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Indian Hotels: On the Slow Road to Recovery - Views on News from Equitymaster
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Indian Hotels: On the Slow Road to Recovery
Jul 4, 2016

The Indian Hotels Company Limited (IHCL) has announced its results for the fourth quarter and full year FY16. On a consolidated basis, the company has reported 9.6% YoY increase in sales and a loss of Rs 605 m in FY16. Here is our analysis of the results.

Performance summary
  • The topline increased 9.6% YoY on a consolidated basis in FY16 led by growth in the domestic operations.
  • The consolidated operating profit increased 26.2% YoY in FY16. Savings across the board in operating costs led to the improved operating margins. The consolidated operating margin for FY16 was 13.4% up from 11.7% in FY15.
  • The exceptional loss of Rs 672 m in FY16 relates to projects that are no longer being pursued by the company across various geographies.
  • The company reported a consolidated net loss of Rs 605 m for FY16. Losses at the consolidated level reduced by 84% YoY during the year.

    Financial Performance Snapshot
      Standalone Financials Consolidated Financials
    (Rs m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Net sales 6,108 6,868 12.5% 41,886 45,909 9.6%
    Expenditure 4,569 5,043 10.4% 37,001 39,743 7.4%
    Operating profit (EBDITA) 1,538 1,825 18.6% 4,886 6,166 26.2%
    Operating profit margin (%) 25.2% 26.6% 11.7% 13.4%
    Other income 213 290 36.4% 987 1,154 16.9%
    Finance cost 198 222 12.3% 1,756 2,460 40.1%
    Depreciation 292 363 24.3% 2,913 3,167 8.7%
    Exceptional Item -1,965 -172 -3,529 -672
    Profit before tax -704 1,358 -2,325 1,021 -143.9%
    Tax 487 477 -2.1% 1,146 1,401 22.2%
    Profit after tax/(loss) -1,192 881 -3,471 -379
    Minority interest 0.00 0.00 310 255 -17.9%
    Share of profit of associates 0.00 0.00 0 29
    Net Profit -1,192 881 -3,781 -605
    Net profit margin (%) -19.5% 12.8% -9.0% -1.3%
    No. of shares (m) 989.3
    Diluted earnings per share (Rs) -0.6
    P/E ratio (x)* N.A

    (* On a trailing 12 months basis)

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INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

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An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
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DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Neither Equitymaster, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Equitymaster's Associate has financial interest in The Indian Hotels Company Limited.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
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