (I-direct
estimate: | 2.5 crore).
Topline growth in the grip of subdued ARR
During Q3FY12, Kamat Hotel’s topline grew by only 7% YoY to | 34.7
crore mainly due to incremental revenue from room additions.
Occupancy level in Mumbai improved by 100 bps YoY while ARR during
the period remained subdued due to supply of additional rooms and
lean season for business activity across the company’s main operating
region Mumbai, which contributes over 85% of topline.
Margin shrinks on higher operating cost
Operating costs for Q3FY12 grew 10% YoY to | 23.1 crore. Among
operating cost components, raw material, employee cost and power &
fuel cost increased by 9%, 17% and 11% YoY, respectively. As a result,
operating margins declined 172 bps YoY to ~33.5%.
V a l u a t i o n s
We believe the company’s main operating region Mumbai is yet to
witness transition from an occupancy led cycle to the recovery in room
rates. At the offer price of | 135, the stock is trading at 20.3x and 13x its
FY12E and FY13E revised EV/EBITDA, respectively. We believe it is fairly
valued at the open offer price. Hence, we recommend that investors
tender their shares in full
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