Business travel takes its toll on EIH's profits - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Business travel takes its toll on EIH's profits

May 30, 2000

EIH Ltd, India's second largest hotel chain has reported a 25% decline in its net profits for FY2000 to Rs 725 m as against Rs 964 m reported in FY99. Total revenues also reported a marginal decline by 2% YoY in FY2000 to Rs 4,663 m. EIH Ltd, India's second largest hotel chain operates 14 hotels under the "Oberoi" and "Trident" brands. Of this the company owns 10 hotels (1,690 rooms) and manages the other four (636 rooms). Its Mumbai and Delhi hotels contribute to around 80% of the profits of the company. The company reported a net turnover of Rs 4.6 bn in FY2000.

(Rs m) FY99 FY00 Change
Total revenues 4,757 4,663 -2.0%
Profit after Tax/(Loss) 964 725 -24.8%
Net profit margin (%) 20.3% 15.5%  
Earnings per share* 18.40 13.83  
(annualised)      

The decline in business travel has taken its toll on the company's performance as a large chunk of profits come from its hotels in Mumbai and Delhi. The slowdown in the economy and political instability has affected the growth in tourism over the last few years and this lead to a decline in occupancy rates and average room rates for the hotel industry.

The prospects for the hotel industry are set to improve as the economy has picked up and the overall investment climate is more favourable. EIH has reported an improvement in its occupancy rate for April'2000 at 64.7% as compared to 62.8% in April'99. The company's occupancy rate and average room rate are expected to improve over the next year.

The market has already discounted the results and the fall in profits of EIH does not bring any surprises. On valuations, EIH Ltd is trading at 8.9x (on FY2000 earnings). This is low as compared to multiples of 20x-25x it had traded at few years ago and the negative news which has affected the hotel industry seems to be in the price.


Equitymaster requests your view! Post a comment on "Business travel takes its toll on EIH's profits". Click here!

  

More Views on News

EIH Announces Quarterly Results (3QFY20); Net Profit Up 17.4% (Quarterly Result Update)

Jan 27, 2020 | Updated on Jan 27, 2020

For the quarter ended December 2019, EIH has posted a net profit of Rs 750 m (up 17.4% YoY). Sales on the other hand came in at Rs 4 bn (down 4.9% YoY). Read on for a complete analysis of EIH's quarterly results.

EIH Announces Quarterly Results (2QFY20); Net Profit Up 54.8% (Quarterly Result Update)

Nov 8, 2019 | Updated on Nov 8, 2019

For the quarter ended September 2019, EIH has posted a net profit of Rs 410 m (up 54.8% YoY). Sales on the other hand came in at Rs 3 bn (down 13.7% YoY). Read on for a complete analysis of EIH's quarterly results.

EIH 2018-19 Annual Report Analysis (Annual Result Update)

Jul 24, 2019 | Updated on Jul 24, 2019

Here's an analysis of the annual report of EIH for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of EIH. Also includes updates on the valuation of EIH.

Chalet Hotels IPO: Should You Bet on This High-End Hotel Chain Owner? (IPO)

Jan 29, 2019

Should you subscribe to the IPO of Chalet Hotels Ltd?

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

EIH SHARE PRICE


Sep 18, 2020 03:37 PM

TRACK EIH

COMPARE EIH WITH

MARKET STATS