Indian Hotels: Seasoned performance - 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?  

Indian Hotels: Seasoned performance

Oct 15, 2003

Indian Hotels (IHCL) started the current financial year on a positive note (15% YoY growth in topline) giving an indication that the worst is probably over for the industry. In continuation of the positive results of 1QFY04, the hotel major posted an 18% YoY growth in topline and nearly 32% growth in bottomline over the previous period. Let us take a look at the performance of the company during the current quarter.

(Rs m) 2QFY03 2QFY04 Change 1HFY03 1HFY04 Change
Net Sales 1,159 1,366 17.9% 2,285 2,662 16.5%
Other Income 105 77 -27.3% 157 157 -0.1%
Expenditure 1,012 1,182 16.8% 1,944 2,329 19.8%
Operating Profit (EBDIT) 147 184 24.9% 341 333 -2.3%
Operating Profit Margin (%) 12.7% 13.4%   14.9% 12.5%  
Interest 93 61 -34.7% 200 126 -37.0%
Depreciation 118 115 -2.5% 235 229 -2.5%
Profit before Tax 41 84 104.1% 63 135 113.9%
Extraordinary items - (29)   - (29)  
Tax 15 20 37.4% 26 33 25.0%
Profit after Tax/(Loss) 26 35 31.7% 37 73 98.9%
Net profit margin (%) 2.3% 2.6%   1.6% 2.7%  
No. of Shares 45 45   45 45  
Diluted Earnings per share* 2.3 3.1   1.6 3.2  
P/E Ratio         102.0  
* annualised            

At first glance, the results seem to be encouraging given the fact that this period is considered off-season for the industry. The company has seen an increase in its overall occupancy levels (15%), as a result of which the average room rates have also gone up 9% over the previous period. IHCL has seen an increase in occupancies across all categories of hotels with luxury and leisure hotels witnessing a 22% increase, while the business hotels saw a rise of 15% over the previous year. Occupancies for the business hotels have been lower on account of the sale of 2 hotels (Blue Diamond, Pune and Taj Residency, Lucknow) to an associate company, Piem Hotels.

IHCL continues to derive 46% of its revenues from its rooms while 44% is contributed from sale of food & beverages. The rest 10% comes from management fees and others. However, this is likely to change during 2HFY04, as the industry expects an increase in the tourist influx due to the holiday season. Even the department of Tourism has indicated that FY04 could see around 3 m tourists coming into the country. This means a substantial 30% increase over the previous period.

On the operational level, IHCL saw a marginal (70 basis points) increase in the gross profit margin during the quarter. However in 1HFY04, the gross profit margin has actually seen a fall (240 basis points). For the quarter, all expense heads have seen an increase (as is apparent from the table below). Going forward, to increase profitability, the cost efficiency may play a key role.

  2QFY03 2QFY04 % change 1HFY03 1HFY04 % change
Raw material 131 151 15.1% 262 296 12.9%
Staff Costs 291 336 15.4% 589 664 12.7%
Fuel, power & lighting 149 160 7.2% 288 320 11.0%
Other exp 441 536 21.5% 804 1,049 30.4%
Total expenses 1,012 1,182 16.8% 1,944 2,329 19.8%

The 37% decrease in interest expenses has further helped the bottomline performance. This is mainly due to the lower interest bearing debts. Depreciation costs have gone down mainly due to the removal of the 2 business hotels from its books and the sale of idle land (Chiplun). At pre-tax levels, the company incurred an extra-ordinary expense of Rs 29 m towards voluntary retirement scheme, which it has written off during the quarter itself.

Currently the stock is trading at Rs 320 levels. The company has been on the look out for acquiring small hotels in the international arena, but it would be some time before that becomes a reality. On the domestic front, the next 2 quarters is the peak season time for the industry. IHCL will benefit from it being the industry leader. The expected opening of Wellington Mews by the year-end will give a further boost to the performance of the company. In the long term, if the spike in international tourist arrival continues, then it will be a sign that India has arrived on the business and tourist global map. That in itself, is enough potential for players like Indian Hotels.


Equitymaster requests your view! Post a comment on "Indian Hotels: Seasoned performance". Click here!

  

More Views on News

THE INDIAN HOTELS Announces Quarterly Results (4QFY20); Net Profit Down 42.9% (Quarterly Result Update)

Jun 11, 2020 | Updated on Jun 11, 2020

For the quarter ended March 2020, THE INDIAN HOTELS has posted a net profit of Rs 668 m (down 42.9% YoY). Sales on the other hand came in at Rs 11 bn (down 14.6% YoY). Read on for a complete analysis of THE INDIAN HOTELS's quarterly results.

THE INDIAN HOTELS Announces Quarterly Results (3QFY20); Net Profit Up 21.4% (Quarterly Result Update)

Feb 1, 2020 | Updated on Feb 1, 2020

For the quarter ended December 2019, THE INDIAN HOTELS has posted a net profit of Rs 2 bn (up 21.4% YoY). Sales on the other hand came in at Rs 14 bn (up 3.7% YoY). Read on for a complete analysis of THE INDIAN HOTELS's quarterly results.

THE INDIAN HOTELS 2018-19 Annual Report Analysis (Annual Result Update)

Jun 5, 2019 | Updated on Jun 5, 2019

Here's an analysis of the annual report of THE INDIAN HOTELS for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of THE INDIAN HOTELS. Also includes updates on the valuation of THE INDIAN HOTELS.

THE INDIAN HOTELS 2017-18 Annual Report Analysis (Annual Result Update)

Dec 19, 2018 | Updated on Dec 19, 2018

Here's an analysis of the annual report of THE INDIAN HOTELS for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of THE INDIAN HOTELS. Also includes updates on the valuation of THE INDIAN HOTELS.

Chalet Hotels IPO: Should You Bet on This High-End Hotel Chain Owner? (IPO)

Jan 29, 2019

Should you subscribe to the IPO of Chalet Hotels Ltd?

More Views on News

Most Popular

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

I Believe These Stocks Will Deliver the Most Outsized Returns in 2021 and Beyond (Profit Hunter)

Sep 23, 2020

Rules of the racetrack can help you bag the biggest gainers of the coming decade.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

THE INDIAN HOTELS SHARE PRICE


Oct 1, 2020 10:37 AM

TRACK THE INDIAN HOTELS

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

MORE ON THE INDIAN HOTELS

THE INDIAN HOTELS 8-QTR ANALYSIS

COMPARE THE INDIAN HOTELS WITH

MARKET STATS