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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RATING....................................................................................... Changed from Buy to Hold
S u p p l y ove rhang a d d ing t o w o e s …
Taj GVK reported its Q3FY12 results, which were below our estimates.
The topline declined ~6% YoY to | 66.3 crore (I-direct estimate: | 73
crore) while it reported PAT of | 6.10 crore, down by 53% YoY (I-direct
estimate: | 13 crore). The dismal performance of the company can mainly
be attributed to YoY de-growth in occupancy and average room rate
(ARR) across the Hyderabad region. On the cost front, total operating cost
surged ~12% YoY to | 47.4 crore due to a rise in employee cost and P&F
cost by 27% and 9%, respectively. The cost has increased mainly due to
incurring of pre operating expenses on new hotel launch during Q3FY12.
Finally, PAT during the quarter saw a significant drop of 53% YoY to | 6.1
crore, due to a decline in topline and operating margin.
ƒ Supply glut and lean business season hit topline
Taj GVK’s topline was manly hit by de-growth in occupancy (down
~700 bps YoY) and muted ARR across the Hyderabad region, which
suffered from supply overhang and the lean season for business.
However, Chennai recorded occupancy growth of ~600 bps YoY to
71% for the quarter.
ƒ Drop in sales and higher cost dent margin
The operating margin dipped ~1100 bps YoY to ~29% for the
quarter due to a drop in sales (down ~6% YoY) and higher
operating cost, which increased by 12% YoY to | 47.4 crore (due to
pre-operating expenses on new hotel launch at Begumpet
{Hyderabad}). Major cost drivers such as employee costs and P&F
costs surged by 27% and 9% YoY, respectively.
V a l u a t i o n s
At the CMP of | 74, the stock is trading at 7.2x and 6.0x its FY12E and
FY13E EV/EBITDA, respectively. We have reduced our revenue growth
estimate by ~2% and ~7% YoY for FY12E and FY13E, respectively,
considering the supply overhang across the Hyderabad region, which
squeezed the ARR growth. Hence, we have reduced our price target to
| 80 (i.e. at 6.5x FY13E EV/EBITDA) with a HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RATING....................................................................................... Changed from Buy to Hold
S u p p l y ove rhang a d d ing t o w o e s …
Taj GVK reported its Q3FY12 results, which were below our estimates.
The topline declined ~6% YoY to | 66.3 crore (I-direct estimate: | 73
crore) while it reported PAT of | 6.10 crore, down by 53% YoY (I-direct
estimate: | 13 crore). The dismal performance of the company can mainly
be attributed to YoY de-growth in occupancy and average room rate
(ARR) across the Hyderabad region. On the cost front, total operating cost
surged ~12% YoY to | 47.4 crore due to a rise in employee cost and P&F
cost by 27% and 9%, respectively. The cost has increased mainly due to
incurring of pre operating expenses on new hotel launch during Q3FY12.
Finally, PAT during the quarter saw a significant drop of 53% YoY to | 6.1
crore, due to a decline in topline and operating margin.
ƒ Supply glut and lean business season hit topline
Taj GVK’s topline was manly hit by de-growth in occupancy (down
~700 bps YoY) and muted ARR across the Hyderabad region, which
suffered from supply overhang and the lean season for business.
However, Chennai recorded occupancy growth of ~600 bps YoY to
71% for the quarter.
ƒ Drop in sales and higher cost dent margin
The operating margin dipped ~1100 bps YoY to ~29% for the
quarter due to a drop in sales (down ~6% YoY) and higher
operating cost, which increased by 12% YoY to | 47.4 crore (due to
pre-operating expenses on new hotel launch at Begumpet
{Hyderabad}). Major cost drivers such as employee costs and P&F
costs surged by 27% and 9% YoY, respectively.
V a l u a t i o n s
At the CMP of | 74, the stock is trading at 7.2x and 6.0x its FY12E and
FY13E EV/EBITDA, respectively. We have reduced our revenue growth
estimate by ~2% and ~7% YoY for FY12E and FY13E, respectively,
considering the supply overhang across the Hyderabad region, which
squeezed the ARR growth. Hence, we have reduced our price target to
| 80 (i.e. at 6.5x FY13E EV/EBITDA) with a HOLD rating.
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