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: In search of respite - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 12, 2003

    EIH: In search of respite

    East India Hotels (EIH), popularly known as Oberoi Hotels, recently declared its June quarter (1QFY04) results. Topline for the quarter has grown by 7% YoY, while pressure on the bottomline continues. EIH has posted a loss for the second consecutive quarter. Let us take a look at the hotel majors’ performance during the June quarter.

    (Rs m) 1QFY03 1QFY04 Change
    Net Sales 818 875 7.0%
    Other Income 94 148 57.8%
    Expenditure 807 904 11.9%
    Operating Profit (EBDIT) 10 (29)  
    Operating Profit Margin (%) 1.3% -3.3%  
    Interest 28 73 164.0%
    Depreciation 72 96 33.4%
    Profit before Tax 5 (49)  
    Tax (2) (46)  
    Profit after Tax/(Loss) 7 (3)  
    Net profit margin (%) 0.8% -0.4%  
    No. of Shares 52.4 52.4  
    Diluted Earnings per share* 0.5 -0.3  
    * annualised      

    The sector has witnessed turbulent times during the last few years. However, from the last quarter (March 2003) things have been looking upbeat, which is apparent from the topline growth. Post the US-Iraq war and the SARS scare there has been an increase in the tourist traffic to the country. According to the tourism department, there has been a 12% increase from Jan-June’03 in the tourist arrivals over the previous period. As a result of which most hoteliers have witnessed an increase in the occupancies during this period. Occupancies have reached as high as 75% in some of the key hotels. Even for Oberoi, some hotels in Mumbai and Delhi have also witnessed high occupancy levels.

    Having said that, average room rates (ARRs) have continued to remain subdued and are still to attain the FY01 levels. In order to achieve higher occupancies hotel majors have had to resort to discounts. As a result, operating margins have taken a major hit. Operating margins have gone in the negative for the company during the quarter, which is just a continuation of its FY03 performance.

    There has been 58% jump in the other income, which is largely due to the extra-ordinary gains from restructuring of the foreign currency loan of Rs 26 m. If the gains are removed then the company has posted an actual loss of nearly Rs 30 m. Operating margins have taken a significant hit during the quarter, which is largely due to the overall increase in the expenses. At the pre-tax levels there has been an increase in the interest and depreciation costs. This indicates that EIH is adding fresh capacity.

    However, as the industry is seasonal in nature, the first half (May-October) is usually the off-season period. We reiterate that any turn of fortunes for the industry would be in the second half (November-April). EIH stock is currently trading at Rs 201, which is around the same levels as last year. However, with the industry on a turnaround, EIH is likely to benefit owing to its strategy of setting up new hotels in upcoming cities like Bangalore and Pune. Having said that, concerns continue to cloud sentiment in the near term.



    Equitymaster requests your view! Post a comment on "EIH: In search of respite". 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.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    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 18, 2017 (Close)


    • 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


    Compare Company With Charts