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)2QFY032QFY04Change1HFY031HFY04Change
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 Tax4184104.1%63135113.9%
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*2.33.1 1.63.2 
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

INDIAN HOTELS 2020-21 Annual Report Analysis (Annual Result Update)

Sep 6, 2021 | Updated on Sep 6, 2021

Here's an analysis of the annual report of INDIAN HOTELS for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of INDIAN HOTELS. Also includes updates on the valuation of INDIAN HOTELS.

Revenge Travel is Here. 9 Stocks Likely to Benefit (Views On News)

Sep 4, 2021

The term 'revenge travel' refers to the desire of going on a vacation after an extended period of lockdown.

Indian Hotels Q4 Review: Reports Net Loss, Revenue from Operations Decline (Views On News)

May 3, 2021

Key takeaways from Indian Hotels Q4FY21 results.

Why Did Shares of Jubilant FoodWorks Rally Today? (Views On News)

Jun 16, 2021

The company sees a 90% recovery despite minimal dine-ins.

Why Did Burger King India Shares Plunge 7% Yesterday? (Views On News)

May 28, 2021

Key takeaways from Burger King India Q4FY21 results.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

INDIAN HOTELS SHARE PRICE


Dec 1, 2021 01:07 PM

TRACK INDIAN HOTELS

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

INDIAN HOTELS - BLUE COAST HOTELS COMPARISON

COMPARE INDIAN HOTELS WITH

MARKET STATS