Hotels ƒ Higher room inventory to keep occupancy under check despite improvement in foreign tourists arrivals (FTA) ƒ :Q3FY15 Result Preview : ICICI Securities, report

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Hotels
ƒ Higher room inventory to keep occupancy under check despite
improvement in foreign tourists arrivals (FTA)
The I-direct hotel coverage universe is expected to report revenue
growth of 5.0% YoY to | 1667.4 crore in Q3FY15 mainly on account of
higher room inventory and marginal rise in ARRs. Foreign tourist
arrivals (FTAs) growth is expected to remain healthy at 11.1% during
the quarter compared to 4.8% YoY growth in Q3FY14. However, higher
room inventory is expected to keep occupancy under check which is
likely to remain flat YoY at pan India level. Average occupancy levels at
leisure destinations is expected to remain higher compared to business
destination during the quarter due to seasonality with improvement of
90-100 bps across destinations.
ƒ Operating margins to remain marginally lower during the quarter
Margins of the I-direct hotel universe are expected to decline marginally
YoY due to higher fixed overheads. We expect I-direct hotel universe
operating margins at 21.8% for Q3FY15E (down 90bps YoY). EIH and
TajGVK are expected to report flat EBITDA margins v/s last year while
Indian Hotel is expected to report fall in margins (down 120bps YoY) on
account of lower profitability of subsidiary companies.
ƒ I-direct universe expected to report net profit of | 111.5 crore
Companies under I-direct coverage are expected to report net profit of
~| 111 crore (net profit margin of 6.7%) in Q3FY15E vs. net profit of |
103.9 crore and loss of | 99.9 crore during Q3FY14 and Q2FY15
respectively. Under our coverage, we expect EIH and IHCL to report net
profit growth of 9.8% YoY and 6.7% YoY respectively while Taj GVK is
expected to report 11% drop in net profit during the quarter.
ƒ Select leisure destinations to drive growth backed by higher FTAs
Average occupancy levels were higher at leisure destinations compared
to business destinations during the quarter due to peak season coupled
with healthy growth in FTA’s during the quarter. In business
destinations, Mumbai registered higher occupancy compared to the
previous year while almost all leisure destinations registered higher
occupancy levels along with improvement in ARRs during the quarter
compared to previous year.

Company specific view (Hotels)
Company Remarks
Indian Hotels Consolidated revenues are expected to grow 4.5% YoY on the back of an
improvement in FTAs. Operating margins are expected to decline marginally due
to lower profitability of subsidiary companies. Expect net profit growth of 6.7%
YoY to | 63.6 crore
EIH With healthy FTAs, revenue is expected to increase 6.5% YoY (highest among
coverage universe) during the quarter. However, the EBITDA margin is likely to
remain flat YoY led by higher operating costs. Expect net profit growth of 9.8%
YoY
Taj GVK Hotel Revenues are expected to grow 6.0% YoY during the quarter due to a marginal
pick-up in demand coupled with the low base effect of last year. The EBITDA
margin of the company is expected to remain flat YoY. However, the net profit is
expected to decline 10.9% YoY due to higher depreciation and lower other
income
Source: Company, ICICIdirect.com Research

LINK
http://content.icicidirect.com/mailimages/IDirect_ConsolidatedPreview_Q3FY15.pdf