Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
EIH: FY02, closed chapter - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 2, 2002

    EIH: FY02, closed chapter

    After charting a revival in FY01, East India Hotels Ltd. (EIH) has once again experienced erosion in sales and profits. The company has registered four consecutive quarters of decline in top and bottomline. However, in its favour, the industry experienced rough times in year ended March '02. As compared to its key Indian competitor, IHCL, the financials have proved to be more vulnerable.

    (Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
    Net Sales 1,298 988 -23.9% 4,764 3,747 -21.4%
    Other Income 153 218 42.3% 419 526 25.7%
    Expenditure 867 806 -7.1% 3,643 3,311 -9.1%
    Operating Profit (EBDIT) 431 182 -57.7% 1,121 436 -61.1%
    Operating Profit Margin (%) 33.2% 18.4%   23.5% 11.6%  
    Interest 31 48 55.3% 180 186 3.2%
    Depreciation 79 76 -4.6% 277 288 4.1%
    Profit before Tax 474 277 -41.6% 1,083 488 -54.9%
    Extraordinary items (11) (1) -87.3% (43) (1) -96.7%
    Tax 44 80 81.9% 92 131 42.9%
    Profit after Tax/(Loss) 419 195 -53.4% 948 356 -62.5%
    Net profit margin (%) 32.3% 19.7%   19.9% 9.5%  
    No. of Shares 52.4 52.4   52.4 52.4  
    Diluted Earnings per share* 32.0 14.9   18.1 6.8  
    P/E Ratio         30.3  
    * annualised            

    Underperformance compared to its peer could be due to greater dependence on select properties. That said, hospitality and travel & tourism business has experienced very challenging 18 months. Slowdown in global and domestic economy affected the sector in the first half of FY02. The second half, which is more remunerative, experienced a wash out with September 11 and related fallouts. These events were followed by internal setbacks from communal riots and border conflict. Reportedly, the industry is expected to have revived in the first two months of the current fiscal. However, travel advisories is likely to affect industry fortunes. While advisories could lead to a precipitous drop in arrivals, withdrawal of advisories is likely to have a gradual effect.

    With reduced business flow and efforts to control costs, operating expenses have declined. But the precipitous drop in sales has proved difficult to manage. Consequently, operating margins have declined, which is in line with industry trend. The company had undertaken a voluntary separation scheme in FY01 and gains seem to have accrued. The accumulated costs, amounting to Rs 105.8m, have been written off against reserves.

    Interest expense, which was flat for the first nine months, has registered a sharp rise in the fourth quarter. Other income also has shown significant increase over the concerned periods. Adjusting for other income, pre-tax profit would be wiped out for FY02, which indicates poor earnings quality. Other income includes profit from foreign exchange transaction.

    At Rs 206 the scrip is trading on a multiple of 30.3x FY02 earnings. Valuations look skewed due to the sharp drop in FY02 earnings. However, to that extent, valuations are likely to revert to mean as earnings revive. This could dilute stock performance. Markets seem to have factored in better financial performance in the current fiscal.



    Equitymaster requests your view! Post a comment on "EIH: FY02, closed chapter". Click here!


    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 17, 2017 01:30 PM


    • Track your investment in EIH LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Detailed Financial Information With Charts