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Indian Hotels net profit up 6% - Views on News from Equitymaster
 
 
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  • Jun 4, 2001

    Indian Hotels net profit up 6%

    India's premier hotel chain, The Indian Hotels Company, has only managed a 6% growth in its FY01 bottomline. This was despite a 16% growth in turnover during this period. A 39% decline in other income component was largely responsible for its shrinking profitability.

    (Rs m) 4QFY00 4QFY01 Change FY00 FY01 Change
    Net Sales 1,826 2,096 14.8% 5,913 6,875 16.3%
    Other Income 82 130 58.2% 475 288 -39.3%
    Expenditure 1,274 1,433 12.5% 4,345 4,992 14.9%
    Operating Profit (EBDIT) 552 664 20.2% 1,568 1,883 20.1%
    Operating Profit Margin (%) 30.2% 31.7%   26.5% 27.4%  
    Interest 53 87 64.2% 359 312 -13.2%
    Depreciation 107 121 13.0% 377 452 19.8%
    Profit before Tax 474 585 23.5% 1,307 1,408 7.7%
    Tax 75 85 13.9% 175 205 17.1%
    Extraordinary expenses (VRS) 0 -21     -35  
    Profit after Tax 399 479 19.9% 1,132 1,168 3.2%
    Net profit margin (%) 21.9% 22.8%   19.1% 17.0%  
    Effective tax rate (%) 15.8% 14.6%   13.4% 14.6%  
    No. of Shares (eoy) (m) 45.1 45.1   45.1 45.1  
    Diluted earnings per share       25.1 25.9  
    P/E ratio         8.9  

    Higher depreciation provisioning and effective tax rates also contributed to this not so impressive performance. However, the company has managed to improve its operating margins during the year by 90 basis points, despite major renovations in progress in several hotels in the group.

    Its 4QFY01 were even better in operational terms. Its operating margins improved by 150 basis points during the quarter. A 58% jump in other income helped shore up its bottomline by 25% during 4QFY01. If however, we deduct the extraordinary items in the form of a voluntary retirement scheme, the net profit growth is actually 20%.

    The company's renovation expenses continue to add to its interest and depreciation costs, which in turn pressurise its profits depite an improvement in operations.

    At the current price of Rs 231 the stock trades at a P/E of 8.9 times its FY01 earnings. The company has outperformed our projections on the turnover growth paratmeter, but its bottomline is more or less as per our projections. We had projected a higher interest outgo (Rs 481 m) for FY01. Based on our projections, the stock trades at a P/E multiple of 7.4x FY02 earnings.

     

     

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    More Views on News

    Indian Hotels: Domestic Operations Performs Well (Quarterly Results Update - Detailed)

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    Indian Hotels has reported a 5.6% YoY increase in the consolidated topline and a consolidated loss of Rs 1,695 m for 1QFY17.

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    Mar 28, 2016

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    Nov 24, 2015

    Indian Hotels has reported a 13.2% YoY increase in the standalone topline and a standalone net profit of Rs 1.2 m for the quarter ended September 2015.

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