EIH: Gets its house in order - 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?  

EIH: Gets its house in order

May 30, 2001

India's second largest hotel chain, East India Hotels (EIH), has recorded 13% growth in topline for FY01. However, sales growth in 4QFY01 seems to have slowed down to single digits as compared to the double digit growth in the previous quarters.

(Rs m)FY00FY01Change
Sales 4,211 4,771 13.3%
Other Income 452 419 -7.4%
Expenditure 3,376 3,649 8.1%
Operating Profit (EBDIT) 835 1,121 34.3%
Operating Profit Margin (%)19.8%23.5% 
Interest 174 180 3.6%
Depreciation 251 277 10.4%
Profit before Tax8621,08325.6%
Extra-ordinary items - (43) 
Tax 99 92 -7.4%
Profit after Tax/(Loss) 763 948 24.3%
Net profit margin (%)18.1%19.9% 
No. of Shares (eoy) 52 52  
Diluted Earnings per share14.618.1 
P/E Ratio 12.9 

Results for FY01 are significantly better than the preceding fiscal. In FY00, the company reported negative topline and bottomline growth of 2% and 25% respectively. The better performance was the result of higher occupancy rates and average room rates (ARR) at its prime hotels in Mumbai, Delhi, Bangalore and Calcutta. Also the company's increasing presence in the leisure hotel segment over the past couple of years has helped shoring up its revenues. The company has opened hotels in Rajasthan and Shimla. It also has plans for other tourist destinations like Kerala.

To improve its operations further and to keep up with the increasing competition in the luxury hotel market in India the company is on the look out for a tie-up with an international hotel company. This will help the company acquire presence in the large markets of Europe and USA.

Improved topline growth and greater control on costs has enabled the company to register significant growth in operating profits. The OPM of the company has increased by 370 basis points. This can be attributed to the revised room rates and strict control on costs during the year.

Therefore, despite the drop in other income the bottomline has exhibited impressive growth. The extra-ordinary item pertains to voluntary separation costs (VRS) of Rs 213.4 m, which is to be written off over a period of 5 years.

At Rs 234 the company trades on a multiple of 12.9x FY01 earnings. The three year average multiple for the company is 20x. However, the threat of competition has increased in its prime market, Mumbai, with a number of hotels to be commissioned. This could have affected valuations of the company.

Equitymaster requests your view! Post a comment on "EIH: Gets its house in order". Click here!

  

More Views on News

EIH 2020-21 Annual Report Analysis (Annual Result Update)

Aug 12, 2021 | Updated on Aug 12, 2021

Here's an analysis of the annual report of EIH for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of EIH. Also includes updates on the valuation of EIH.

Revenge Travel is Here. 9 Stocks Likely to Benefit (Views On News)

Sep 4, 2021

The term 'revenge travel' refers to the desire of going on a vacation after an extended period of lockdown.

Why Did Shares of Jubilant FoodWorks Rally Today? (Views On News)

Jun 16, 2021

The company sees a 90% recovery despite minimal dine-ins.

Why Did Burger King India Shares Plunge 7% Yesterday? (Views On News)

May 28, 2021

Key takeaways from Burger King India Q4FY21 results.

Indian Hotels Q4 Review: Reports Net Loss, Revenue from Operations Decline (Views On News)

May 3, 2021

Key takeaways from Indian Hotels Q4FY21 results.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

EIH SHARE PRICE


Dec 7, 2021 (Close)

TRACK EIH

COMPARE EIH WITH

MARKET STATS