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Indian Hotels: Recovery Still Far Away - Views on News from Equitymaster

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Indian Hotels: Recovery Still Far Away
Mar 28, 2016

The Indian Hotels Company Limited (IHCL) has announced its results for the third quarter of FY16. On a consolidated basis, the company has reported 8.5% YoY increase in sales and an 83.5% YoY decrease in net profit. Here is our analysis of the results.

Performance summary

  • The topline increased 8.5% YoY on a consolidated basis led by growth in the domestic operations.
  • The consolidated operating profit margin increased to 20.3%. Savings in power and fuel costs led to the improved operating margins. The consolidated operating profit was up 12.6% YoY.
  • The exceptional loss of Rs 534 relates to certain projects that are no longer being pursued by the company across various geographies.
  • The company reported a consolidated net profit of Rs 101 m for 3QFY16 (down 83.5% YoY) and a consolidated loss of Rs 88 m for 9MFY16.

Consolidated financials

(Rs m) 3QFY15 3QFY16 Change 9MFY15 9MFY16 Change
Net sales 12,059 13,090 8.5% 30,813 33,625 9.1%
Expenditure 9,696 10,430 7.6% 27,490 29,283 6.5%
Operating profit (EBDITA) 2,363 2,660 12.6% 3,323 4,342 30.7%
Operating profit margin (%) 19.6% 20.3% 10.8% 12.9%
Other income 284 244 -14.3% 666 909 36.4%
Finance cost 440 816 85.5% 1,345 1,725 28.2%
Depreciation 748 811 8.4% 2,194 2,311 5.3%
Exceptional Item -173 -534 -302 -207
Profit before tax 1,287 743 -42.3% 148 1,008 581.9%
Tax 570 601 5.3% 575 847 47.3%
Profit after tax/(loss) 716 142 -80.2% -427 161
Minority interest 126 73 -42.4% 244 244 0.1%
Share of profit of associates 19 31 69.2% -36 -5
PAT after minority and sh. of asso. profit 608 101 -83.5% -707 -88
Net profit margin (%) 5.0% 0.8% -2.3% -0.3%
No. of shares (m) 807.5
Diluted earnings per share (Rs) (3.9)
P/E ratio (x)* N.A

(* On a trailing 12 months basis)

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